This past weekend, Southwest Airlines experienced more cancellations and delays than any other U.S. airline, causing the company to declare a rare state of ‘operational emergency.’ Since Friday, more than 100 flights have been canceled due to maintenance, putting around 40 planes a day out of service – more than double the airline’s usual average. They’re still struggling to keep up with such a high level of aircraft downtime, but with about 5% of their 750-plane fleet down for the count, it’s certainly been a tough weekend for Southwest.
Unfortunately, this isn’t the first time a major airline has paid the costly price of downtime. A few years ago, another airline’s major outage was caused by a failed Automatic Transfer Switch (ATS) switchgear, triggering the data center to lose its main power source. The incident caused the airline to cancel around 1,780 flights and ended up costing the company nearly $150 million in downtime-related costs.
Just one day of downtime can cause any company to take a massive, unexpected operational hit, but emergencies such as these prove that airlines have a lot more at stake when designing and managing critical service operations, especially in an industry so heavily reliant on equipment uptime. Unplanned maintenance events can lead to risks like damaged brand reputation, lost revenue and, most critically, decreased customer satisfaction and loyalty. But, by learning from the following three lessons, and putting the right technologies and resources in place, brands can mitigate risks like these and avoid weekends like these altogether.
1. Train for uptime now to avoid resource threats later.
In a memo obtained by CBS News, Southwest called for ‘all-hands-on-deck’ in the wake of the operational emergency, warning that maintenance employees could face termination for any unexcused absences. This state of emergency memo and its ‘threat of termination’ is, understandably, causing the mechanics’ union to express concern, as it gives the airline the ability to assign longer work hours and change staffing assignments. The threat also follows an earlier CBS investigation into Southwest mechanics’ complaints of undue pressure to put aircrafts back in service faster, which, according to former NTSB member John Goglia, is an indication of deeper problems for the company. “This kind of stress on the operation is not good,” says Goglia, proving that by prioritizing training around uptime now, brands can avoid putting their own service team members at unnecessary risk in times of emergency.
But, this kind of proactivity isn’t always top of mind – that is, until it’s too late. In fact, many brands see servitization, the selling of service and maximized uptime as opposed to the selling of products, as a potential detriment to the profit extraction of the service side of business. Most service organizations are already profitable, so they’re not currently demanding any major changes. But, in a world where most customers would rather plan their maintenance, and preferably eliminate downtime, repairs need to be preventative for the sake of both the service technicians and the customers.
That’s why organizations who invest in training early are ahead of the game. Industry leaders often say that most companies they see don’t focus enough on training – they simply try to find the quickest way to onboard. But, a relentless pursuit of service perfection through training and development is what brings people together. And, in the face of emergencies such as these, brands are starting to reckon with the need to assess all areas of their organizations to ensure that each function is fully prepared to make the shift to servitization now and create proactive plans to put resources in place that address operational deficiencies later.
2. Budget for the True Cost of Downtime, not just the revenue lost.
It’s no secret that downtime can impact your schedules, your brand reputation and your overall profit potential, making it crucial for entire organizations to be proactive. But, to understand the benefits of maximizing product uptime, we must first acknowledge the true cost of downtime. Generally, downtime can be defined as any period of time when something such as a network, factory, or piece of machinery is not in operation – specifically as a result of some sort of failure or malfunction – causing lost business opportunities.
But, true downtime cost (TDC) includes all the business support costs dedicated to maintenance and repair time, plus the potential lost business opportunity costs. And, from tangible costs lost capacity, lost production, direct labor and inventory, to the intangibles like responsiveness, stress, and reputation, some TDCs can be difficult to earn back. In fact, according to Don Fitchett, founder of Business Industrial Network, predictive maintenance and analytics like TDC come from “analyzing all cost factors associated with downtime, and using this information for cost justification and day to day management decisions.” But in the case of many manufacturers, “this data is already being collected and simply needs to be consolidated and organized according to the TDC guidelines.”
So, what’s actually at the root of this TDC? In many cases, it’s a company’s reliance on a preventative maintenance model rather than a predictive maintenance model. While the two seem (and even sound) similar, preventative maintenance is actually just maintenance based on fixed schedules like time, events, and meter readings, and it’s a known method in many maintenance processes. But, thankfully for airlines like Southwest, we’re headed into a much more uptime-focused way of thinking, with predictive technologies and strategies at the core.
3. Prioritize the shift from a break-fix service model to an uptime guarantee.
In a statement to CBS, Southwest says it is working to minimize the impact to customers of the out-of-service planes. But the fastest way companies can navigate unplanned downtime and operational emergencies such as this one, while still increasing customer satisfaction and improving financial performance, is to redefine after-sales service – from a break-fix, reactive model, to a subscription-based, uptime guarantee. And, because of the catastrophic TDC for plane fleets, many airlines are particularly interested in predicting mechanical failures in advance so that they can reduce flight delays or cancellations.
With the appropriate technology in place that will enable them to predict the probability of aircrafts being delayed or canceled in the future, companies can base predictive maintenance on relevant data sources such as maintenance history and flight route information. In any case, after-sales service operational failure can cause widespread downtime, and brands could ultimately suffer the consequences. Business operations can be very transactional, and you won’t always know what the blips on the radar actually are until after the failure occurs. So, instead of transactional, reactionary work, brands have to start thinking about ways to be more anticipatory.
Despite this Southwest debacle, the airline industry as a whole is known for its hyper-focus on uptime – and for being the most ahead of the curve when compared to their manufacturing peers in other industries. In fact, Rolls-Royce first championed the ‘Power-by-the-Hour’ concept in the early 1960s, where customers pay a fixed cost per hour for uptime. But, being ahead of the curve doesn’t mean companies should stop innovating – more companies are moving to a Performance-based Logistics (PBL) model, where the industry is moving away from the decades-old practice of selling service parts to contracts that are based on expected performance outcomes. And, with this shift comes added responsibility for the original equipment manufacturer (OEM).
So, ultimately, optimizing overall service performance means more than just optimizing individual service occurrences. True optimization addresses the synergies between all processes throughout the after-sales service journey, from beginning to end. And, as servitization forces companies to evolve from that reactive, break-fix model, to one focused on maximizing product uptime, the ultimate goal is to empower organizations to fully transform their businesses into service-driven machines. With that lever, companies can eventually bypass the devastation of an ‘operational emergency’ completely.
Download the 2019 After-Sales Service Predictions Orange Paper today to learn how 2019 will be the year that manufacturers start to seriously acknowledge the time needed to accelerate their shift toward servitization and maximizing product uptime.