Figure 3: Combining the Check-in and retailing processes for greater efficiency
Luggage and Baggage Process Improvements
Another major area of process improvement McCarran needed to focus on was luggage and baggage handling. The airport had been losing between 10% to 30% of all bags, leading to high levels of customer dissatisfaction and many manual processes attempting to compensate for the confusion around this broken process. Relying on Radio Frequency Identification Devices (RFID) McCarran piloted several programs for baggage tagging, management and retrieval using the RFID standard. In the retail industry, Wal-Mart has been a pioneer in establishing higher levels of performance in logistics and supply chain performance using RFID, and McCarran's many efforts have lead to best practices for the U.S. being defined by their efforts. Figure 4 shows a comparable business case McCarran's management used for defining the ROI of implementing RFID systems with 52% of bags tagged as of January 2007 and read rates of 99%. These results combine for best practices in the context of RFID being used to overcome the queuing problems McCarran has with freight and luggage.
Figure 4: RFID Analysis Based on Queuing Theory
Using EOQ Modeling theory combining RFID illustrate the implications of queuing optimization on orthogonally-defined processes including luggage and freight management. McCarran's approach to RFID pilots and implementation has been very rapid due to the reliance on queuing approaches as defined by Lui and Wang. RFID's implementation at McCarran would have failed if it had not been for taking a more process-centric view of queuing and EOQ strategy definition relating to both freight and luggage. The results of re-defining processes first has been an impressive 30% reduction in lost luggage and a more efficient luggage and freight handling process measured by a reduction in cost per bag handled.
Service-oriented Architectures Synchronize Service
Airports are starting to see the positive ROIs possible due to tight integration of systems across functional boundaries. Without strong integration built on an agile and intelligent IT platform, no service provider within an airport can hope to survive in the turbulent, unpredictable, and accelerating competitive environments that typify airport operations today.
What's needed is an agile IT architecture that can align on the core supplier, buyer, and customer-facing processes and re-align not only IT resources, but serve as a catalyst for capturing knowledge and repurposing it throughout an airport services operation enterprise. Clearly there is a strong need for SOAs as a result of these dynamics.
What makes SOA highly differentiated as an IT strategy is the potential it provides to turn what had been exclusively a cost center into a business center, where P&L can be determined by the contribution of information to decisions. To look at SOA as purely a cost reduction strategy is short-sighted, myopic, and will lead many manufacturing companies to mistakenly move towards database and master records consolidation in the hopes SOA can answer the shortfall. SOA is clearly not a cost reduction strategy, yet the business benefits it provides of making manufacturing more attuned to customers and suppliers, in short becoming more attuned to its own value chain, are where the true ROI of SOA is today according to Study in Contrasts (2006).
The bottom line is that SOA delivers competitive advantages by synchronizing supply chains, service organizations and service functions to better align with customer demands. SOA is a new competitive weapon that services organizations are discovering that uses information assets not as historical mile markers, but as the fuel to propel their companies into more precisely aligned strategies for sensing and responding to demand. SOAs are serving also as the foundation for furthering airport operations by also including a series of analytical applications for tracking and reporting back key performance indicator's trending over time. The use of these indicators in the form of a scorecard is also critical to best practices in services re-definition.
Conclusions
The use of queuing specifically...
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