Operations management of the Virgin Atlantic airways - Essay Example

?Operations Management Table of Contents Introduction 3 Literature Review 4 Findings & Analysis 10 Supply Chain Management 10 Relationship Management 11 Human Resources Management 12 Yield Management 13 Problem Resolution 13 Conclusion and Recommendations 17 References 19 Introduction Operations management is a concept that emphasises on the management of the process concerned with production and distribution channels of organisations. Operations management often deal with the internal environment of the organisation. The process of the operations management is totally dependent upon the nature of the manufactured goods along with the organisational processes such as retail, manufacturing and wholesale. Operations management, if implied with efficiency, can reward the organisation with enhanced competency and profitability on the whole (Johnston & Clark, 2007). Operations management is implemented in every industry to maintain proper co-ordination in the organisational system. Hence, it can be said that implication of operations management can be highly beneficial (JPC Media LLC, 1999). Operations management has a wide concept and therefore is quite complex to be implemented. This requires an effective and comprehensive planning. Virgin Atlantic is an airway services provider. Richard Branson had established this company in the year 1984 with a single aircraft. Presently, Virgin Atlantic is one of the leading airlines service providers (Virgin Atlantic, 2010). Virgin Atlantic also serves with global satellite stores, telecom services and air buses. The mission statement of virgin Atlantic is “To grow a profitable airline, that people love to fly and where people love to work” (Virgin Atlantic, 2011). Their services are far better as compared to the other airline services. They offered highly trained staff. Hence, the aim of this paper is to analyze the operations management of the Virgin airline services (Thomason, n.d.). The main purpose of this research study is to analyse the operations management of the Virgin Atlantic airways. The discussion of this study emphasizes on the supply chain, customer relationship management (CRM), organisational management, human resource management (HRM) and yield management of the Virgin Atlantic airways. Literature Review It is important to understand the concept of operations management. It is generally the business purpose which sets, coordinates, organises and manages the required resources that is needed by a company to produce services or goods. Operations management engages the management of all the factors such as personnel, technology, equipment, information along with the other existing resources. Thus, it is said to be the central function for every individual company (Scribd, n.d.). The practice of operations management is different depending on the category of the organisation. Organisations can be classified into two extensive categories and they are the service organisations and the manufacturing organisations. The nature and application of the operations management would differ according to the nature of the organisations. It needs to be noted that these two categories of organisations have two basic differences. The first one is that the manufacturing organisations are involved in producing goods that are physical and also tangible in nature and has storing facility whereas service organisations are involved in the creation of products that are intangible in nature and does not have the facility of storage which means that production cannot be initiated before time. The second point of distinction is that in case of manufacturing organisations there is hardly any direct contact between the operations and the customers. The only way of developing contact with customer is through retailers and also through distributors. However, in service oriented organisations, it is the customer around whom the service is centred and thus direct interaction between the customer and the operation is immensely important (Scribd, n.d.). According to Johnston & Clark (2007), operations management in the service industry is involved with distributing services to the users or customers of the service. It engages the recognition of the requirements of the customers in the service industry, running and controlling the procedure of distributing or discharging the services while making it certain that the purposes are met at the same time. It also ensures focusing on the constant enhancement of the services being provided. Thus, the function of operations management is quite critical for the success of any organisation. It has been correctly mentioned by Ronen & Pass (2007) that the business environment has witnessed quite an important revolution and that has been the conversion “from a sellers’ market to a buyers’ market”. In the past the most common concept that prevailed was that of a sellers’ market which to certain extent implied a business environment that was monopolistic. Here the measurement of a particular business deal was dictated by the service donor or the supplier, for instance, the price, quality, performance, and time to respond. However, this concept has changed and services are being provided according to the requirements of the consumer along with constant enhancement. Chase & Et. Al. (2006) stated that proper management of the resources that are productive in nature is significant in order to attain growth as well as competitiveness. Operations management is involved and concerned with the management of such productive resources. Operations management is all about quickly carrying out the regular work in an organisation on a day-to-day basis in an efficient way without making any faults and in a cost-effective way. Managing these operations efficiently helps an organisation to attain competitive advantage (Chase & Et. Al., 2006). It is important to mention in this context that supply chain forms an integral part of the operations management in the service industry. The concept of supply chain is considered to be a central element of strategy which was even mentioned by Porter (1985), where he recommended that the competitive advantage of a particular service organisation is not completely reliant on the value chain but also on the efficiency of the value system on the whole. It was further stated by Porter (1996) that operational excellence should not be considered as a strategy. He explained the concept of competitive advantage as an outcome of activities that stand apart from the competition or to carry out the activities in a way which is tough to imitate and make sure that those activities are developed to compliment the particular business chosen by the organisation. According to the study of Waters & Waters (1999), that operations management is being given a lot of emphasis in the recent time. This is because of numerous reasons such as global competition, enhancement in the processes of manufacturing, importance given to the quality of the product and the altering expectations of the customers. The most crucial element was the identification that for an organisation to be successful, it is important that it serves with such products as well as services to its customers that are required by them. It has been stated by Harvey (2007) that human resource management is an integral part of the airline industry and it is also a crucial element of operations management. Airlines industry employs a lot of people because of the nature of its business and they account for roughly 30 percent of the gross operational cost. In the above discussion the significance of supply chain in the service industry can be clearly understood. According to Li (2007), supply chain includes the complete activities that are required in the course of satisfying the requirements and requests of the customers. The activities involved in the process of supply chain facilitate in transferring the raw resources into finished products. This also includes the involvement of the transfer of information as well as funds (Harvey, 2007). Customer relationship management (CRM) is also considered as an integral part of the airlines industry and falls under the system of operations management. Airlines industry is a service providing industry where the customer is always in direct contact with the organisation and its personnel. Therefore, it becomes important to maintain a healthy and good relation with the customer for reaping long-term benefits. According to Shanmugasundaram (2008), the idea of CRM includes gaining, investigation and utilisation of knowledge regarding the customers in order to increase the sale of goods as well as services effectively. Practicing a strategy that is customer oriented and re-structuring the present process of interaction with the customers by the particular organisation would assist in holding on to the already existing customers as well as lure new ones. CRM is adopted by organisations as a strategy and it is not a form of technology. Practicing CRM would increase the pleasure and would make the customers stay for an extended time-period and promotes loyalty among the customers as well. Therefore, it can be said that CRM indicates the foundation, improvement and continuance of lasting relationships that are mutually favourable and valuable among the organisation and its customers. Operational CRM generally implies the procedures that would provide support to the business procedures of front office which also involves customer contact. Jobs that are an outcome of these processes are then directed to the personnel who are in charge for them. Implementation of CRM also assists the organisations to build competitive advantage (Shanmugasundaram, 2008). Yield management is also considered to be an important part of the airlines industry. It is being assumed by majority of the models of business that company demands a similar price to all of its customers for a specific product. The concept is to relate to the curve of demand by deciding the price on the basis of the eagerness of the customers to pay. The challenge faced in this context by the management is in recognising the differences and setting the prices suitably. The method for several points of price is referred to as yield management. This is also known as revenue management as it is the procedure for averagely planning the allotment of the limited resources of the organisation at such costs where the revenue would be the utmost. This management has confirmed to be quite successful for the airlines industry and thus, is practiced widely in the airlines industry (Heizer & Et. Al., 2009). Findings & Analysis Virgin Atlantic requires maintaining a complex and a broad organisational structure that in turn signifies the implementation of operational management with efficiency. They provide their services in the different sectors such as airline industry, mobile industry, entertainment industry and financial service industry. Essentially, airline services deal with both, the higher income group and the lower income group. It also operates in multiple regions as its target market. Supply Chain Management The management process and relationship between customer and supplier to deliver superior customer value at minimum cost is known as the supply chain management. This concept usually focuses on achieving the improved results for all the members of the supply chain including their customer. Supply chain considers the whole organisational activities related with transformation of goods and services, materials and information flow of the organisation (Jespersen, 2005). Virgin Atlantic has developed their airlines services by increasing the frequency of the flight. They have applied the strategy of value added services and reduced the operational cost. Virgin Atlantic airlines had provided in-flight product services along with the passenger’s food products. To demonstrate the in-flight services supply chain Virgin Atlantic has appointed Tefen Management Consultancy, the main target of the industry was to restructure the managerial concept of the organisation (Dobney, n.d.). The airline services are increasing in the present date and if the Virgin Atlantic airline influences the customer by providing the discountable tickets then it can be beneficial for the company to gain competency. Airline industry can also have their personal engineering department those can provide the services for the whole industry. This procedure can assist the Virgin Atlantic airline company to maintain their organisational system and function well in the industry. Customer Relationship Management Generally, Customer Relationship Management (CRM) is the process to manage the customers and to monitor their performance. CRM has a capability to change the customer relationship with the industry and can also assist to gain competency. Customer relationship management is a concept that helps to understand the nature of customer and supplier managerial processes. To imply the appropriate customer relationship management, Virgin Atlantic airline has introduced eDigital Research, it helps the company to gain competency from their customers. Usually eDigital Research is a device that can improve the booking experience of airline industry. Virgin Atlantic has also developed various surveys in the organisation to get direct contact with customer related to sales and promotion. Virgin Atlantic has implemented various surveys for the customer relationship management. It would be helpful for the Virgin Atlantic if they provide the direct communication with the customers and service providers. This can help the company to know the customers view regarding the company (Anderson & Kerr, 2002; Rajola, 2003; Ed, 2008). Human Resources Management Generally, Human Resources Management (HRM) is the process of dealing with the people of the internal environment. This process mainly emphasises on the motivation, the training and the development of the employees. The concept of HRM fully emerged in the mid-1980s. Various companies have applied the concept of HRM and it aids them to gain competency (Armstrong, 2006; Storey, 2007). Virgin Atlantic does not imply the measurement tracking system. This is usually the devices which are required to record the performance level of the customers. If Virgin Atlantic applies the tracking system, it can benefit the company to clearly visualise the performance level of the employees. Employee satisfaction is a vital factor to recognise the customer satisfaction. Virgin Atlantic airways can imply the free flow of communication between the top managerial staff to the lower staff. Implementation of this process can help the organisation to know the view of employees and employee’s satisfaction level can also be known to the company. Yield Management Yield management was first implemented in the US airline industry in the 1970’s. Generally, the term yield means revenue in business management context, it usually means to gain more return through the investment. Yield management is basically applied in the hotel industry and airline industry. Problems related to yield management are quite often found in the other sectors (Ingold, 2000). Noting the demand of the customers, Virgin Atlantic can apply the yield management in the managerial system. Other airline services are also implementing yield management in their company. Therefore, by visualising the competitor’s strategy, it can be essential for the Virgin Atlantic to apply yield management. Problem Resolution Considering the problems faced by the Virgin Atlantic airline it is essential for them to identify the problems and their resolution. Virgin Atlantic airline is one of the leading airline service providers in the UK. By implementing the performance tracking system in an effective way, the organisation shall be able to identify and develop the productivity of each employee. With due consideration to the complex organisational structure of Virgin Atlantic, it is quite likely that the organisation shall face certain challenges related to operations management. From a theoretical perspective, the concept of operations management can be identified to consider every facet of a business from product development to pricing and customer relationship management (Belobaba, 2009). Therefore, the organisation should also provide significant consideration to these aspects while implementing the concept. It is due to this reason that the implication of operations management shall emerge to be a complex and challenging process for the organisation. The process can also become cost-consuming and time consuming as well. For instance, implementation of performance tracking system shall require reconsideration of the HR policies of the organisation. This process can apparently be observed as time consuming and complex process (Armstrong, 2006). Virgin Atlantic requires communicating with customers belonging to different socio-economic regions. It is due to this reason that the company should identify the requirement of every group of customers as well as their preferences. For instance, the Virgin Atlantic airways have limited route for the transaction and their services are delayed. Punctuality is termed to be one of the key factors for the airline industry and it is also valuable for the high-yield customers (Anderson & Kerr, 2002). The marketing strategies of Virgin Atlantic airline also consider surveying their customers with optimum satisfaction. With this concern the organisation provides free fooding and other recreational services to its customers on air. This requires hiring of professionals from relevant segments that in turn shall raise the operational costs to a significant extent. However, these kinds of services shall enhance customer satisfaction. The enhanced customer loyalty shall in turn reward the organisation with greater market share and thus facilitate its competency and profitability. It is in this context that the organisation can implement the CRM approach in an effective way (Anderson & Kerr, 2002). It is worth mentioning that the CRM is a significant aspect of operational management that can facilitate the growth of Virgin Atlantic airlines. Effective customer relationship can be promoted in the airlines industry to uphold competitive advantages and profitability in the long-term prospective. Presently, many airlines company are shifting to customer relationship management (CRM) to maintain their profitability. Customer relationship must be sustained in a proper order and it should not mislead the organisational process. From an overall point of view, it can be stated that the CRM rewards sustainable growth to the organisation which can act as a key competitive advantage to the company. Customers’ perceptions, preferences, choices and other influencing factors of their buying behaviour largely depend on various economic factors which are recorded to be continuously changing in the post modern era. Therefore, maintaining the continuous record of customer preferences shall become quite challenging for the organisation. With this concern the organisation can take feedback from its customer in periodic intervals (Anderson & Kerr, 2002). The main objectives of operations management in case of Virgin Atlantic should be to yield enhanced return in terms of sales revenue and market share that can be attained through significant consideration to the aspects of customer satisfaction, increasing employee productivity and efficiency in its supply chain management. It is in this context that Virgin Atlantic airlines is required to develop cooperation among their employees and also need to provide effective training related to the customer relationship management. Notably, empowering the employees with complete knowledge of customer relationship can enhance their productivity and in turn assist in the sustainable growth of the organisation. Proper interaction between the valuable customers and the company is a vital aspect because it can assist the airline company not only to identify customers’ values but also increase the efficiency in operational decisions in relation to product development through supply chain management and encouraged employee productivity (Allen, 2011). Therefore, implementing operations management effectively will be quite challenging for the organisation. However, it shall reward significant competitive advantages and sustainable growth to Virgin Atlantic airlines. From the above discussion, it can be stated that operations management is essential for the growth of the organisation. Hence, Virgin Atlantic can analyse the above given resolution and can implement the strategies suggested in relation to operations management (Boland, 2002; Allen, 2011). Conclusion and Recommendations In this study, the challenges faced with regard to the operations management in Virgin Atlantic have been acknowledged and the practices through which the challenges can be conquered have also been discussed. It is very important for an organisation to have a sound system of operation management especially in the service industries as this helps an organisation to survive in the competitive environment of business. Operations management has gained more importance in the airlines industry after being hit by the financial crisis and the terror attack of 2001 September. The airlines industry witnessed a substantial downfall in the business after these two disasters. In order to survive and sustain a more effective form of operations management has been practiced by the industry. Like other organisations, even Virgin Atlantic was hit by these disasters and in order to emerge from the disasters, the organisation needs to adopt certain practices in the field of operations management and implement them. This is required for the organisation in order to survive and ensure growth in the business in the long run. From the above discussion, it was found that the organisation needs to apply the practice of human resource management, customer relationship management and supply chain management more effectively and also needs to implement the practice of yield management. The organisation needs to manage its human resource in an efficient way so that the work is allocated properly and they are managed by personnel who are best suited for it. The supply chain management even needs to be managed properly so that there is a smooth flow of the service. Although customer relationship management is practiced in the organisation, it was observed that more emphasis needs to be given to it. And, lastly, it was found that yield management should be practiced in the organisation as it holds a lot of importance. Yield management would help the organisation to exploit the differences in the demand curve and earn the utmost returns possible. References Allen, B., 2011. Punctuality. How Airlines Can Improve On Time Performance. [Online] Available at: http://www.aviation.go.th/rbm/Punctuality.pdf [Accessed September 09, 2011]. Anderson, K. & Kerr, K. C., 2002. Customer Relationship Management. McGraw-Hill Professional. Armstrong, M., 2006. A Handbook of Human Resource Management Practice. Kogan Page Publishers. Belobaba, P. & Et. Al., 2009. The Global Airline Industry. Air Transportation Economies. 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