Seattle Consulting, Inc.

The Value of Warehouse Outsourcing at Air Canada

As airlines continue to struggle with rising fuel costs and increased competition, many are looking at all options for streamlining their operations. Seattle Consulting was engaged by a major Canadian third party logistics provider (3PL) to assist it in evaluating the potential outsourcing of Air Canada's spare parts warehousing operations.

Prior to arriving on-site, Seattle Consulting worked with the Canadian 3PL to define an assessment approach and a methodology for quantifying the business value of the potential outsourcing. Potential sources of value were identified in cost reduction, revenue growth, improved customer service and the injection of capital. That model is graphically depicted below.

Together with a team from the Canadian 3PL and Air Canada Technical Services, Seattle Consulting reviewed all the major processes within the warehouse operations, compared the results to industry best practices and defined potential opportunities for improvement. The various Business and Contractual Blueprints were then developed.

In this particular instance the outsourcing did not go through, due to a number of labor issues. The results of the assessment, however, were used by Air Canada to target improvements in its warehouse operations.