Tuesday, April 30, 2013
Lovejoy, the Airlines, and Big Data
A deficit in any of one these will generally result in more of the other two. For an operations-specific example, please see the guest post I wrote for shmula.
But Lovejoy's Triangle applies just as much in a service business as it does in a manufacturing one. Take, for example, the airlines. They have capacity in the form of planes in the air. But over the years, as it has become ever more difficult to maintain profitability, the airlines have slashed capacity to the core. This means fewer planes, fewer and less frequent flights, and more people per flight. (When was the last time you were on a plane that wasn't completely full?) This would seem like good business, right? Improved capital asset utilization.
Of course the simple solution is to add more capacity -- more planes flying. But since that would reduce profitability even further it's not likely to happen anytime soon. Instead the airlines have come to rely more heavily on the third leg of Lovejoy's Triangle, Information. Better information improves their ability to forecast demand, predict the weather, maintain their fleets, even fly the planes. This allows them to operate on a curve further to the right, and therefore allows them to run at higher and higher capacity with less danger of ballooning inventory.
But collecting and processing information is nothing new to the airlines. They amass volumes of data about passengers and planes everyday. And they generally use it to pretty good effect. So how can they do it better? That's where big data comes in. Even though airlines have tons of data, most of it exists in silos, disparate databases that don't talk to one another or allow a holistic analysis of the information. Here's one example of big data applicability from one of the articles referenced below:
"For example, a boarding-gate agent has a long queue in front of her with passengers waiting to ask questions (seat assignments, meals, onboard entertainment, etc). It could take 30 minutes or more to work her way through the queue. If she had a dashboard informing her they were only 10 minutes from departure and that 15 passengers onboard were in danger of missing their connecting flights, and they were all frequent flyers, it could influence her behavior. Instead of trying to answer each question in the queue, she could focus on getting the plane underway - because that would do more for passenger satisfaction."
Whether in manufacturing, service, healthcare, or virtually any other industry, understanding the implications of Lovejoy's Triangle can provide key insights into how to run your business. Big data is an important example of this today.
Articles for Further Reading:
IN FOCUS: How airlines are handling big data
BIG DATA, BIG INSIGHTS
Posted by Evan Durant at 8:00 AM