Systems and Operations- Critical Evaluation of Relevant Issues - Essay Example

?Systems and Operations-Critical Evaluation of Relevant Issues Table of Contents Introduction 3 Organisation’s Overview 4 Current Operational Areas of American Airlines 4 Various Key Processes of American Airlines That Contributes To the Competitive Advantage 11 Various Issues Surrounding the Information System of American Airlines 13 Recommendations for Improving the Issues of American Airlines with Incorporating Knowledge Management 14 Ethical Concerns and Security Threats to the Recommended Information Systems 16 Conclusion 19 References 21 Introduction According to Stevenson, operations management of any organisation can be defined as “the process which combines and alters a wide range of resources which are used in the operation systems in a very controlled manner according to the policies of the organisation”. Therefore, the set of interconnected administrative behaviours which are implicated or extended to service management is known as operations management (Stevenson, n.d.). In the paper, the organisation of American Airlines will be studied in relation to their current operational areas that comprise their product and service design, supply chain management, capacity planning, resource planning, inventory control and quality management. Various aspects comprising their different organisational, managerial and technical issues along with ethical and security threats prevailing within the information system of the organisation and necessary recommendations in order to improve or overcome from those issues will also be taken into consideration in the discussion of the paper. Hereby, the main objective of the paper is to study the organisation of American Airlines in relation to their information arrangements and operations administration processes. Organisation’s Overview In the year 1929, the Aviation Corporation was formed in order to acquire young aviation companies. In 1930, the Aviation’s Corporation’s airline subsidiaries were integrated with American Airways, Inc. Later in the year 1934, it transformed to American Airlines, Inc., and eventually, the organisation became the foremost airline provider to take of the flight ‘Douglas DC-3’ in commercial purposes or services. Eventually, American Airlines became the country’s top non-international air transporter among others (American Airlines, Inc., 2008). Moreover, in the year 2002, Gerard J. Arpey became the Chief Operating Officer as well as the President of American Airlines. American Airlines under the leadership of Gerard J. Arpey became part of the ‘oneworld’, one of the foremost global alliances in the field of airlines (American Airlines, Inc., 2008). Current Operational Areas of American Airlines Product & Service Design According to Moritz, product & service design is “the design of the overall practices of a service as well as the design of the process along with different strategies in order to provide a particular service”. In addition, it is a process which covers the four D’s, that is define, discover, develop and deliver. It is all about recognising the market, client and organisation, developing ideas, transform them into practicable solutions and eventually to help in implementing them (Moritz, 2005). The operational areas of American Airlines includes such as product & service designs, supply chain management system, planning inventory control, resource planning and quality management among others. The product that the organisation deals basically with is the airline service and also it produces numerous service designs to its wide range of customers worldwide. One of the most significant services of American Airlines is their introduction of Admirals Club which is especially intended for their travelling customers (American Airlines Inc, 2008). Admirals Club as a quality feature offers an expansive range of facilities such as individual workstations, computers with internet facility; extensive distance telephones, children’s rooms, music rooms and a wide variety of sweet and flavourful snacks are available for purchase. This particular service through Admirals Club is regarded to be a perfect gift for any traveller who wants to calm down in comfort during the breaks while travelling (American Airlines Inc, 2008). Apart from the service design of Admirals Club, the organisation also proposes travel gifts card for its customers. Through this travel gifts card, the customers can avail to travel in thrilling destinations throughout the world without any expiration date or fees (American Airlines Inc, 2008). The other significant service design that the organisation offers is American Airlines Credit Card. This credit card can be used in order to purchase goods and services from different regions of the US. Along with this, the card has got no annual subscriptions and least amount is required in order to take advantage of this facility (American Airlines Inc, 2008). Moreover, the organisation also signifies an exclusive service design to its customers regarding the personalisation of the customers’ luggage. With American Airlines personalised luggage tags, one can recognise their baggage easily. The exclusive luggage tags of American Airlines endows features of clear and visible show of the owner’s name and are made of strong plastics with rounded edges. This luggage tags can also be regarded or can be treated as a convenient gift (American Airlines Inc, 2008). Supply Chain Management Apart from the product and service designs of American Airlines, the processes of supply chain management in relation to operational areas play a significant part. According to Mentzer, supply chain management (SCM) is the strategic as well as systematic synchronisation of the traditional production purposes within a particular organisation for the motive of progressing the continuing position of the organisation along with supply chain methods (Mentzer, 2001). The supply chain management (SCM) of American Airlines affords qualified minority women-owned and veterans’ owned small business concerns, the opportunity to participate as potential suppliers for products and services for American Airlines while initiating the management of supply chain in its business transaction processes. The organisation provides the best quality products and services to their customers globally. In this connection, the organisation has to rely upon the suppliers and the contractors in order to perform the highest industry values in its business supply chain processes (American Airlines Inc, 2008). The organisation while executing its supply chain management emphasises upon the evaluation of its wide range of products and services according to their merits giving fair and impartial consideration to all suppliers. In addition, the organisation also reviews constantly the performance of the suppliers and the contractors in order to enhance their ability to provide products and services that surpass or meet the industry standards. Moreover, the organisation also has laid emphasis upon the procurement and the construction opportunities especially for the minorities, women owned and small business organisations (American Airlines Inc, 2008). Inventory Control Planning American Airlines pays attention upon its inventory control planning. According to Spectrum, inventory control can be defined as “the preservation of updated information accounting for and locating all objects for which the organisation has a lawful liability” (Spectrum, n.d.). The various types of inventory control processes that the organisation emphasises are of various dimensions. The dimensions like ‘overbooking’ or selling the seats over the aircraft capacity, controlling discount-fare availability and also managing an extensive network are a few different types of inventory control processes that are normally executed by the organisation (Britton, 2009). The advantages of overbooking, though it has been criticised by the media and others, is one of the most successful inventory control plans of the organisation. The process of overbooking allowed the organisation to serve the customers more often in order to give them their first choice with deeper discount facility. It also helps to maximise revenue as well as manage the over sales effectively (Britton, 2009). In addition, the process and the main objective of managing discount-fare allocation is never to deny a late-booking and allow full fare to the customers. Moreover, the process of managing an extensive network acting as a traffic management is also implemented by the organisation to ensure the accommodation factors for the passengers with greatest revenue contribution. These are some of the key inventory control processes that the organisation mainly focuses upon (Britton, 2009). Resource Planning According to Ray, resource planning can be defined as “an integrated information system that helps in effective usage of enterprise’s resources and also facilitates the course of information between all trade functioning of the organisation” (Ray, 2011). In today’s economic environment and particularly in the airline industry where there lies very small margins, increasing revenue and declining cost is a big factor. The organisation continuously works in order to optimise its resource planning operations in a certain way that can minimise costs and maximise revenues while maintaining the utmost levels of safety along with providing quality service to its passengers. Here, in this particular fact relating with minimising costs and maximising revenues along with maintaining various standard procedures are the ultimate resource planning of American Airlines (Fico, 2009). Quality Management According to Feigenbaum, quality management is a disciplined system of consumer work related processes that are utilised throughout the organisation along with the incorporation of the suppliers. It is obvious to the fact that high quality products are the result of high quality work processes (Feigenbaum, 2002). Above all, according to Charantimath, quality management is the process of recognising and managing various behaviours that are needed to attain the quality motives of an organisation with proper quality planning, control and improvement (Charantimath, 2003). The quality management of American Airlines lies in the quality feature standards that the organisation serves to its customers globally. The organisation recognised that in order to achieve extensive benefits in future, it should meet its customers’ requirements through serving better quality services. When the customers purchase the product from the organisation, they obviously expect certain quality features like global route network, competitive pricing and a frequent flyer with many other facilities that are available for them (American Airlines Inc, 2008). Moreover, the customers’ expectations also include safe and dependable travel knowledge, clean aircraft, and timely luggage deliveries along with interaction with professional and caring employees who treat them with respect regardless of differing cultural backgrounds, experiences and languages. By focusing upon these sorts of customers’ expectations, the organisation has already started to pursue certain initiatives in order to cope up with the different expectations of the customers which are eventually supported by various teams that are prevailing throughout the organisation (American Airlines Inc, 2008). The quality management of American Airlines lies in the safety and security management systems towards its customers. The organisation’s core aspect of spotlight on safety is ‘Safety Management System’ (SMS). It is a set of developed flight principles that eventually describe the inclusive strategies in order to enhance passenger safety issues (American Airlines Inc, 2008). The other quality management aspect of American Airlines lies while interacting with the customers or passengers from initial trip selection and booking, arrival at the airport and pre-boarding, to the onboard and post flight experiences. Apart from providing the quality management features to the customers, the organisation also focuses upon the various attributes that the customers really care about most (American Airlines Inc, 2008). Various Key Processes of American Airlines That Contributes To the Competitive Advantage The various product and service design initiatives of American Airlines towards its customers or travellers eventually contribute to the evident competitive advantages of the organisation. The organisation’s different product and service design features like the service of Admirals Club where the customers or the passengers can get relaxation in quite comfort, the travel gifts card through which the customers easily can avail to travel in exciting destinations throughout the world, the usage of American Airlines credit card and easily identifying the luggage tags among other services ultimately contribute to the competitive advantage of the organisation (American Airlines Inc, 2008). The organisation’s commitment for providing opportunity towards the qualified minorities and the small business concerns in order to participate as potential suppliers for products and services on behalf of American Airlines, while initiating the management of supply chain in its business transaction processes eventually leads towards the contribution regarding the competitive advantage of the organisation. Moreover, the organisation’s assurance and positive response towards the inclusions of minority and small business organisations, mainly in procurement and construction opportunities across the organisation also paved the way of competitive advantage globally (American Airlines Inc, 2008). The various key planning inventory control processes that includes the process of ‘overbooking’, managing the allocation discount oriented ticket pricing and managing a widespread network which acts as a traffic management that eventually leads the competitive advantage of the organisation while executing their business transactions globally (American Airlines Inc, 2008). In today’s economic environment, every airline company is very much competitive as well as provide challenges to other companies. The newer airlines companies have considerably lowered down their operational costs rather than other legacy companies such as American Airlines. The organisation realised that in the airline industries where margins are very small, maximising revenue and cost is the utmost challenge that the organisation is facing. In order to cope up with this severe challenge, American Airlines introduced an ‘Optimisation Suite’ which is designed particularly in order to resolve comprehensive challenges and for American Airlines this include formulating vital resource allocation, scheduling decisions and assets management. The introduction of this ‘Optimisation Suite’ eventually contributes towards the competitive advantage of the organisation (American Airlines Inc, 2008). The organisation’s positive and enthusiastic approach by providing quality management regarding the safety and security issues towards its customers or passengers ultimately contributes towards the competitive advantage of the organisation. In addition, the quality features like safe travel experience, cleanliness and timely luggage deliveries also count for this sustainable competitive advantage of the organisation (American Airlines Inc, 2008). Thus, these are certain key processes within the operational areas of American Airlines that are ultimately contributing to the competitive advantage of the organisation. Various Issues Surrounding the Information System of American Airlines For many years, American Airlines are predominantly residing their terminals in a specific location. Over the course of time, all the systems in these terminals were fine tuned in order to meet their exacting requirements and standards. However, due to certain latest changes in the managerial culture, American Eagle which is a sister company to American Airlines repositioned into other terminal and thus the existing equipments could not be expanded in order to alert the employees of various dangers like storms among others. This could be one of the major organisational issues of American Airlines (Synapse Wireless Inc, n.d.). Moreover, the management issues surrounding the information system of American Airlines are quite a few. One of the management issues of the organisation is the process of ‘overbooking’. It is the practice of consciously selling additional seat reservations for a flight in comparison to the actual seats on the aircraft. The problem or the issue lies in the fact that the organisation allows their customers to cancel unpaid reservations with no penalty (American Airlines Inc, 2008). The organisation estimated that certain percent of seats on sold out flights would be unused if reservation sales were limited to aircraft capacity. Poor overbooking decision making can prove costlier for American Airlines because once a flight departs, a vacant seat has got no economic value. As a result, the organisation bears a low opportunity cost which can be regarded as one of the management issues of American Airlines (Smith & Et. Al., 1992). In this connection, the technical issues that American Airlines faced was regarding the matter of observing the number of seats available which were being sold on a growing number of flights and allocating the remaining seat availability to different reservation agents. This was due to the organisational information processing problems that the organisation faced. In lieu of this, the size of the reservation offices were limited by the feasible distance between the agents and specially mentioned ‘chalkboard’ was used in order to track the sold-out flights. The agents of American Airlines used various devices in order to examine the flight availability. These are certain major consequences of arising technical related issues or information processing issue that the organisation faced (Smith & Et. Al., 1992). Recommendations for Improving the Issues of American Airlines with Incorporating Knowledge Management In connection with the organisational, managerial and technical issues of American Airlines, there is a need to improve in certain significant areas like modifications in organisation cultures, the process of overbooking and keeping an adequate track of number of seats with proper means of communication among others in order to cope up with the arising issues of American Airlines. In order to cope up particularly with the organisational issues like modifications in the organisational cultures, the organisations especially the ‘Engineering and Technical Support Team’ should evaluate and improve a number of possibilities by means of a proper and adequate landline telephone connection along with employing and improving cellular telephone technology in order to alert the employees of various dangers like storms among others along with solving this crucial issue (Synapse Wireless Inc, n.d.). According to Dataware, Knowledge Management can be defined as “the compilation of information values which are used to make easy collection, organisation, transfer and distribution of knowledge between the employees” (Dataware, n.d.). In lieu of the organisational issues of American Airlines, knowledge management can be served in order to achieve the required efficiency in this particular identified area by quantifying and processing the results that mainly is determined by the organisation into a desired effect. Knowledge management would allow the ‘Engineering and Technical Support Team’ of the organisation to measure and verify the usage of the new systems to obtain a clear picture of how the new improved systems are being used and most notably use the data to improve organisational knowledge transfer processes. In this way, knowledge management serves in order to achieve the required efficiencies particularly relating with the organisational issue in American Airlines (Dataware, n.d.). In lieu of the ‘overbooking’ issue from the management prospective, the particular areas like properly setting reservation levels higher than seating capacity, high level overbooking decision making policies and technologies along with the optimisation model should be improved in order to cope up with this major issue that is normally faced by American Airlines (Smith & Et. Al., 1992). In this connection, knowledge management serves as a standard protocol and application that facilitates the incorporation among various systems that are responsible for the improvement of the process of ‘overbooking’. By implementing the various systems, knowledge management ensures that that the information architecture related with the process of ‘overbooking’ is flexible enough in order to meet the evolving needs of American Airlines. In this way, knowledge management serves to achieve the required efficiencies particularly relating with the management issue of the organisation (Dataware, n.d.). The technical issues of American Airlines, especially the information distribution problem that the organisation is facing should be improved by the growth and development of reservation systems. Also the related usage of operations research in the organisation can result ultimately in a proper as well as an adequate way to keep the track of seat availability on several flights for a significant amount of passengers booked all over the world (Smith & Et. Al., 1992). In this connection, knowledge management serves as a customisable knowledge management system. It should introduce certain user models so that the organisation can easily introduce various information processing technologies and apply some modifying tools like ‘HTML’ and ‘JavaScript’ among others. This particular knowledge management system allows easy integration of existing and new applications. It also includes certain documented application programming interfaces as well as some software developer toolkits that eventually allows the organisation to link or communicate different systems to each other (Dataware, n.d.). Ethical Concerns and Security Threats to the Recommended Information Systems Basically, the organisational issues of American Airlines can be controlled by improving the means of landline telephone connections along with introducing cellular telephone technology so that their main computer could easily start a single flashing light located at the central gate with proper fully functioning and monitoring systems (Synapse Wireless Inc, n.d.). Apart from the organisational issues of American Airlines, the management issues of the organisation can be controlled through the utilisation and implementation of the decision technologies which is incorporated into an ‘optimisation model’ that increases the net income along with overbooking decisions. In order to choose the best overbooking model for a particular flight, the ‘optimisation model’ balances the added income that can be achieved by reservation selling against the cost of the additional over sale risk. As the overbooking level enlarges, net revenue also increases to a significant value. In this way, the issue of ‘overbooking’ problem might be controlled for American Airlines (Smith & Et. Al., 1992). The significant technical issues of American Airlines can be controlled by introducing or developing ‘Customer Reservation Systems’ (CRS) along with implementing the ‘SABRE’ system. These particular systems denote the real-time business application of computer technology, and an automated system with complete passenger records that are easily available electronically to any agent connected with these systems. As a result, the reservation of the travellers of American Airlines increase per day and filing of reservation can also decrease to a significant level. These controllable factors allowed the organisation in order to handle the growth in demand for air travelling. In this way, the issue of technical problems of American Airlines can be controlled (Smith & Et. Al., 1992). From the ethical concerns perspective, the organisation can face an ethical threat while improving the landline telephone connection along with enabling cellular telephone technology. In certain areas, American Airline relies on systems and procedures that are specifically designed for suitable groups of employees in order to make sure that it concurs with its regulatory obligations. Failure to comply with the regulatory obligations eventually can raise the ethical threats for the organisation. However, this ethical threat can be controlled by performing and establishing proper technologies that genuinely matches with the necessary regulatory obligations (North American Airlines, 2008). Moreover, the “overbooking’ model or policy of American Airlines could be an ethical issue or threat for the organisation. The particular model might not match the ethical standards between the organisation and the customers or passengers of American Airlines. The policy could be in an obligation from the customers or passengers point of view and can eventually hamper the brand or reputation of the organisation. This threat can be controlled by having or applying proper and transparent ‘overbooking’ policy that simply matches with the ethical standards desired by customers without any further obligations (North American Airlines, 2008). In this connection, the ethical threat relating with the introduction of ‘Customer Reservation Systems’ (CRS) along with the implementation of ‘SABRE’ system can occur within the organisation. In lieu of this, the threat lies in the operations strategies of the systems that the organisation implements. In order to control this factor, the implemented systems should be operated according to the needs and the requirements of the organisation in a proper and adequate manner along with operating in a free risk environment (North American Airlines, 2008). The security threats particularly are observed in the recommended solutions of technical issues of American Airlines. The isolated as well as complicated password protection systems that are would be introduced and implemented by the organisation such as ‘Customer Reservation Systems’ (CRS) and ‘SABRE’ system could arise a security threat for the organisation. In order to cope up with this probable security threat, the organisation has to establish and introduce a proper and well sustained quality password protection software programs so that the system operations could run smoothly without any complexities operating within the organisation (North American Airlines, 2008). Thus, these are certain ethical and security threats to the recommended information systems along with controllable measures have been provided. Conclusion With the advent of increased use of technology and competition in the airlines industry, there is a need of a very practical applicable theory that is maximising revenue and reducing cost for every organisation of the airlines industries in order to survive in today’s business environment. In the paper, the current operational areas of American Airlines that include the various operational fields like the organisations product and service design, supply chain management processes, planning inventory control processes, resource planning policies and quality management among others are focused. And also an analytical discussion has been made regarding these key processes within the operational areas of the organisation that significantly contributes to the competitive advantage. Also the various organisational, management and technical issues surrounding the information system has been elaborately discussed. In this connection, certain instructions were also recommended regarding the improvement to the specialised areas of the organisation which might eventually prove beneficiary as well successful for American Airlines. The concept of knowledge management is also highlighted and ultimately it can play a significant role or position within the organisation in alleviating the prevalent issues. Moreover, the ethical concerns and the security threats to the recommended information systems is also highlighted and certain controllable factors were also prescribed in order to cope up with several issues and threats that are prevailing within the organisation. It can be hoped in case of American Airlines that by following the prescribed recommended plans or strategies, the organisation can reach its desired objectives to a large extent. 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