Virgin Atlantic – Supplying the Skies
The air transport sector has faced challenging times of late, and supply chain management has played a vital role in getting it back on its feet.
Virgin Atlantic is a household name in Atlantic air travel, and as Head of Supply Chain and Commercial for the company, Martyn Haines play an essential role in keeping its planes in the air. Haines is in charge of ensuring that Aircraft Maintenance has the aircraft parts and material needed to keep Virgin Atlantic’s fleet flying.
This includes scheduled maintenance, any defects that arise from those requirements, and defects that arise during the aircraft operation.
Virgin Atlantic’s supply chain activities include logistics and warehouse management, material inventory and tooling management, order management for both new orders and managing repairs of components, and commercial and financial management.
There are over 90,000 different parts necessary to keep its planes running, and Supply Chain’s role is to not only ensure optimum availability for operational requirements but to do it cost-effectively.
“Virgin Atlantic prides itself on the onboard service offered to customers and therefore our onboard cabin product is a major part of our parts and material provision service,” Haines says.
A Demanding Supply Chain
Of course, the role of the supply chain within Virgin Atlantic has been highlighted during the difficult events of the last couple of years.
“The Covid pandemic was difficult for our airline, and like others, we had to make some tough decisions to be able to survive,” Haines recalls.
This included some decisions to maintain cash flow that impacted the company’s large supplier base. Previous payment terms and trade creditor adjustments were made to ensure survival and a committed focus on the health, safety and security of Virgin Atlantic’s people and customers.
Some warehousing activities were outsourced, and the firm expanded its partnership with its incumbent freight and logistics provider. Virgin Atlantic also simplified its operating fleets from five types of aircraft down to three, making a significant difference to the inventory Haines needed to manage.
Virgin Atlantic currently flies three different aircraft types, including 17 Boeing 787-9s, ten Airbus A330-300s, and nine Airbus A350-1000s. The airline is also due to take delivery of its first Airbus A330-900 later this year.
“During the Covid period, when some of our fleet was grounded and the remainder was flying with less utilisation, they all still needed to be maintained in accordance with our Approved Maintenance Programme,” Haines points out. “We still needed to provide parts and material provision service to our engineering teams, but due to the business’s financial position, and the general supply chain shortage, we used much of our material held in stock, but struggled to re-stock at the rates normally required.”
Even in the post-lockdown period, worldwide supply chains continue to experience stress and Virgin Atlantic’s suppliers report that demand is outpacing supply.
And so, Haines has ensured the airline’s supply chain and logistics operations can adapt to this new, post-Covid world.
“Most importantly we have worked hard to maintain good supplier relationships with open communication on our financial recovery and our future requirements,” Haines says. “We have also worked hard to overcome the shortfalls of our automated inventory management systems, and much of this has been achieved through micro-management of our problem areas.”
Some of this has required interim process changes and a focused approach to metrics reporting, and target setting. Haines is not expecting these issues to disappear overnight, so he is setting staged recovery targets depending on the criticality of the parts and material involved.
The most difficult areas to recover are the parts and materials necessary for the upkeep of passenger cabins.
“We are proud of the service we offer to our customers, and we need to ensure we have all parts so our cabin crew can provide that optimum service,” Haines explains. “These parts and components are often bespoke to our different fleets of aircraft and we have found this particularly difficult to manage during the post-Covid period.”
Virgin Atlantic’s recovery approach has included working with different suppliers and the use of aircraft manufacturers to encourage good supplier management behaviour amongst the large supplier base, and an increased level of inventory investment to protect the forthcoming challenges.
To achieve this, strong supplier relationships have been essential, which is a challenge when things are changing so quickly.
“Many of these essential relationships previously existed, but we have seen a change in personnel with many suppliers,” Haines tells us. “This has meant that we have had to re-establish through new contacts and in many cases, this has been via video conferencing due to the previous travel restrictions.”
While the technology has changed, however, many of the techniques and priorities involved have not.
“Whilst we use the good old-fashioned Supplier Relationship Management techniques, we have needed to make some adjustments,” says Haines.
As an example, Haines points to Brexit legislation changes which require European component repair shops to release repaired components with different paperwork than what was required pre-Brexit.
“We have had to forge relationships with new suppliers, and we quite often need to bring work back to the UK for repair,” Haines says.
Virgin Atlantic’s key relationships for aircraft and engine component repair are with Air France, KLM and Rolls Royce. These long-standing relationships have been established for nearly 30 years and Virgin Atlantic has reinforced these during the pandemic period.
“Whilst they have their own challenges with the worldwide supply chain chaos, we have been able to draw on their expertise and scale to support our operational requirements,” says Haines.
The Long View
While it is easy to see the short-term impact of the Covid pandemic and the ensuing logistics and supply chain issues that followed it, the crisis has also had a long-term effect on the way Virgin Atlantic does business.
“One of our changes was to outsource elements of our warehousing to our established logistics partner, Bollore Logistics UK Ltd,” Haines says.
To rationalise its property footprint, Virgin Atlantic closed warehouse facilities at both its Gatwick Hangar and head office in Crawley, transferring inventory to Bollore’s facilities at Heathrow and Cardiff. Whilst Warehouse & Logistics providers are providing many services, it is all overseen by Virgin Atlantic’s Quality Assurance oversight.
“This transition has been challenging during the covid pandemic, but we are confident that the services are now being supplied by a world-class provider in state-of-the-art warehousing facilities close to our main operating base at London Heathrow,” Haines tells us.
Looking further forward, however, Haines has even bigger plans for the airline.
“Our biggest plan for future Supply Chain improvements is via our Engineering Transformation Programme which will see the implementation of a new ERP solution within the next 12 months,” he says. “We are implementing Trax eMRO and already have a sizeable team working to transition from our existing IT systems. We had already prepared for this transition before the pandemic, but this was put on hold for obvious reasons.”
The new product provides the means to manage and maintain all information generated by an aviation management organisation, but also offers major benefits to Virgin Atlantic’s supply chain processes and effectiveness, providing sophisticated materials management functionality to control acquisition as use of aircraft parts and material.
“This will include improved levels of accuracy in inventory management, improvements to shipping and receipting, and elimination of interrupted work due to material availability,” Haines says. “Also, the improved integration with our corporate ERP system and interface with other recognised B2B connectivity will enhance our performance in supply chain management.”