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A Business in Transit

DNATA, the largest airport terminal cargo operator in the Middle East, uses SAS to forecast workloads and streamline productivity

An airport cargo transit service company faces many of the same supply and demand challenges as any other business. However, a major difference is that the amount of cargo traffic in a major airport swings a wide pendulum from day to day, even from hour to hour, meaning that the unpredictability of volumes and pressure on the supplier are spectacularly high. Failure to handle a day's work can have disastrous consequences.

Tight margins mean that DNATA, the largest cargo terminal operator in the Middle East region and sole handling agent at Dubai International Airport, needs to not only be prepared for unusually busy times, but to be prepared for slow times as well. Because there is no room for under-utilization in today's airport cargo business, DNATA chose SAS to forecast the equipment, facilities and manpower it needs to stay competitive.

Heavy Going
DNATA operates 24/7 and employs over 5000 staff at the airport, of which 1000 are deployed in the cargo terminals. Dubai International Airport handles over 800,000 tons of cargo per annum, 50 percent of which is transferred from one aircraft to another, thus effectively being handled twice. In fact, according to the Airports Council International (ACI), Dubai International ranks 20th worldwide in terms of cargo volumes handled.

"Dubai International Airport is by far the largest, and busiest, airport in the Middle East and has been growing at an incredible double-digit pace for the last 12 years," says Jean-Pierre DePauw, Senior General Manager of DNATA Cargo. "Over 100 airlines are operating flights through Dubai and use DNATA's services."

Additionally, there is heavy competition from neighboring airports. The United Arab Emirates, for its small landmass, has seven international airports. "The airports require high service quality at a low cost. In addition, airline volumes are unpredictable, heavily fluctuating from flight to flight and day to day. The airlines are unable to give us accurate forecasts of expected volumes in and out of Dubai. You can imagine what a challenging environment we are in," says DePauw. DNATA decided to create a system that would allow them to plan manpower, equipment and facilities in the short, mid, and long term to meet service quality targets with maximum productivity.

Seeking Continuous Quality Improvement
"DNATA Cargo is a total quality management (TQM) driven organization. We therefore strive for continuous improvement in all areas," continues DePauw. "We measure every process and sub-process for every shipment that we handle against a time standard, and gaps are used as opportunities for improvement. Our inability to arrive at volume forecast with a decent accuracy level was not only affecting our quality measures, it was also costing us dearly.

"The surge in volumes handled at Dubai International Airport, and the corresponding need to optimize the manpower deployed to handle these volumes, meant that we needed an analytical tool capable of giving the forecasted volumes and statistical inferences to derive a manpower forecast with an accuracy of plus or minus 10 to 15 percent, which we could then fine tune to around five percent over a period of time," DePauw explains.

"For fine tuning the forecast, the data needed to be a subset based on various parameters like different types of cargo, area-wise import and export volumes and also sector-wise volumes, and so on. We finally embarked on a worldwide search to find a vendor and package that could help us achieve the forecasting accuracy we needed. Once the selection was narrowed we put together a team of experienced industrial and software engineers for further evaluation, and to meet the specific requirements of the business, such as incorporating a Graphical User Interface (GUI) system for sub-setting data at shift level based on product and service classification."

Moving Forward with SAS
According to DePauw, SAS was chosen for this project at the conclusion of the exhaustive audit of the available solutions. "We selected SAS based on a market survey of 15 to 20 packages. First of all, the support SAS offered was excellent. But SAS topped the list based on their comprehensive coverage of statistical tools and models, ability to interface with network packages and compatibility with desktop software. Because SAS software had the capability of drilling down the database and giving us the required information as well as the forecast, the decision to go for SAS was easy."

Ramesh Mamidala, BSM – Cargo & Logistics, expands on the factors influencing DNATA's choice. "As the competition increased for transit cargo handlers in early 1995, there was corresponding pressure on prices which had severe impact on our yields and profitability. While offering competitive rates to our customers to retain them, we still had to protect and improve our bottom line. The only way to do that was through optimizing the use of our resources, as resources contribute to more than 70 percent of our costs, and eliminating elements that did not add value to our operations.

"We wanted to achieve that through improved operations planning and resource deployment. Obviously, forecasting became very important in our efforts. So, we searched for a sophisticated and comprehensive forecasting and statistical package that could deliver what was expected, and SAS was the best match. Nothing came as close as SAS."

Saving Time, Fine-Tuning Resources
DNATA is now able to extract various types of required information, such as sector-wise volumes, types of cargo and types of aircraft loads, which previously had required more time. "Before we had SAS, our IT department had to get the download from the mainframe and we normally experienced a waiting time of a week to ten days," says Mamidala.

According to DePauw, SAS plays an important role in new business development and strategy for DNATA. "On the whole, SAS has helped in developing MIS for strategic inferences and future long-term plans. For the short term it has helped us to derive data in various permutations and combinations to fine-tune such resources requirements manpower, equipment and facilities to meet the peak loads.

"For the past five years SAS has been used by all operations managers to derive volume forecasts, which helps them to plan their revenue and expenses as part of an annual budget exercise. Furthermore, planning and shop floor managers use SAS on a daily basis to forecast, plan and manage the optimal deployment of resources in operational areas. SAS is also used to project a long term forecast for facilities planning and the expansion of the cargo terminal operations."

In addition, DNATA uses SAS to communicate with upper management and external organizations. Senior management and such corporate departments such as Performance Development, International Affairs and Corporate Development Information also use information derived from SAS for their cargo planning and development needs. Government agencies like the Department of Civil Aviation also receive SAS-generated forecasts, with regular updates, in order to plan airport infrastructure requirements.

A Clear Forecast
An important aspect to DNATA's success is the reliability of the forecasts themselves. DePauw states: "In using SAS, the forecast inaccuracy rate has been substantially reduced – to less than ten percent. This has led to a considerable improvement in the decision making process, particularly in regard to facility expansion and new projects."

"The planning process and credibility of the process has improved significantly at all levels," concludes Mamidala. "The bottom line where SAS is concerned is that we were able to improve our productivity. The improvement is expressed in kilos handled per man hour worked, from 239 kg per hour worked when we started our measurements in 1993 to now over 700 kg per hour worked as our 2002 measurements show. No doubt, a large portion of this gain can be directly attributed to our using SAS to more accurately forecast our staffing, equipment and facility needs, all of which help us achieve greater efficiency and boost our competitiveness in the region."

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DNATA

Challenge:
Unpredictable cargo volumes, stiff competition, inability to plan for manpower, facilities equipment
Solution:
DNATA uses SAS forecasting to achieve accurate planning and volume forecasts, greater efficiency and increased competitiveness

In using SAS, the forecast inaccuracy rate has been substantially reduced – to less than ten percent. This has led to a considerable improvement in the decision making process, particularly in regard to facility expansion and new projects.

Jean-Pierre DePauw

senior general manager, DNATA

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