1 practical use of six-sigma for the iata fuel program tom fodor assistant director e&m
TRANSCRIPT
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Practical use of six-sigma for the IATA Fuel Program
Tom Fodor
Assistant Director E&M
2 13-14 April 2010Ops Conference 2
230 airlines Representing 93% of scheduled international air transport
IATA is an association of:
3 13-14 April 2010Ops Conference 3
IATA’s Mission: To represent, lead and serve the airline industry Represent airlines’ interests to
governments & international organizations
Assist the airlines in developing solutionsto the issuesaffecting efficient operations
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Fuel Price Evolution
Forecast average fuel
price for 2012
$129.2 / barrel
Platts, September 28, 2012
$138.7 / b
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IATA’s Four-Pillar Strategy
Invest in new technology Operate more efficiently Build & use efficient infrastructure Use effective economic measures
Aviation & Climate ChangeAviation is facing the challenge
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IATA Green Team Achievements 2005-2012
Americas: 17 Europe: 40 Africa/MENA: 27 ASIA/ASPAC: 27
111 visits 41.3 M tons
of CO2
US $9.8 B
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IATA Green Team Identified Savings Potential
Average identified saving is 5% of the airline fuel budget
Savings range from 2% to more than 14% (higher values for airlines that did not have a structured fuel efficiency program in place)
Based on the actual fuel efficiency assessments, the major savings come from Flight Dispatch and Flight Operations
33.4%
42.7%
13.9%
10.0%
SAVINGS SUMMARY
Flight Operations
Flight Dispatch
Maintenance & Engineering
Ground Operations & Commercial
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IATA Methodology for Fuel Program
Define
Measure
AnalyzeImpro
ve
Control
Lean Six Sigma Methodology Combines the Lean and Six Sigma
methodologies Lean: reduce waste and add value Six Sigma: reduce variation in
product output, data driven, uses
statistical tools
IATA uses the DMAIC process for the
fuel program DMAIC Process
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Define Baseline
Phase 1 Phase 3Phase 2 Phase 4
Implementation Execution
Implementation Plan
IATA Fuel Efficiency Program – Phase 1
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Fuel Program
Setup
Define Baseline
Engage Executive Management Support Define Corporate Fuel Process Define Organization Establish Fuel Team Select Program Methodology
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Executive Sponsor, Fuel Manager, Fuel Team
The Fuel Implementation Organization
The Fuel Efficiency Organization
Executive Sponsor
Fuel Efficiency ManagerFuel Team
CEO / COO
Executive Steering Committee
Airline Departments
Airline Departments
Airline Departments
Airline Departments
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The Fuel Efficiency Implementation Team
1IATA Webinar 2010
CargoCabin
Service
Ground Operations
Flight Operations
Flight Safety
Dispatch
Operations Control
Finance
Human Resource
Network Planning
Information Technology
Training
Crew SchedulingMaintenance
& Engineering
Fuel Purchasing
FUEL EFFICIENCYCORE TEAM
Commercial
FUEL EFFICIENCYSUPPORT
TEAM
FUEL EFFICIENCYSUPPORT TEAM
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Responsibilities and Accountabilities
Identify new policy requirements
Develop Policies, ensure corporate compliance
Complete policy design
Document policies
Approve Policies
Communicate Policies
Ensure Policies are compatible with standards and best practices
Escalate non-std or missing policies
Control new policies
Fuel Policy Task Descriptions
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Phase 1 Phase 3Phase 2 Phase 4
Implementation Execution
Implementation Plan
IATA Fuel Efficiency Program – Phase 2
Fuel Program
Setup
Define Baseline
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Perform Gap Analysis Review all five operational areas – Flight Operations,
Flight Dispatch, M&E, Ground Operations, Cabin Identify initiatives Establish preliminary savings targets
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IATA Fuel Efficiency Gap Analysis
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Areas covered: Flight Dispatch – 8 areas reviewed Flight Operations – 14 areas reviewed Engineering and Maintenance – 8 areas reviewed Ground Operations – 3 areas reviewed Cabin – 4 areas reviewed
Objectives: Reduce weight Reduce drag Reduce engine specific fuel consumption
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Basic Data – Fuel Budget
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Calculated for the previous 12 month period
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B747-400 Fuel Penalty for Extra Weight
B744 weight factors 4 Hours 3.9% 7 Hours 4.1% 8 Hours 4.1%12 Hours 4.7%
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Basic Data – Fuel Penalty
Number Annual Weight Fuel penalty Fuel penalty Fuel penaltyof Aircraft Flt Hours Factor 1 kg - A/C 1 kg - Fleet 100 kg - Fleet
A330-300 12.0 57,120 3.5% 167 1,999 199,920
A320-200 28.0 74,060 3.1% 82 2,296 229,586
B747-400 06.0 28,398 4.3% 204 1,221 122,111
B777-200 12.0 58,224 3.8% 184 2,213 221,251
B737-700 28.0 76,440 3.6% 98 2,752 275,184
CRJ-200 22.0 44,000 2.0% 40 880 88,000
ATR 72 22.0 44,000 1.9% 38 836 83,600
Total 130 382,242 12,197 1,219,653
Fuel penalty to carry extra weight
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Fuel burn (penalty) in kilograms to carry 1 kg additional weight on the entire fleet for 1 year
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Initial Assessment of Potential Savings
Potable Water Fuel Penalty Water UpliftFuel burn to
carryOptimum
waterTarget Fuel Burn
CO2Reduction
Weight Reduction 1 kg - Fleet kgwater uplift
kg/yrreduction
kgImprovement Saving Kgs
MetricTons
A330-300 1,999 kg 1,350 kg 2,698,920 kg 702 kg 75% 1,052,063 kg 3,314 tA320-200 2,296 kg 120 kg 275,503 kg 49 kg 50% 56,196 kg 177 tB747-400 1,221 kg 1,606 kg 1,961,109 kg 559 kg 75% 511,625 kg 1,612 tB777-200 2,213 kg 1,238 kg 2,739,090 kg 495 kg 75% 821,486 kg 2,588 tB737-700 2,752 kg 108 kg 297,199 kg 36 kg 50% 50,196 kg 158 tCRJ-200 880 kg 50 kg 44,000 kg 33 kg 50% 14,707 kg 46 tATR 72 836 kg 50 kg 41,800 kg 34 kg 50% 14,379 kg 45 t
Total 8,057,621 kg 2,520,651 kg 7,940 t
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Example: Potable water quantity reduction
Fuel savings calculated based on water consumption of 0.3 l / pax / hr using average flight length
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IATA Fuel Efficiency Program – Phase 3Phase 1 Phase 3Phase 2 Phase 4
Implementation Execution
Fuel Program
Setup
Define Baseline
Implementation Plan
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Perform Benefit / Effort Analysis
Prioritize Initiatives Risk Analysis / Mitigation Managing the Change
Build a Business Case Define KPIs and OPMs Identify Data
Requirements / Source Develop Implementation
Plan
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Implementation Management
“Formalize” in the Planning Process:
Documented and detailed implementation plansDetailed timelines with well-defined milestonesAccurate measurements and tracking results to planQuantification of periodic and cumulative benefit to the
airline
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Rating the ProjectBENEFIT EFFORT
ID
Fuel Saving
Sta
tus Typ
e 1
Fin
an
cia
l D
ire
ct S
avi
ng
s
Typ
e 2
Fin
an
cia
l In
dir
ect
Sa
vin
gs
Oth
er
(oth
er
fina
nci
al,
cost
-wis
e r
ea
din
ess
, p
rog
ram
su
cce
ss,
rep
lica
tion
)
TO
TA
L B
EN
EF
IT
Per
sonn
el R
equi
rem
ents
(a
vera
ge F
TE
)
Pro
ject
Dur
atio
n (w
ks)
Cap
ital R
equi
rem
ents
($
MM
)
Pro
ject
Ris
k (N
one,
Low
,Med
ium
, H
igh,
Ver
yHig
h)
TO
TA
L E
FF
OR
T
RE
CO
MM
EN
DE
D
PR
IOR
ITY
Importance Weighting: 0.85 0.10 0.05 1.00 0.25 0.25 0.25 0.25 1.001 Project 9 Reduction of Potable Water 6 6 1 5.8 1 1 1 1 1.0 1
2 FUEL EFFICIENCY PROJ ECT PRIORITIZATION GUIDE
Benefit
For each measure, determine relative impact the fuel initiative has on respective measures (1,3,6,9)
Measure Weight 0 1 3 6 9
Direct Savings 0.85 <$50K $50-500K $500 - 1M $1 - 10M >$10MIndirect Savings 0.10 <$50K $50-500K $500 - 1M $1 - 10M >$10MOther * 0.05 0 1 2 3 4 - 5
Effort
For each measure, determine relative effort level required to meet initiative requirements (1,3,6,9)
Measure Weight 0 1 3 6 9
People 0.25 < 1 FTE 1 - 1.5 FTE 1.5 - 2 FTE 2 - 2.5 FTE > 2.5 FTETime Duration 0.25 < 1.5 Mo. 1.5 - 3 Mo. 3 - 4.5 Mo. 4.5 - 6 Mo. > 6 Mo.Capital Required 0.25 $0 $0 - 50K $50 - 100K $100 - 150K > 150KRisk 0.25 None Low Medium High Very High
*
Promotes cost-wise operation Improves direct support for fuel efficiency Increases probability on initiative success Replicates across the airlineCYINTECH INFORMATION SOLUTIONSDecember 10
Confidential -F
or
Dis
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CYINTECH INFORMATION SOLUTIONS
BENEFIT EFFORT
Importance Weighting: 0.50 0.30 0.20 1.00 0.25 0.25 0.25 0.25 1.00
1 Project 1 1 3 1 1.6 1 6 1 9 4.3
2 Project 9 6 1 3 3.9 1 1 1 1 1.0
3 Project 10 1 3 0 1.4 3 1 1 3 2.0
4 - -
5 - -
6 - -
7 - -
8 - -
9 - -
10 - -
Projects Input into Benefit-Effort Worksheet
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3
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Benefit
Effort
Project 9
Effort
Be
nef
it
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Setting Priorities
Start Here
CYINTECH INFORMATION SOLUTIONS
Highly Desirable OpportunitiesProjects in upper left are the most desirable projects
Potentially Desirable OpportunitiesProjects in the upper right are potentially desirable, but usually require more analysis
“Potential Quick Hits”Possibility for Kaizen event or small GB project
Least Desirable OpportunitiesProjects in the lower right are the least desirable
Individual Fuel Efficiency Initiatives
Effort
Benefit
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3
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9
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BENEFIT / EFFORTMATRIX
B/E Matrix Helps to Screen Potential ProjectsC
onfid
entia
l -F
or D
iscu
ssio
n O
nly
March 11 3
Low
Med
High
Low Med High17
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Mitigate / Eliminate the Risk of Safety and Uncertainty
Safety Risk Management
CYINTECH INFORMATION SOLUTIONS Confidential
Identify Risks
Analyze Risks
Identify Likelihood of Risk Occurrence
Analyze Consequence of Risk
Estimate Level of Risk
Evaluate Risks
Risk Reduction / MitigationCo
ns
ult
ati
on
/ C
om
mu
nic
ati
on
Ac
tio
n /
Mo
nit
or
/ R
evie
w
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Project Work Plan Project timeline and the milestones depend on:
Required resources, carry out survey Development of new servicing procedures based on the survey
results
Communication / Change Management
Internal communication to include: Ground Operations management and personnel Flight Attendants and Pilots Supply Chain / Contract Management Internal stakeholders
External communication: Ground Service Providers
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Selecting KPIs
KPIs Should be SMART
Specific – Clearly defined performance
requirementMeasurable – Defined in a quantifiable wayAchievable – Realistic, manageableRelevant – Directly related to the desired goalTime-constrained – Set to a defined time span
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KPIs are supported by trend graphs & performance measures to show progress against the specific targets in each initiative of the program
Example of an Executive Level Dashboard
Using Business Information (KPIs)
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Key Performance Indicator (KPI) & Operational Performance Measures (OPMs) The company’s KPI and supporting OPMs for the project are:
Part of the overall weight reduction initiative (KPI) Reduction of water servicing quantity in consideration of
passenger load and flight length plus other considerations
(OPM) % of flights serviced to policy level (OPM) Resultant fuel savings when comparing actual water weights
carried to pre-initiative baseline levels (OPM)
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Data Requirements
Data elements for tracking actual results Aircraft water tank capacity Projected flight time and associated policy water volume Actual water volume after servicing Volume of water remaining on arrival Number of passengers and crew Flight time (block to block) Planned consumption rate Actual consumption rate
Identify source of data Ensure data quality
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Implementation Plan
Project / Objective
Benefit / Effort, Priority
Target Savings
Issues / Tasks
Duration / ROI
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ABC AIRLINES FUEL EFFICIENCY IMPLEMENTATION PLAN
FE Project: # 9 GO - TO1 Potable Water Carriage
Objective: Reduce the amount of unnecessary water carriage
Initiative Owner: VP Ground OperationsService Provider: ASAP Ground Servicing, Inc.Data Source: Ground Service Records / Flight History / Cabin Staff Reporting
B/E Ratio: 5.8 B / 1.0 EPriority: 1ATarget Savings: 7,940 tons of CO2 Target % 50% domestic fleets, 75% international fleets
Proposal: Tailor the amount of potable water on each flight leg
Issues: Ground Service ContractsAccurate ForecastingAccurate Measurements
Implementation Tasks: 1. Establish team2. Develop survey3. Conduct survey
Duration: 3 months
Expected ROI: 500% Timeframe: April to June 2011
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IATA Fuel Efficiency Program – Phase 4Phase 1 Phase 3Phase 2 Phase 4
Fuel Program
Setup
Define Baseline
Tracking Results Analyze Results Adjust Policies and Procedures Sustain & Control
Implementation Plan
Implementation Execution
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32LFI Conference 2012 Nov. 5, 2012
Build Statistics Track actual savings against plan and identify under-performing areas Savings can be calculated from weight reduction and fuel penalty value
J an Feb Mar Apr May J un J ul Aug Sep Oct Nov DecA330-300 0.0 t 0.0 t 43.1 t 58.8 t 58.8 t 75.6 t 81.3 t 75.6 t 90.7 t 98.7 t 106.3 t 104.0 tA320-200 0.0 t 0.0 t 0.0 t 0.0 t 2.4 t 2.5 t 3.9 t 6.6 t 7.6 t 9.0 t 8.5 t 8.5 tB747-400 0.0 t 0.0 t 6.1 t 11.0 t 25.8 t 21.5 t 16.9 t 26.5 t 35.8 t 30.2 t 32.2 t 28.0 tB777-200 0.0 t 0.0 t 21.4 t 35.0 t 36.4 t 46.7 t 33.8 t 41.8 t 55.2 t 60.4 t 58.0 t 53.9 tB737-700 0.0 t 0.0 t 1.6 t 3.2 t 4.1 t 7.7 t 10.9 t 12.8 t 12.4 t 10.2 t 13.1 t 11.2 tCRJ -200 0.0 t 0.0 t 0.1 t 0.4 t 0.8 t 1.0 t 1.3 t 1.6 t 1.8 t 1.8 t 1.7 t 1.2 tATR 72 0.0 t 0.0 t 0.0 t 0.1 t 0.4 t 0.8 t 1.0 t 1.4 t 1.4 t 1.8 t 1.4 t 2.0 tMonthly 0.0 t 0.0 t 72.2 t 108.4 t 128.7 t 155.8 t 149.1 t 166.3 t 204.9 t 212.1 t 221.3 t 208.8 tCumulative 0.0 t 0.0 t 72.2 t 180.6 t 309.3 t 465.1 t 614.2 t 780.5 t 985.4 t 1,197.5 t 1,418.7 t 1,627.5 t
Actual Savings per Fleet
J an Feb Mar Apr May J un J ul Aug Sep Oct Nov DecA330-300 1,350 kg 1,350 kg 1,100 kg 1,000 kg 1,000 kg 950 kg 900 kg 950 kg 900 kg 850 kg 800 kg 800 kgA320-200 120 kg 120 kg 120 kg 120 kg 110 kg 110 kg 105 kg 95 kg 90 kg 85 kg 85 kg 85 kgB747-400 1,606 kg 1,606 kg 1,550 kg 1,500 kg 1,350 kg 1,400 kg 1,450 kg 1,350 kg 1,250 kg 1,300 kg 1,250 kg 1,250 kgB777-200 1,238 kg 1,238 kg 1,125 kg 1,050 kg 1,050 kg 1,000 kg 1,075 kg 1,025 kg 950 kg 900 kg 900 kg 900 kgB737-700 108 kg 108 kg 101 kg 95 kg 92 kg 77 kg 62 kg 55 kg 52 kg 57 kg 45 kg 54 kgCRJ -200 50 kg 50 kg 49 kg 45 kg 39 kg 37 kg 34 kg 30 kg 27 kg 26 kg 27 kg 31 kgATR 72 50 kg 50 kg 50 kg 48 kg 44 kg 39 kg 36 kg 31 kg 29 kg 25 kg 28 kg 20 kg
Actual Average Potable Water per Flight
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Monitor Performance
Potable Water Actual Versus Target and Plan A330-300
0.0 0.0
43.1
58.8 58.8
75.681.3
75.6
90.798.7
106.3 104.0
93.988.4 90.6 88.4 88.4
99.595.0
99.5106.1 103.9 101.7 99.5
0.08.4
43.1
75.684.0
104.099.3
104.0110.9 108.6 106.3 104.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Tons
/ m
onth
Actual Target Plan
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Monitor Performance Look for significant variance from plan
Implement corrective action accordingly Potable Water Actual, Target and Plan A330-300 Total
(Tons / Year)
1,154.8 t947.9 t792.8 t
0.0 t 200.0 t 400.0 t 600.0 t 800.0 t 1,000.0 t 1,200.0 t 1,400.0 t
Target Actual Plan
Continuous progress check Identify any implementation issues Improve procedures as necessary Institutionalize changes for sustained results Modify organization structure if required
Adjust Policies and Procedures
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Institutionalize the ImprovementsInstitutionalize the Improvements
Establish control plan, metrics, and monitoring, transfer control to process owners
Track and Control Results
• Establish / Maintain process ownership
• Manage to new metrics• Ensure projects are linked to
strategic or financial targets
Capture and ExtendProject Knowledge
• Perform a Project Review• Validate project completion• Archive and share materials
Audit the Results
• Ensure the improved process remains intact
• Use data / statistics to validate
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To sustain and control results:
37
Fuel Book 5th Edition & Implementation Guidance Material
Fuel Book 5th edition highlights: Time dependent maintenance costs Aircraft performance monitoring (APM)
Released: October 2011
Implementation Guidance Material: Setting priorities Risk assessment Building a strong business case Program management Metrics for tracking implementation Key Performance Indicators
Released: June 20115th edition
Fuel Efficiency ProgramImplementation Guidance Material
Nov. 5, 2012LFI Conference 2012
3838IATA Fuel Efficiency Regional Workshop - Amman
Oct 6-7, 200938IATA Fuel Efficiency Regional Workshop - Geneva
June 9-10, 2009
38 23 Jan 2009Singapore Airlines
Thank you!
Thomas FODORAssistant Director,Engineering & MaintenanceOperations Department www.iata.org
International Air Transport AssociationIATA Head Office800 Place VictoriaP.O. Box 113Montreal, QC H4Z 1M1CanadaTel.: +1 +1 (514) 874 0202 Ext. 3952Fax: +1 +1 (514) 874 2661Mobile: +1 (514) 927 3249E-Mail: [email protected]