Etihad Airways - Operations Management - Case Study Example

Etihad Airways-Operations Management Name Institution Date Etihad Airways-Operations Management Introduction Operations management also referred to as OM is the processes or systems of management that provide services and/or create goods (Stevenson, 2005). Competition within the industry of airline is powerful and companies ought to make every effort to improve endlessly and to develop their competitive advantages in terms of responsiveness, cost management and differentiation. With this regard, as the assistant for the OM for Etihad Airways, I will carry out some research about some operational issues in the company and the airline industry as a whole. In brief, Etihad Airways is regarded the United Arab Emirates’ flag carrier. The company whose base is in Abu Dhabi was established in July 2003 by the Royal decree (Buyck, 2008). 10 Operational areas & Product and Service Design Goods and services design Design of goods and services entails special features or characteristics of a service or product that is considered a major element in the buying decisions of the consumer in addition to innovation and new services and products’ time-to-market (Reid & Sanders, 2005). Etihad Airways is significantly devoted to offering guests with an excellent experience of travel both on the ground and inflight (Buyck, 2008). Recently the airline has upgraded several aircrafts in Economy Class and Business Class cabins, and its latest First Class suite is currently available on the all three-class plane. It is important that the operation manager carefully chooses which design to create since poor decision implications may possibly resonate all through the functions of operations. Operations managers in addition not only create latest product designs but also have to create outputs’ strategies that are within different life cycle stages. Managing quality Customers are usually ready to pay extra costs in case they see the service or product has a greater quality compared to that of the rival (Stevenson, 2005). Safety is considered a central function of the business at Etihad, and safety is regarded as the top priority of the airline. Safety is a fundamental component of the sustainable, effective and efficient provision of air transport business. Etihad Airways has instituted a Safety Management System (SMS), responding to ICAO recommendations, CAR Part X, Civil Aviation Law of the United Arab Emirates, and Federal and Emirate statutory conditions for safety and health, not excluding the Abu Dhabi Health and Safety Regulatory Framework (ADEHSRF) (Kingsley-Jones, 2012). The airline has a devoted department of safety and quality that serves as the coordinating central area for risk management during total operations. In its very basic sense, quality is satisfying the consumer with services or goods hence it is the operations manager’s obligation to make sure that awareness of quality is incorporated with every part of the 10 decision areas in OM. Process and capacity Design of process and capacity is taking the designed service/good and making decision on the most beneficial means to produce it. The focus of this decision is based on transforming an initiative into a real output. However, the process must meet client requirements and simultaneously satisfying specifications of product with respect to labor and costs (Reid & Sanders, 2005). With regards to Etihad Airways, the airline’s fleet of sixty six aircraft operates not less than 1300 flights every week, serving a global network of eighty seven cargo and passenger destinations in fifty five countries. The main business of Etihad is passengers’ air transportation at an international level. Additionally, the airline operates Etihad Cargo, Etihad Holidays and an international contact centre institute as a component of its business group (Kingsley-Jones, 2012). The role of the operational manager is to make aggressive and creative use of the company’s resources to accommodate every unique need of the customer. Location strategy When analyzing the organization’s potential variable and fixed costs the selected location is considered a vast predictor of the company’s profitability as well as the overall risk. The company’s location has crucial consequences in case the location of the company is poorly established (Stevenson, 2005). Etihad Airways is the United Arab Emirates’ (UAE) national airline. Being the UAE’s capital, Abu Dhabi is Etihad Airways’ hub. However, the airline has offices in the 87 countries it operates in (Buyck, 2008). Layout strategy Efficiency has to be the key concern for the company when the company’s design is being laid out. Like the other 10 decision areas of OM, the layout relies on the kind of the firm. With this respect, an airline company like Etihad Airways that operates at an internal level has to have a good layout strategy in order to fulfill the needs of its customers. Once operation managers carefully design layouts, productivity is increased, efficiency is increased, and hence costs are decreased (Reid & Sanders, 2005). Human resources and job design Design of job is a complicated approach that merges employee empowerment as well as method analysis. So as to attain the highest output per employee the operations manager will foster an atmosphere where the worker possess a highly specialized job where they are given freedom from the federal policies to make contributions to the organization in their personal means. Etihad employs not less than 9,000 staff who represents not less than 120 nationalities all over the globe. Additionally, the airline is dedicated to pioneering chances for the population of the UAE’s national, and via the Emiratisation Program, provides a broad range of opportunities of training for Emiratis, such as technical engineering development program, cadet pilot scheme, and a development program of graduate management (Kingsley-Jones, 2012). The increasing number of workers drove a considerable rise in administration of employee, necessitating an ongoing focus on bureaucracy and automation. Supply-chain management The most complicated feature of the responsibilities of the operational manager is creating a consistent, sustainable and generally most significantly efficient supply chain. The involvedness of supply-chain management entails making crucial decisions all through the chain (Jacobs, Chase & Lummus, 2011). While technology progresses so do supply-chain management advances. The supply chain of commercial aviation is under great pressure from forceful airline cost-cutting as well as low traffic demand. Inventory, MRP, JIT Inventory management is OM’s three-tiered factor that is essential to the company’s success. It entails dependent demand, independent demand and JIT and lean system. The OM manager has to develop comprehensive ordering schedules, reduce lead times as well as creating detailed bill of materials. It is argued that when a purchasing system is more dependable, the higher the profitability probability not just for the organization but for the OM manager as well (Reid & Sanders, 2005). Just-in-time or JIT and lean system are two major elements in inventory management that greatly depend on minimization of waste. JIT takes a central focus to minimize waste, while lean production starts externally with the customer’s focus. It is the role of the operations manager to establish what is valued by the customer and then optimize on the goods’ inventory so as to reduce wasted holding expenses on needless goods (Reid & Sanders, 2005). Once lean production and JIT are used in unison a supply chain that is very profitable is created. Scheduling Scheduling involves operations’ timing and can be defined by short-term and aggregate scheduling. Aggregate scheduling integrates consolidating every function of a company into a distinct schedule that outlines the company’s long-term goals; varying from establishing the work-force size to influence demand to changing prices (Stevenson, 2005). Many OM managers prefer using graphs or charts for simplifying sales and ordering forecasts whereas others prefer the format of linear programming. The fundamental nature of short-term scheduling is the firm’s capacity to meet potential surges in demand which were not identified within the long-term forecasts. Operations managers have to choose whether to concentrate on longest processing period projects or the earliest job that presents in the system. Maintenance The final strategy decision in OM is maintenance and is frequently overlooked. Making sure that the equipment required to produce a service/good is efficiently functioning without devastating breakdowns is essential to the company’s long-term stability (Reid & Sanders, 2005). In case the operations manager sustains thorough measures of preventative maintenance through regular inspections and can offer corrective maintenance, the likelihood of downturn of equipment diminishes drastically. Generally, Etihad Airways is managing product/service design according to their selected strategy which is differentiation (Buyck, 2008). Additionally, the company is fully dedicated to carrying out its operations in methods that guarantee the responsible management of environment’s effect. Via the implementation of the environmental policy, corporation with the Masdar future energy program as well as its fleet that is fuel efficient, the airline centers on complying with the reduce, reuse and recycle principles (Kingsley-Jones, 2012). Capacity planning The company manages its capacity by the manner in which it operates. For instance, on average the airline presently operates 187 flights every day; 1,311 flights every week; 5,638 flights every month; and 68,172 flights every year. Currently the airline operates a 66 aircraft fleet which has: two Airbus A319s; 15 A320s; 16 A33-200s; six A330-300s; four A340-500s; seven A340-600s; 10 Boeing 777-300ERs; two A300-600Fs; two A330-200Fs; one B777-200F, one MD11F and one Boeing 747-400F (Kingsley-Jones, 2012). In 2011, in terms of revenue and passenger numbers, Etihad Airways saw the number of passenger increase to 8.3 million, a 17% rise from 2010. Forecasting Forecasting is the process whereby a future occurrence is predicted (Shim, 2009). The fundamental basis of every business decision includes production, inventory, personnel and facilities. Forecasting time horizons include short-range forecast which is usually up to one year, normally not more than three months. Medium-range forecast has three months to three years. Long-range forecast involves three years and above. The types of forecast include: economic forecasts whereby business cycle is addressed in terms of money supply and inflation rate among others; technological forecasts is whereby the technological progress rate is predicted; demand forecasts is whereby the sales of existing services and products are predicted (Shim, 2009). So as to meet the predicted fleet of Etihad, destination and passenger growth by 2020 that plans for not less than twenty five million passengers to fly to not less than 100 destinations overseas a 250 planes’ fleet, the company will require a workforce of around 22,000 individuals (Kingsley-Jones, 2012). Regardless of the challenging conditions of economy that the aviation industry has faced from 2008, Etihad has kept on expanding its workforce within a measured means to fit this tremendous growth (Kingsley-Jones, 2012). Process selection and Facility layout Process selection is generally how services or goods are delivered or made, which influences a number of an organization’s aspects, including facility layout, capacity planning, equipment as well as work systems’ design. Facility layout involves the way facilities are organized so as to maximize processes which are not just effective but efficient towards the general organizational goal. Additionally, it is reliant on selection of the process. Etihad Airways appreciates digital strategy. Etihad acknowledges the significance of latest technology and keeps on researching and investing significantly in the digital channels (Kingsley-Jones, 2012). This is demonstrated through the online check-in. Guests are able to save time through online checking in from 24 hrs to 2 hrs prior to departure. Additionally, guests are able to check-in, choose their ideal seats as well as print their boarding pass. Location Etihad Airways is considered the UAE’s flag carrier. In July 2003, the company was founded by Royal decree and is based in Abu Dhabi (Buyck, 2008). The company’s base is Abu Dhabi International Airport and Khalifa City in Abu Dhabi is Etihad’s head office. The factors that the company considered is that the airline ought to reflect Arabian hospitality at its best and to enhance Abu Dhabi’s prestige as a hospitality centre between West and East. This location is good for the company the Arabian hospitality is cultured. Additionally, the location supports the company’s strategy because the airline has received a variety of awards which reflect its rank as the principal premium airline trademark in the globe, including World’s Leading Airline at the World Travel Awards in 2011, 2010 and 2009 (Kingsley-Jones, 2012). Quality management Etihad represents contemporary Arabia as well as Abu Dhabi which is its home, while also getting insight from the outstanding in 5-star boutique hospitality from all over the globe. Etihads guests travel within a high-tech seating planned for optimal comfort, experience impeccable service and fine dining, and use the modern inflight entertainment (Kingsley-Jones, 2012). On ground, the airline has deployed a number of services intended to make the experience of travel as smooth, comfortable and quick as possible. Every inflight menu is customized to a particular route, characteristically including at least one Western option, one taste of Arabia dish and one destination inspired dish. Quality management facilitates the growth of a business (Bedi, 2006). Conclusion In conclusion, this paper has provided an analysis of operation management with reference to Etihad Airways. The ten areas of OM have been discussed and the role of the operational manager has been cited. In general, Etihad Airways faces some challenges just like any other international airline can face in the airline industry. However, with proper strategies in place, the company sees itself as the leading airline company like it is as seen by its Award winning capacity. Reference Stevenson, W. J. (2005). Operations management. Boston: McGraw-Hill/Irwin. Kingsley-Jones, M. (2012). Etihad airways. Airline Business, 28, 8. Bedi, K. (2006). Quality management. New Delhi: Oxford University. Shim, J. K. (2009). Strategic business forecasting: Including business forecasting tools and applications. Hawkhurst, Kent: Global Professional Pub. Reid, R. D., & Sanders, N. R. (2005). Operations management: An integrated approach. Hoboken, N.J: John Wiley. Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2011). Operations and supply chain management. New York: McGraw-Hill Irwin. Buyck, C. (2008). Etihad's Global Ambitions - Abu Dhabi's airline has borrowed Emirates' business model and hopes for similar success. Air Transport World, 45, 4, 42. Read More