Comparison of Boeing & Airbus - Case Study Example

A comparison of Boeing & Airbus Table of Contents Executive Summary 3 Introduction 4 Company overview 4 Boeing 4 Airbus 5 Five competitive advantages6 Quality (Being Right) 6 Speed (Being Fast) 8 Dependability (Being on time only) 9 [Source: Kanji, G. 2008 p.63] 11 Flexibility (Being able to change) 11 Cost (Being Productive) 12 References 15 Executive Summary The executive summary is of prime importance as it throws light on the overall aspects of the topic of operational management. Here the researcher has discussed the operational management and strategies of two leading aircraft manufacturing companies. Therefore, researcher mainly stressed on five key aspects of operational performance objectives which are quality, speed, dependability, cost and flexibility. The various components of the operational management techniques have been discussed in details with emphasis on indispensable ingredients which can help the buyers. The quality assurance techniques need to be supervised and monitored in such a way so that the end results can be delivered in accordance with the proposed or assured quality. The speed is an important in the airlines industry. So, the researcher draws a comparison between the speeds of two companies. Finally, the flexibility, cost and dependability will discuss to highlight the operational efficiencies. Introduction In present corporate scenario, the international business management plays a crucial role to manage the business network (operation management) across the globe. So, most of the companies introduce innovative strategies to enhance the business network and reduce the competition. In this sense, strategic management is an integral part of international business management. Strategic management identifies and describes the policies that the management of an organization formulates to achieve competitive advantage for the firm and enhances its performance (Kanji, 2008 p.69). When the average profit, product quality etc. Are higher of a company than its competitors, it can be said that the company has gained competitive advantage. Strategic management aids the management in identifying and setting the objectives of a firm. The mission, vision, values and objectives are set depending on operation strategy of a firm. Strategic management provides sustainability to a business entity in the competitive market. It gives a clear picture to the employees about their job culture and co-relates it with the organizational goals. Operational strategy helps in increasing the productivity of the firm and maximizes the skills of the employees by introducing new work cultures and providing new area of work. Thus, strategic management is beneficial to a firm in various important aspects. This study will throw light on the contribution of strategic operations management as well as the operational performance of two leading airlines company Boeing and Airbus (Owen and Maidment, 2009 p.142). Company overview Boeing Boeing is one of the largest aerospace companies in the World. The corporate office of the Boeing is established in Chicago. The company is specialised for manufacturing commercial jetliners and defence, space and security systems. This is the top exporter which attaches with the 150 countries’ allied governments and airlines companies. The product and service range of the company includes military and commercial aircraft, weapons, satellites, lunch system, defence and electronics system, communication and advanced information systems and performance based training and logistics. The aerospace company is traditionally specialised in innovation and leadership. The primary objective of the company is to meet the emerging customer needs through its continuous expansion of the product line. There are 170000 employees are connected with the business network throughout the world. The operational efficiency of Boeing shows the quality of the employee force. There are two customized business unit i.e. Boeing Commercial Airplanes and Boeing Defence, Space & Security. The company also has set a new financing business unit which is a financial solution provider for airlines industry throughout the globe. This unit also supports the main two business unit of Boeing. On the other side Boeing Operations & Technology and Engineering helps to acquire, develop, apply and protect the innovative technologies (Hester, 2009 p.211). Airbus Airbus is in the forefront of the aircraft industry in the area of commercial know- how, technological leadership, customer focus, manufacturing efficiencies. Headquarter of this prestigious airline manufacturing company is located in Toulouse, France. The company has reported that it produces approximately half of the jet airliners throughout the globe. The company is specialised for the commercial airliners manufacturing. There are 63000 employees are connected with wide spread business network of Airbus. The business network of this company is mainly based on four European Countries i.e. United Kingdom, France, France and Germany. The branches of this company are also spread in Asia Pacific countries like India, China and Japan. There are two products which is very popular for Airbus i.e. A320 (first fly by wire airliner in the world) and A380 (World’s largest airliner). In the year 2011, sales revenue of the company is € 33.10 where the net income is € 1.597 billion (Hester, 2009 p.216). Five competitive advantages (Source: Patil and Gray, 2009 p.73) Quality (Being Right) Boeing implement four primary aspects of operational management in their manufacturing process i.e. supplies relationship, lean, build anywhere vision for the future and global manufacturing—supporting. For following this aspects, all the employees of the company is well aware about the lean management which increases the productivity of the company. The Shingijutsu consultant is also provides effective training for the rights action in the operational process. The lean management is essential part of operational management, aqnd it is also the heat of production system of Boeing. The success of commercial Airplanes in the global market place is depending on this management. The lean invent special design of the airline which is attractive for the customers. There are also different aspects in production system rather than lean management i.e. more improvement in production process and supplier partnership (Sinha and Willborn, 2007 p.214). During the whole production process of commercial airlines the company concentrates to reduce the defect and maintain the quality which is competitive than other airlines company. This is main chemistry of the company to be successful. There are the primary aims of the production process i.e. highest quality production, cost effective and consuming least time in production. Boeings used number of production system mechanism in the production process i.e. Six Sigma, Lean manufacturing, Global Manufacturing, value Stream etc. All the elements are important for maintaining the competitiveness of the company. The value stream tool of Boeing represents the production flow of building an airplane of the company which is very essential for quality production. This mechanism guides the company from raw material to the production of the finished goods which reduce the production defect (Daniel, 2007 p.87). On the other side, the Airbus used quality engineering to maintain the existing quality and increase the base quality. The primary expectation of the customer from the company is to produce highest quality products which are safe enough. So, the company does not treat the quality within a certain standard. But it is attached with the whole life cycle of the production process of the company i.e. from designing to manufacturing stages. The quality engineering reduces the geographical as well as functional barriers of the company. The primary role of this mechanism can be segmented in two categories i.e. Quality Conformance and Quality Line Side. Airbus also used total quality management in their production process which enhances the customer base of the company. Due to enhance the quality the company is driving from continuous improvement to secure proper process performance (Unhelkar, 2007 p.175). [Source: Daniel, G. 2007 p.184] Speed (Being Fast) The comparison between Boeings and Airbus shows that the cashing speed of the flights is same i.e. 855 km / hrs. But, there are slight speed advantages of Boeing over Airbus. The primary cause of this difference is heavy weight and length. So, most of the customers prefers the Boeings rather than Airbus due to its high speed. The operational efficiencies and strong engineering and maintenance are also the prime cause behind high speed. There are different types of designs are to be incorporated in the operational process so that possible improvements and requirements can be identified to make the entire process efficient and accurate to the maximum possible extent (Stebbing, 2010 p.116). Dependability (Being on time only) Engineering and maintenance is the first step of dependability in the operational process of Boeing. This helps the customer to fly the airliners in a safe and secure way which fulfils the regulatory requirement of the customers. For the purpose of maintain the fleet, the company provides the latest information about fleet and other services to keep customers appraised. The company also provides the engineering support to the customers who are too much essential for track and schedule the maintenance programme. The primary aim of these activities is to make an airplane based on the dignity of the company. Numbers of operational centre of Boeing spread throughout the globe with aims to assists the customer of the company and enhance the dependability with the company. These operational centres helps the clients in the area of engineering issues, maintenance requirement, technical problems on the time frame of 24*7. There are total 12000 fleets (McDonnell Douglas airplanes and Boeing) are present in the airlines industry due to the dedicated and around-the-clock customer support. The range of services of the company is starting from comprehensive airplane support services and ends with maintenance issue, system, handle structure and other issue. The important features of these airliners manufacturing is to use JIT (Just- In – Time) technology in the production process as well as service centre which increase the productivity and loyalty of the company (Vaughn, 2007 p.136). On the other side, the dependability assessment of the Airbus depends on the two parameters i.e. aircraft design and systems manufacturers. This is totally based on the stochastic modelling. Traditionally, the company ensures that pre defining appropriate architecture will satisfy the dependability requirements of the company. This is basic measurement for company’s growth. It reflects the company’s capability to manage the three types of resources i.e. human capital, information capital and organization capital. Airbus takes adequate strategy to manage the human capital i.e. employees. Airbus utilizes the performance appraisal, employee motivation, training and development technique to handle these resources properly and increase the dependability. But present the company use some new strategies which are based on the real time setting. According to the strategy, the Airbus uses deterministic, pre-defined rules and approach to take decision on mission re-assignment and aircraft dispatch. The company follows three steps process as a part of dependability assessment. The first step is to track the changes in the state of system components. This correspondence tracks each and every system component and find out the component which is responsible for the failure during the achievement of the mission. Here, it is assumed that these components are not related with the safety issues of the aircraft. In the second step, the operational team of Airbus track the changes of failure rate of different components. This step finds out the new failure rate as well the prognosticated rate of distribution due to the failure of system components. In the third step of the dependability assessment is changes in mission profile. There are number of features which have been included in the operational mission of Airbus i.e. the number of days the duration of each flight and number fleet per day. The destination of flight can be changed due to the different external cause. So, the engineering and maintenance facilities related with the mission. The operational team of Airbus is always alert about all these things to enhance the dependability. [Source: Kanji, G. 2008 p.63] Flexibility (Being able to change) The integration, substantial design, testing operations and manufacturing of Boeings depends on the flexibility and efficiency of the unlicensed spectrum. The flexibility is applicable for the control of automated equipment and communication. The company uses contractual obligation as a part of the flexibility in operation. The concept of contractual obligation can be defined as an agreement between two separate entities or organization where something needs to be returned for a valuable benefit. While making a contractual obligation the sellers or the business organizations interact directly with the customers to assess their obligation regarding products and services and delivers assured quality of products and services at the right time. If this contract is violated then the quality system can contribute in initiating legal steps to punish the guilty. On the other side the Airbus offer legal assistance in cases of negligence on the part of treating the customers by providing them inadequate or wrong information in respect to availing services or buying of products. The concept of the quality system being contrary to the aspect of negligence can take a serious turn of events for the sellers if deliberate negligence is noticed while dealing with the final buyers (Patil and Gray, 2009 p.142). [Source: Stebbing, L. 2010 p.94] Cost (Being Productive) The annual report as well as the production report shows that the cost of the two aircraft manufacturing company can ne segmented in the following ways: Prevention Cost: The prevention cost is actually an integral component of the quality assurance technique which immensely helps in preventing inferior quality involved in the desired products and services. Some of the in-built ingredients of the prevention costs are marketing research, customer surveys, purchase order reviews, process validation, quality improvement activities, quality training, gage design, process control planning, supplier quality planning etc. Appraisal Cost: The appraisal cost is defined as the cost which helps in identifying the different types of expenditures involved in the planning process and the underlying testing techniques which also involves the final buyers. The concept of appraisal is aptly applicable for assurance of superior quality in both the internal and the external business environment. Failure Cost: This type of cost is generally included in successful accomplishment of the planning and is defined as the additional costs which are not mandatory in achieving the desired results for attaining the assured quality of the end products and services (Taylor, 2009 p.185). [Source: Daniel, G. 2007 p.114] References Daniel, G. 2007. Operations Management: Critical Perspectives on Business. 4th Edition. Macmillan Press: Northampton. Hester, R. 2009. Air quality management. 5th Edition. Blackwell Science Ltd.: Conway. Kanji, G. 2008. Total quality management: proceedings of the first world congress. 5th Edition. Times Books: Oldham. Owen, F., and Maidment, D. 2009. Quality assurance. 5th Edition. New York University Press: New York. Patil, A. and Gray, P. 2009. Engineering Education Quality Assurance: A Global Perspective. 5th Edition. Digital Press: Bradford. Sinha, M., and Willborn, W. 2007. The management of Operational Management. 7th Edition. Fourth Estate: Manchester. Stebbing, L. 2010. Operational Effectiveness: the route to efficiency and competitiveness. 6th Edition. David Fulton: London. Taylor, J. 2009. Quality assurance for environmental measurements: a symposium. 5th Edition. Harper Press: Liverpool. Unhelkar, B. 2007. Process quality assurance for UML – based projects. 5th Edition. Nick Hern Books: Highland. Vaughn, R. 2007. Quality assurance. 5th Edition. David Fulton: London. Read More