Wednesday, December 31, 2014

Time to say good bye

As some of you may know, I will change jobs after working a decade in the software and consulting business for airports. I will be managing Compendio Bildungsmedien AG, a Swiss textbook publishing company. We design and develop textbooks, course and training materials in printed and digital form.

It has been a pleasure working with each and every one of you over the years and I thank you for being co-workers of the highest caliber and for helping foster my personal and professional growth along the way.

The years I spent in the airport industry were challenging, interesting and enjoyable and my decision to leave was a difficult one to make; however, I have been presented with an excellent opportunity and I would be remiss if I did not pursue it.

Throughout the years I was always proud of the work we accomplished and I will most certainly miss the opportunity to work with each of you. I wish you all the very best in your future endeavors; both personal and professional, and I thank you again for your positive contributions to my professional career, and making my time spent both fulfilling and enjoyable.

Thursday, June 5, 2014

Getting the best out of your operations control - part 1

"You can’t motivate people, but you can create an environment that encourages them to be motivated." In his article Getting the Best Out of People in the Workplace, Les Landes covers a number of key areas to achieve that goal. What applies to the workplace in general, surely applies to operations control.

This first post about 'getting the best out of your operations control' addresses the operations control processes. Les Landers points out that "if people don’t have clearly defined processes for the tasks that they’re expected to do, they are likely to struggle with how to carry out the tasks." What follows is how a high-level model for an integrated operations control. Such a model should apply for each process being monitored and steered, whether the airport can manage the process directly or not.

Let us take an example of the passenger flow, specifically passenger screening. Flight schedule, resource allocation, capacity information and standard processing times can be used to predict expected passengers and expected waiting times. In the best case, booked passenger numbers are available from the airlines (split by transfer and local passengers). During the day, planned information is automatically and dynamically updated with status changes, such as cancellations, delays, passenger number changes, gate changes, etc. which make the predictions more valuable. Automatically triggered warnings alert coordinators in operations control about potential bottlenecks (e.g. expected waiting times even with all lines open). Pro-active actions can be taken like delaying gate information to passengers and changing the gate. An actual waiting time at a passenger screening, automatically detected or manually reported, will trigger an alert and associated action. Such an action can be, obviously, to open more lines. Another action, maybe not that obvious, would be to first provide a list of flights which are currently being processed at security screening and which maybe become critical to complete boarding in time. Then, passengers of that flight can be directly addressed at the screening point. The analysis and reporting does not only cater for statistics. It should also analyse how well the prediction was, in order to adjust the algorithm. And provide feedback to planning and scheduling.

Now apply the same approach and technology to other processes.

Let's see what will be in part 2 of the series on how to get the best out your operations control. Maybe about Constructive Accountability?

Monday, February 3, 2014

Decisions should be based on efficiency and not on whether there is budget

Budgeting is at the heart of how nearly all large corporations are managed today. Therefore managers cannot be blamed if they don't care about costs as long as they stay within budget. At the same time we want to nurture entrepreneurial spirit and empower managers at all levels. Therefore, in addition to the traditional budgeting process, we may have to establish a more encompassing performance management addressing efficiency and productivity goals.

Let us look at two real live examples from airport operation of an airport with expected passenger and cargo growth:

Passenger Bus Operation: Based on expected passenger growth, there is budget to employ more staff this year.

Cargo Operation: The head of cargo operation has budget to expand the warehouse this year.

Both investments will not be ideal if the growth does actually not happen and if the growth only occurs during peak times.

Suppose we gave them efficiency targets, expressed as cost per Workload Unit (WLU). For the passenger bus operation the WLU would be number of passengers transported. For cargo operation it would be tons of cargo processed.

Now instead of following just the budget, the manager responsible for passenger buses manages his WLU cost by contracting drivers for buses from a transport company to cover the highest traffic peaks of the day. And the head of cargo operation defers an expansion because this would increase his WLU cost. He instead rents storage space in an external building until he has sufficient volume to keep his WLU costs on an acceptable level.

This approach provides growth-independent performance indicators, a simple and direct cost control and empowers managers to make entrepreneurial decisions. There may be some challenges to implement this model. Firstly, such a paradigm shift from budget control to efficiency targets creates resistance. On all levels. Secondly, the budgeting process will be more demanding because we will have a budget and WLU cost targets. Thirdly, it is important, but not easy, to choose correct WLU because they need to be relevant for the bottom line.

This model is not about getting rid of budgeting but about getting rid of the budgeting mindset. The potential benefits are extensive:
  • It is a scalable approach to be used by all hierarchical levels. The higher the level, the more consolidated the view.
  • Managers will start to manage differently. Before they make a decision with cost relevance, they will carefully assess the impact on your WLU costs, something they would not necessarily do with a budget.
  • You breed entrepreneurs and it actually leads to a culture change.
  • Managers will learn a lot about the composition of the costs of their work load units, because whenever the costs go up or down they have to find out the reason.
  • Then, when they know where the big levers are, they’ll start to pull them to get a better correlation between production and costs.
  • For the controllers it is much more simple to do their job. (if you ask a controller today, he will tell you that his function is, to make sure that the managers act like entrepreneurs).
  • This is a self-regulating system: whatever happens to the production, the responsible manager will act immediately to stay within his work load unit cost targets.
There is an ACI Guide to Airport Performance available which contains a useful set of performance measures across a number of categories. It does not provide, however, guidance on the steps airports have to take to develop, implement, and refine their performance management systems.