Corporate Responsibility of British Airways - Case Study Example

BRITISH AIRWAYS SUSTAINABILITY REPORT Student’s Name: Code + Course name Professor’s name University City, State Date Executive Summary British Airways (BA) is a global premium airline and the largest airline in the UK. The airline is a subsidiary of the International Consolidated Airlines Group (IAG). By the end of 2013, BA transported 40 million passengers as compared to the 37.6 million passengers that it transported in 2012. The company’s global workforce stood at 41,720 employees in 2013. The company has strived for excellence in the provision of airline services both within the UK and on a global basis. As a strategy of attaining competitive advantage, the airline has implemented strategic supply chain management initiatives to ascertain that its SCM activities meet the economic needs of the company besides catering for the environmental and social aspects. The two areas that require development include the capabilities and culture of the SC professionals. Consequently, the project targets to evaluate the professional experience and attitude of the SC professions before upgrading the employees to have the proper culture and capabilities that suit the airline industry. Introduction Supply chain management refers to the set of techniques used in the effective integration of suppliers, warehouses, manufacturers and stores to ascertain that the firm produces and distributes its merchandise in the appropriate quantities, at the required time and to the required locations. By so doing, the main objectives of the company encompass minimizing system-wide costs and enhancing the delivery of its services. Sustainable supply chain management refers to the efficient fulfilment of the economic, social and environment aspects that concern the supply chain in order to guarantee competitive advantage on the part of the company (Chkanikova, 2012). This paper seeks to explore sustainable supply chain management in the aviation industry through the case of British Airways. The aviation industry is selected for this project because companies in the industry have intensified their attention on their supply chains to lower costs (PricewaterHouse Coopers, 2014). Additionally, supply chain in the industry is risky and requires sustainability. Discussion In the aviation sector, supply chain management refers to the effective integration of the suppliers, warehouses, stores and manufacturers with the intention of ensuring that the airline industry uses the least possible costs to obtain its products and deliver its services to customers. It is important to understand the upstream and downstream sectors of the aviation value chain. The upstream stakeholders of the airline value chain encompass aircraft manufacturers, the manufacturers of the components of the aircraft, leasing firms, and the providers of aviation infrastructure such as airports, aviation communication providers and air navigation service providers. The other suppliers in the aviation supply chain include caterers, fuel suppliers, providers of insurance service, and providers of ground services. The downstream section of the aviation value chain consists of the primary product of the airline that is the passengers. This entails the utility of travel agents, Global Distribution Systems (GDS), Computerised reservation Systems (CRS), and travel integrators such as tour operators. Supply chain management emanated from the strategic management theory that emphasises collaborative advantage as opposed to competitive advantage. The collaborative paradigm views the business world as a network of integrated entities that exhibit interdependent relationships initiated and enhanced through strategic collaboration with the intention of guaranteeing benefits to all the stakeholders (Chen 2004). British Airways (BA) is a global premium airline and the largest airline in the UK (BA 2012). As a result, the sustainability of its operations is a mandatory necessity for the company in its quest to be the most admired airline in the world. The company has introduced an integrated business plan and sustainability strategy to enhance its awareness pertaining the impact of its operations to customers, the society, the economy and the environment. BA exhibits its relentless efforts towards attaining sustainability in its supply chain by implementing several supply chain software applications such as JDA and partnering with other firms such as Gist to manage its supply chain. The second product of the airline industry is the distribution of cargo. It necessitates the effective integration of the services of cargo integrators and freight forwarders (Tretheway & Markhvida 2014). Therefore, in the case of BA, the airline had already allocated the responsibility of the managing of its supply chain involving expendable airframe spare parts to Boeing by 1999 (BA Engineering 1999). The firm has also implemented the JDA solution to enhance the effectiveness of the supply chain besides achieving the effective integration of the supply chain team. Moreover, BA has hired the services of Gist to manage the supply and distribution of employee uniforms and inflight catering products. The sustainability strategy has also seen the airline ascertain that its supply chain process fulfils the social and environmental aspects besides enhancing its competitiveness in the industry (Newton 2000). A good organisation structure is one of the indicators for the success of its supply chain. An effective structure of the supply chain implies that the existing relationships between the stakeholders of the supply chain has a clear specification of the bases, power, authorities, responsibilities, position and communication. Such precise structuring of the critical aspects of the supply chain structure enables the airline to reduce costs and enhance the efficiency of its airline services. Apparently, a structure that heightens the communication between the stakeholders of the supply chain process and reduces hierarchical barriers plays a major role in guaranteeing the success of the service company. Moreover, it is proper to state that service sectors concentrate on ensuring that the delivered services yield customer satisfaction to guarantee their continued success in the industry. Consequently, a good culture geared towards satisfying the needs of customers will see the airline concentrate on delivering its products, passengers and cargo, at the expected destinations within the anticipated timeframe (Dess et al. 2008). Moreover, the services offered by the members of the flight crew is also important towards guaranteeing customer satisfaction. Sustainable management of the supply chain also necessitates the utility of strategic alliances that will enable the merged company to combine its products thus resulting in the maximum utility of its resources and the reduction in the costs that the firm would have incurred if it had transported half the expected passengers or cargo. For instance, the merger between British Airways and Iberia in 2011 resulted in the formation of the International Consolidated Airlines Group (IAG). The merger resulted in a 2.6 million increase in the number of passengers carried by BA in 2012 as compared to the previous year. The ability of the strategic supply chain to plan and forecast the future demand for its products is the other success factor. Moreover, the use of the most appropriate technology in the supply chain by the airline also serves as a mandatory success factor. Finally, outsourcing should also be one of the SCM practices that an airline ought to embrace so as to build its in-house capabilities pertaining SCM with specific emphasis on the use of the inventory management modern technologies (Jennings 2009). BA has also adopted outsourcing which has proven to be beneficial. I think the corporation has a built-in process of change management that reviews the supply chain elements and looks for opportunities to improve operational efficiency and quality on a continuous basis. Just as it is the case in many airline companies, BA also manages the pricing of its services and revenue. The firm also understands that inventory management would propel it to greater heights in terms of competitive advantage and revenue generation. The company also utilises a traditional supply chain technique to approach variances in the demand for its services and product failure. The catering unit exhibits a good example of an effective supply chain technique. It has an objective that requires it to be the undisputed leader in the supply chain subsector of the airline. The decision of BA to turn to JDA Solutions has enabled the company record maximum performance levels. Prior to the implementation of the solution, some of the constraints that the airline faced in the management of its inventory encompass high profile failures in the delivery of its services, nil-stocked items, and high costs of inventory witnessed at the catering division, in transit, across the suppliers and at the distribution centres. Following JDA’s ability to forecast the expected passengers, the company is in a favourable position of estimating the materials used to meet the needs of the passengers thereby yielding sustainable SCM (JDA 2015). However, in cases whereby the firm cannot predict the future, it is difficult to eliminate the supply chain risk completely since no firm can have infinite resources to meet all its supply demands regardless of the supply disruptions. However, there are three ways through which the company can get rid of the supply chain risk. The airline firm should strive to enhance the resilience of its supply chain. The first option of attaining the resilience of the supply chain concerns the capability of the company to react immediately to capitalise on the existing marketing opportunities or counteract any emerging impediments to success. The resilience of the firm also implies that the company should be able to absorb any shock and return to its original state of performance as soon as possible. Finally, the company can also enhance the resilience of its supply chain by being in a position of recovering from the most widespread or worst disruption. It is also certain that many companies have already spent a lot of time and money on sustainable supply chain management. However, there is more that the firms ought to do. For instance, it is evident that most sustainable SCM strategies target to reduce the costs without taking into consideration the vulnerabilities caused by the cost-reduction strategies. After the identification of the vulnerabilities, the firm should also determine the owners of the vulnerabilities since all the stakeholders in the SC have different responsibilities. Two Areas for Development As mentioned above, developing culture and capabilities of any department of a firm contributes towards the ability of the firm to attain competitive advantage over its competitors. Similarly, the area of culture and capability require continuous improvement to enhance the culture and capabilities of all BA’s supply chain stakeholders pertaining supply chain management. Strategic Approach In the quest to improve the two areas, the project targets to understand the HR strengths and weaknesses with reference to the culture and capabilities of the professionals. The study will use questionnaires to obtain the perception of the all the stakeholders regarding whether they considered that the firm’s culture and capability aspects pertaining the supply chain HR professionals was proper for its success or not. The second phase of the project entails conducting an assessment of the experience of the SC HR professionals. The fact-finding mission targeted to determine the interest of the professionals by finding out the specific level of involvement to the firm’s supply chain processes and objectives. Project Timeline The project would run for nine days with the first day involving the creation of awareness to the BA staff regarding the significance of the project to the airline. The task will run for three days. On the second day, the project leaders will communicate to the employees about the particulars of the project. The third day will involve drafting the questionnaires followed by the administration of the questionnaires to the respondents on the fourth and fifth days. On the sixth day, the project leaders will collect the questionnaires. The leaders will then analyse the questionnaires on the seventh day. The CIPD professionals would then interview the respondents based on the professional guidelines on the eighth day followed by an open forum conducted by the professionals on the ninth day. The open forum session would last for approximately three hours (Appendix 1). Budgeting The project would cost $285,000 to develop the skills of the employees. The project would split the funds in conducting a pre-study assessment that would involve some of the project members travelling with the airline to have their experience pertaining the professionalism exhibited by the supply chain professionals. The project would also use funds in the preparation, printing and administration of the questionnaires to the respondents. Finally, the firm would also utilise part of the allocated funds to hire the services of CIPD professionals since they would be responsible for conducting the interviews and discussions through membership upgrade and experience assessment. Communication Plan The need to assess the experience of the BA SC professionals and upgrade their membership necessitates the use of the SC supervisors including both ground supervisors and the crew members. The study will use posters, e-mails and direct phone calls to the selected respondents to create the sense of urgency for the project one month before the onset of the project. Two days before the project’s set commencement date, the project leaders phoned the respondents to ascertain their participation in the project. The project will also use discussion forums to communicate to the respondents on the last day of the project. Project Constraints The main constraint of the project is the failure of some respondents to evaluate their individual performances. In fact, some respondents provide false evaluations that do not reflect their actual performance on the ground. The basis for the false evaluations is the fact that the respondents fear that they would face a potential lay off in the event that they did not portray the required professionalism as stated by the CIPD professionals. Risk Assessment The main risks that the BA supply chain faces is a ‘fragile’ reputation since customers can regard the firm negatively on a single occasion where the professionals portray substandard performance in the delivery of their services. Intense competition for passengers and cargo is the other risk that has necessitated airlines to merge to increase their product size. Finally, the supply chain faces the risk of increased costs associated with the security measures, fuel and labour involved in the transportation of its products (passengers and cargo). Conclusion British Airways is the largest airline in the UK; having realised the boost when it merged with Iberia to form the International Consolidated Airlines Group (IAG). Developing a sustainable supply chain has seen the airline introduce the social and environmental dimensions into its strategic supply chain management. The acquisition of latest passenger aircrafts such as Boeing 787 and Airbus A380 has marked a significant milestone for the company in the quest for noise and carbon footprint reduction. The project targets to develop the capability and culture of the BA supply chain professionals to enhance their performance and attitude. The Reflective Analysis I tend to believe that the project bears paramount significance to the company. The main areas of development that encompass developing the capabilities and culture of the employees play a pivotal role to the success of a department of an organisation. For instance, culture defines the attitude, norms and values portrayed by the employees at the workplace. Therefore, I think that the professional development project would yield a positive culture for the employees thereby fostering their morale. Consequently, the employees would strive to deliver their best in terms of meeting the objectives of the supply chain sector that revolve around attaining customer satisfaction by offering exceptional services. I also think that enhancing the capabilities of the SC professionals is also detrimental to the airline’s success. Exceptional capabilities implies that the airline is in a position of delivering the best services by availing its products to their destinations in the required quantities, at the correct time and in the correct manner. Therefore, I opine that the successful implementation of the project would increase the reputation of the firm thereby impacting positively on its competitive position. The perception emanates from the fact that culture and capabilities are the central pillars of any service firm. Reference List British Airways (BA) 2012, Corporate Responsibility Report, British Airways Corporate Responsibility Report. British Airways (BA) Engineering 1999, ‘Innovative New Service: Global Airline Inventory Network’. Chen, I J & Paulraj, A 2004, ‘Towards a theory of supply chain management: the constructs and measurements’, Journal of operations management, vol. 22, no. 2, pp. 119-150. Chkanikova, O 2012, ‘Sustainable supply chain management: theoretical literature overview’. Dess, G, Lumpkin, G & Eisner, A 2008, ‘Strategic management: Texts and cases (4th ed.)’, Massachusetts: McGraw Hill. JDA 2015, ‘British Airways Achieves Cost Savings, Reduces Inventory Holdings with JDA Software’. Available from: http://www.jda.com/view/scm-case-study/british-airways-achieves-cost-savings-reduces-inventory-holdings-with-jda-software/ Jennings, D 2002, ‘Strategic sourcing: benefits, problems and a contextual model, Management Decision, vol. 40, no. 1, pp. 26-34. Newton, V 2000, ‘British Airways-Towards Sustainability’, International Journal of Sustainable Development. Riwo-Abudho, M, Njanja, L W & Ochieng, I 2013, ‘Key Success Factors in Airlines: Overcoming the Challenges’, European Journal of Business and Management, vol. 5, no. 30, pp. 84-88. Tretheway, M W & Markhvida, K 2014, ‘The aviation value chain: Economic returns and policy issues’, Journal of Air Transport Management, vol. 41, pp. 3-16. Appendix The Project Schedule Task Start End Duration Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 1 Creating the sense of urgency 10/11/15 12/11/15 3 Days                     2 Communicating to the employees 11/11/15 11/11/15 1 Day                     3 Drafting the questionnaire 12/11/15 12/11/15 1 Day                     4 Administering the questionnaire to the 200 employees 13/11/15 14/11/15 2 Days                     5 Collecting the questionnaires 16/11/15 16/11/2015 1 Day 6 Analyzing the questionnaires 17/11/15 17/11/2015 1 Day 7 Interviewing the respondents 18/11/15 18/11/15 1 Day                     8 An open forum discussion 19/11/15 19/11/15 1 Day                     Read More