Basic Techniques in Engineering Management - Case Study Example

Engineering Management Name Course Lecturer Date Abstract Basic techniques needed in engineering management as well as the understanding on financial resources are keys to success in any Maintenance Repair and Overhaul Organization. In order to emphasize on the importance of these key techniques, this paper discusses on Livewel Aviation Services. Livewel Aviation Services is the leading airport service provider in India and is interested in investing in Maintenance repair and overhaul facility in Dubai. In this respect, the paper analyzes the factors that affect the success or failure of strategy planning in the organization; it proposes an organizational structure for the organization, the business and marketing plan, and the control and leading activities. It concludes by arguing that by implementing the proposed activities, Livewel aviation MRO stands a better chance to be one of the successful MRO to make a late successful entry to the market. Table of Contents Abstract 2 Introduction 4 Factors Affecting Success or Failure of Strategy Planning 5 Competition 5 International Certification standards 5 Quality of products used 6 Specification Complexities and Inadequacy 6 Skilled Human Resources 7 Large and Diverse Spend Data 8 Automation Imperative 8 Commercial Jet transport 9 Proposed Organizational Chart 9 Business and Marketing plans 14 The Marketing Planning Process 14 Control and Management 18 Findings and recommendations 19 References: 21 Introduction Livewel Aviation Services is the leading airport service provider in India and is interested in investing in Maintenance repair and overhaul facility in Dubai. The facility will cost the service company an approximate cost of US$ 80 million and will be one of the best and fully equipped MRO ever established in Dubai. The company has entered an agreement with a local airport called Jabel so as to set up the world class the facility. Like any other aviation facility, it will have to be certified as an Approved Maintenance Organization (AMO) so as to meet international certification standards and will specialize in line maintenance; c-checks, aircraft painting and refurbishment of the aircraft cabin interior. The MRO also will be modernized and spacious enough to handle wide bodied aircrafts like the Airbus A-380 and b-787 Dreamliner. Nevertheless, as a full service MRO, Livewel Service Aviation will provide Engineering support, inventory management, component support, engine overhaul and engine condition monitoring services. Also, the facility will conduct Airfoils repairs, turbines and engines, auxiliary power units, Airframes, Electric and electronic systems, landing gear systems, dynamic components, propellers, coverings, corrosion, protection, interior arrangement and redesign. Set to be the Middle East leading MRO, Livewel will sit on a 24,000 plot of land with hired aviation professionals of about 500 during its inception. Being a new venture for the service provider company, it remains to be seen whether it can overcome the challenges that other giant MROs like the SR Technics, Lufthansa Technics and the Air France industries – KLM Engineering and Maintenance facility have lived with (Aucoin, 2002). Factors Affecting Success or Failure of Strategy Planning Since high demand for, maintenance, Repair and overhaul services has been witnessed with the two major Manufacturing companies, i.e. Boeing and Airbus, the facility is considering to make the cost of the services affordable. Also in a bid to lower the cost and increased competitive advantage, big airlines have resulted outsourcing their maintenance task to MROs which are the third party organization (Blanchard, 2008). Competition India and other countries like Mexico imposes cost fee to new companies interested in joining the MRO industry on grounds that it is a late entry. Therefore, new entrants like Livewel Aviation MRO are subjected through a learning curve to acquaint itself with the local business environment. Nevertheless, new entrants will have to face competition from the local and international firms who are already settled in Indian market place (Kartinen, 2004). International Certification standards The MRO facility will be divided into Airframe and Component repair, Aircraft engine overhaul and Line maintenance which are undertaken by Original Equipment Manufacturer (OEM) and Engine manufacturers’ examples of Rolls Royce, General Electric and the Pratt and Whitney. Since aviation safety is of critical importance, Livewel MRO has to comply with a set of comprehensive international standards and certification so as to improve customer confidence at all levels in the global supply. For instance, the AS/EN/SJAC 91002 standard was developed to provide a wide range of requirements for organizations carrying out design, maintenance and repair of aviation products and therefore, Livewel aviation services will have receive this certification to enhance itself credibility, confidence and trustworthiness from the major industry stakeholders. An AS9110 prescribes requirements to guarantee quality management system in the MRO industry, and it also provides services to the commercial and the military aviation products. However, some MROs have not yet embraced the idea of these regulations opting the same through supply chains and reliability on ICOP certification scheme (Aucoin, 2002). Quality of products used Livewel aviation MRO like any other maintenance industry will encounter numerous challenges one among them being how to demonstrate proper controls to build a good customer relations and assurance to the regulatory agencies that they have got robust quality systems in place. This among them is to ensure high standards of integrity and safety of products which the customers bring to service, therefore as a maintenance industry, it also has to be certificated by the US Federal Aviation Authority (FAA) so as to start its operation or otherwise be regarded as a non certified repair station and subjected to excessive scrutiny (Nel, 2006). Specification Complexities and Inadequacy Specification complexities and Inadequacy is another factor likely to pose a challenge to the inception of the Livewel Aviation MRO. This is because; specification of required parts used in the maintenance depends on Original Equipment Manufacturer of the aircraft. If the facility is to run to its full potential it has no otherwise but to partner with a specific OEM so that it can develop a wider network. This strategy has been witnessed by the major players in the market, which include Emirates airlines where it entered a partnership with Airbus Company and the General Electric Company while Turkish Technik in partnership with Pratt and Whittney opened an engine overhaul shop in a 50:50 joint venture (Eisner, 2008). It should also be noted that when purchasing of these parts, there are many alternatives in the market that are available and as a matter of fact, majority of MROs purchase their parts from multiple sources. Therefore, this complex specifications accompanied with inaccurate technical attributes might cause an unconventional buying for Livewel Aviation MRO. This is because there would be a likelihood of uncontrolled pricing on the parts purchased to be used in aircraft maintenance. This means that, the facility will have to outsource the senior personnel and liase with the OEMs for spare parts delivery as they look on ways of training their own personnel (Kartinen, 2004). Skilled Human Resources Inadequate skilled Resource will be another challenge for Livewel Aviation MRO. Being established in India, where majority of citizens are known to be entrepreneurs it will be difficult to obtain the required skilled personnel at once considering that in Europe and USA the industry has developed to capacity with adequate skilled personnel. This factor might cripple the facility in that, expertise managers responsible for purchase of the diverse commodities, ranging from Valves, bearings, nuts and bolts to office supplies of the MRO are not likely to be found in India. Apart from the soft skills and the normal procurement skills, the manager who will be in charge of the facility will be required to be well conversant with mechanical engineering, aeronautical engineering, industrial engineering, design and production engineering which will not an easy task to find a candidate in India with all these combined skills. This follows fully developed MROs by other airlines like the Emirates and AirAsia Large and Diverse Spend Data Livewel aviation MRO will also likely to be faced with Large and Diverse Spend Data. MRO facilities are known for their multiplicity of spare parts, huge item counts and high number of sub-categories coupled with an equally same number of suppliers. Therefore, the amount of currency spend in items in the facility may appear smaller as compared with the direct materials in the facility. However the shear volume of the parts ordered to be used and a big number of suppliers definitely complicate the spending behavior leading to what is known as a large and diverse spend data in the facility (Nel, 2006). Automation Imperative Automation imperative is another factor that the facility can capitalize on to make itself relevant. Competitive pressures in the industry have deprived a substantial market share in the high-cost MROs. Therefore the facility should consider cost reduction strategies in its operation such as replacing the manual efforts by personnel to automation so that it can increase its process efficiency. This is because the MRO industry in general is highly effort-intensive, which leads to most personnel to spend up to 80% of their time searching and verifying information so that they can execute their task. Therefore, Livewel should invest in the technology, which will enable higher automation of maintenance and repair process so that its clients depends less on the manual efforts (Compton, 1997). Commercial Jet transport The rapid development of commercial jet transport is another factor that will influence the growth of the facility. Analysts have forecasted a consistent growth of the commercial jet transport over a period of ten years. Therefore, the decision to build an MRO in Asia and specifically India ultimately depends on what scale effects can the facility operate. But as a result of growth in the regions airlines there is likelihood that the facility will be economically feasible at the region. Nevertheless, certain volume of operating capacity is needed from the facility in order to be regarded as being competitive in offering cost advantages which most airlines are looking for. Lufthansa Technik’s chief executive views the current MRO industry as being in a transition Process where the providers of MRO services and OEMS are positioning themselves in the market. Therefore, Livewel Aviation service in setting up its MRO should look into this factor or otherwise face a risk of operating on outdated schedule and service. The 2008 economic crisis and the ongoing Eurozone crisis has impacted aviation industry mainly the airline industry and the MRO industry which has led to high fuel prices. The Asian continent still recuperating from the crunch means that the facility will live to content with slim profit margins during its early stages of inception (Kartinen, 2004). Proposed Organizational Chart Like any other established organization or industry, Livewel Aviation MRO is structured into different levels of operation so that customer meets its strategic goals and objectives with clearly defined lines of authority and responsibility. The maintenance repair and overhaul facility of Livewel aviation will operate under the Chief Executive V.P and the General Manager who will be the key figures of the organization on the outside world. The top brass management of the facility comprises of Senior V.P of Marketing & Business Development and Senior Assistant both reporting to the General Manager and the Executive V.P on the issues and advice from the middle level management. Their work is to formulate policies meant to run the facility. At the middle level management, we have the Quality Assurance manager, Finance and economics manager, Human resource and administration manager and the security manager who also are answerable to the general manager and the Executive V.P. but through their respective heads. At this level of management, the various managers plan on how the formulated policies will be implemented. This is where the priorities are set and resources are allocated depending on the urgency of a particular task. The lower level in the organization structure of the facility comprises of divisions and Sections. The division part is composed of the Aircraft division, Aircraft programs division, engine division and the Components Division under the helm of respective divisional heads and they report to the top and the middle level management. It is at the divisional level where the implementation of the policies formulated at the top are adopted. Once adopted, the sectional division rolls out the tasks in line with the new policies. For instance, whenever an airworthiness notice or directive is issued on a particular component, it is at this division where duty is performed inline with the directive issued (Compton, 1997). The engine division is further sub-divided into various sections to handle different models of engines. These sections are headed by the sectional heads and the key feature is the specialization of tasks .The various sections handling different engine models are equipped with overhaul workshops having state of-the-art facilities to handle different engine components, Non-Destructive Tests (NDT), engine weighing and tool calibration. Overhaul workshops has got avionics overhaul workshop to handle avionics instruments and radios whereas Safety workshop handles the safety equipments like survival kits, life vests, oxygen masks and hydrostatic testing facility for cylinders and gas bottles (Kartinen, 2004). Furthermore, various sections handling the different models of engines have got engine test cells where engine and auxiliary power thrusts are tested at different lbs of thrust. However, all the various departments of the Maintenance, repair and Overhaul facility have to be certified by the various respective aviation agencies as the GCAA, EASA, FAA and Indian Aviation Authorities to ensure adherence to the highest standards of quality. Basically, the focal point of this facility structure will be the engineering systems. The systems will enhance functions integrations, resource optimization and improvement in the technical reliability in the engineering department. The system also functions to provide business user solution to support implementation of the business process and enable safe, secure and efficient management of the MRO facility The Quality assurance department will be in the helm of monitoring all the technical and the technical support functions within the facility to make sure they adhere to engineering procedures and operate within the confines of Terms of certification and approval. The technical resource centre also within the facility will be in charge of the technical publications so that personnel mandated to perform tasks are availed with task cards and the appropriate manuals concerning the standard of work required of the facility inline with its approval. The centre will have to ensure that, the documents it holds are updated to meet the latest state of document amendments. Therefore, the Quality of work the facility will adopt ultimately determines if ISO Quality Assurance certification will come by (Chang, 2005). Additionally, Livewel MRO facility accreditation will depend on the range of skills acquired by its personnel. Therefore, it will be procedural for the facility to adopt a wide range of technical training programs especially in the engineering disciplines ranging from servicing, type training, and procedural systems. It is the clear that, the main differentiating factors of this facility and other facilities are that of leading quality and operational performance to facilitate high dispatch reliability than other facilities. Innovative maintenance solution will be another differentiating factor where equalized maintenance concept will be designed to enhance high aircraft availability and reduce the CFM56 engines Turnaround Times (TAT) to around 45 calendar days. Furthermore the facility looks forward to diversify global customer base to accommodate flagship carriers, low cost carriers and aircraft leasing companies (Chang, 2010). Currently, most airline around the world are facing, a changing MRO market since the sector is undergoing the evolution of consolidating due to the growing presence of OEMs in the after market and consequently the new generation aircraft with different technical and support requirements. Therefore, Economic environment and consolidation in the airline business are the main players in the development of the MRO sector (Shainis, Dekom & Mcvinney, 1995). Business and Marketing plans Economic success of the facility will depend on the extent of market research, business audit and the situation analysis (current situation).This is followed by careful scrutinization of the MRO industry as a whole. This will be guided by the marketing plan developed which show how best the facility can attract and service more aircrafts and its components and edge out its competitors. The Marketing Planning Process Being located in India, Livewel Aviation MRO is motivated by the incentive of a fast growth of the airline industry in the Asian continent. This prompts the expansion of the MRO industry which is the setting base of this facility (O'connor & O'connor, 2005). As part of the marketing plan, the facility brands itself differently from the rest of the existing MROs in the country. It has adopted unique selling points such as partnership with the Original Equipment Manufacturer (OEM) to facilitate quick delivery of spares and the signing of the (BASA) Bilateral Aviation Safety Airworthiness and the introduction of the Maintenance management software (Thamhain, 1992). Livewel Aviation MRO should carefully analyze both internal and external business environments in its location so that it can analyze the whole MRO industry and select the most suitable marketing strategies to adopt. By effectively doing so, it will be in a position to continuously monitor external threats and opportunities while revising its internal efficiency procedures. It is vital that the facility before its set up analyzes both internal and external aspects on the facility operation and their respective impact will be of considerate in determining the survival and success of the MRO facility in its location (Aucoin, 2002). The internal business environment of the MRO facility and its influence are within the control of the management and its major attributes ranges from the efficiency in maintenance, management skills and the effectiveness of the communication channels. The MRO facility can only counter this by encouraging continual appraisals and swiftness in acting on the inefficiencies (Thamhain, 1992). The major challenge to this facility is how it will deal with the external business environment which is the powerful force which can easily bring down the facility and its economy. This is because any changes in this environment will create either opportunities or threats in the market share of the facility through economic fluctuation and customer attitude changes (Shainis, Dekom & Mcvinney, 1995). The ideal business customer of the MRO will be the India Express airline, Air Kerala, Air India Regional and Jet airways. These are scheduled airlines operating from Kochi and Mumbai capitals and they form about 24% of the existing market segment. The reason why the Facility is targeting these airlines is that, all of them operate in a scheduled calendar and it will be easier for the facility in planning the calendar for their maintenance and overhaul (Chang, 2010). During the first year of operation the facility is projecting to generate 1/8 of the total amount of capital injected into the facility. Also during the same year, the facility looks forward to wooing the flagship carrier as its customers through the outsourcing and the consolidation program. The facility will also inject 1/8 of the total cost in branding and marketing itself. This will be in form of ads and promotional strategies consisting of the Corporate brochures, websites, magazine production of the facility and specialized publications to create awareness the target customers concerning the services the facility offers (Compton, 1997). The facility also should consider analyzing its Strengths, Weaknesses, Opportunities and Threats, if they are kick start its operation on a positive note. This will enable it to deliberate on the possible Strengths and Weaknesses it posses and research on it to set out opportunities and threats that are present. Also this will serve in analyzing the possible and closest competitors like the Airworks India (engineering) Pvt Ltd in Gurgaon city and Indamer Company Pvt Ltd located in Mumbai city and their possible dangers (Chang, 2005). company city Airframes & engines Components & repairs Modification & avionics Line & Corporate Air India Maintenance ltd Mumbai y y y y Air works India Pvt Ltd Gurgaon y y y Blue dart Aviation ltd Channai y y Livewel Aviation Mumbai y Indemer Company Pvt Ltd Mumbai y y y y Arrow aviation Pvt ltd Kolkota y y The facility will therefore be offering Maintenance, Repair and overhaul services of all kinds to the selected airlines at the cost of the existing market cost and at a competitive based pricing of its parts. Consequently, the facility hopes to control this market over the coming years by exploiting its strengths (O'connor & O'connor, 2005). The management should engage in developing a quality system in the facility structure so that the requirements of the MRO are fulfilled. These include the ‘fit for purpose’ principle to ensure the services provided by the MRO meets the intended desires of the customers. Another principle forming an important basis of quality assurance is the ‘Right first time’ principle where mistakes in the facility should be totally eliminated (Shainis, Dekom & Mcvinney, 1995). Control and Management After discussing all the different management activities that Livewel Aviation Services MRO need to consider, it is also important to highlight the management control activities that should be employed. In this case Livewel Aviation Services will need to do a variety of activities in order to manage the different areas accordingly. It should start by controlling how the planning of different activities is conducted in the organization. Secondly, the organization should control the coordination of the activities of different parts of the organization. All activities should be well coordinates. Third, communication of information will constitute another significant activity for controlling the management. In order to know whether management of the activities is bearing fruits, the organization needs to be conducting evaluation of information often. In this case, management control should be in such a way that all actions exactly correspond to a plan determined previously, for instance a budget. This is because such kinds of plans could be based on the situations that existed at the time of their formulation. Therefore, incase these circumstances or situations have changed by the time of implementing the project, then it means that the actions that the plan dictated may no longer apply (Chang, 2010). Findings and recommendations Due to the tremendous expansion of the airline industry in India with fewer ventures in the MRO industry in the region, Livewel aviation MRO stands a better chance to be one of the successful MRO to make a late succesful entry to the market. Nevertheless, less stringent measures and rules in the MRO industry gives the facility live as it will not be subjected to heavy taxation by various air governing bodies. After completion of the project, it is recommended that: Livewel MRO should emphasize on training of its personnel and staff to adapt to the industry changing technology. The facility should adhere to the airworthiness standards maintenance schedules to built customer confidence and to avoid inconveniencing the customers schedule. The facility should embrace consolidation as it is the current trend between the airline and the MRO industry. 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