Operation and Process Management at Singapore Airlines - Example

Student Name: Tutor: Title: Operation and Process Management Course: World count: 2922 Executive Summary This report analyzes the operations and process management of Singapore Airlines as one of the profitable airlines in the world. The report commences with a brief introduction that sets the pace for the rest of the work and chats the path to be followed. The background provides basic information about Singapore Airline to set the tempo for the report. 4Vs has been used to analyze the various aspect of service delivery to the passengers using Singapore Airlines. The part that follows discusses the strengths and weaknesses of the airlines. The last past provides the recommendation and the alternative strategy for the airline for future expansion. The report ends with a brief conclusion echoing important points in the report. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Background to Singapore Airline 4 Analysis of Singapore Airlines 5 The types of operating process 5 Use of information technology to support the operations 6 Capacity management 7 TQM Principles at Singapore Airline 7 4Vs Analysis 8 The volume dimension 8 Variety dimension 8 The variation dimension 9 The visibility dimension 9 Major strengths and weaknesses of the operation 10 Major strengths 10 Weaknesses of Singapore Airline 10 Recommendations and operations strategy development 11 Conclusion 14 References 15 Appendix 16 Introduction Air travel is a huge a growing industry. The industry facilitates world trade, economic growth, tourism and international investment hence it is crucial to globalization across the world. Business travel has escalated where companies are increasing becoming international with regard to investment. Singapore Airlines is the national carrier of Singapore and transports 18.7M passengers yearly. Singapore Airline has been positioned as a premium carrier committed for providing high quality transportation services while providing priority to profitability over size. The airline operates passenger services to above thirty countries across the world with about one hundred and five aircraft (Rodrigues & Cusick, 2012).  This report gives analysis of the Singapore Airlines operations. It begins with the background information of the airline and analyzes the operations of the airline the next part. The report discusses strengths and weaknesses of the airline and provides recommendation for improvement. Background to Singapore Airline Singapore Airlines is the most profitable airline in the world (see Appendix 1 & 3) and it is a trend setter in the airline industry. Singapore Airline has been successful since it was understood from the beginning the Airline built a youngest, most advanced, safest and fuel-efficient fleet. The airline from a technical perspective has maintained the latest models and adheres to replacing of obsolete (Daft & Albers, 2012). The aircrafts of Singapore Airlines is divided into four classes that give customers a variety of choice. Over the last twenty years Singapore Airlines has grown from a mere regional airline into one of the leading cargo and passenger carrier in the world. Singapore Airline is more successful owing to its operational strategy. Critical success factors refer to refer to essential areas of activities that have to be performed well if the objectives, mission or goals of a business have to be accomplished. As defined by the founder, D. Ronald Daniel, the limited number of areas where the outcome, if satisfactory, will result in successful competitive performance of the organization (Chang & Hung, 2013). Singapore Airlines has to maintain is critical success factors in order to gain a competitive advantage in the global aviation industry that is very competitive. Analysis of Singapore Airlines The types of operating process A few elements of Singapore Airline operations and organization have enabled the airline to attain this paradoxical accomplishment of service excellence at low cost. These elements include rigorous approach in customer service innovation and design, continuous and heavy investment in human capital, culture of relentless cost focus, and investment strategy with regard to fleet. Singapore Airlines invests intensely in human resource management processes. Training lasts an average of 4.5 months which is twice more than the industry average (Rodrigues & Cusick, 2012). Higher investment in training include wine appreciation, poise and interaction style with equal importance focused on understanding the airline industry and essence of cost competitiveness. High quality services to customers results in a virtuous cycle where customer loyalty is promoted, there is lower turnover as well as a decline in customer acquisition costs. Singapore Airlines empowers frontline employees to generate ideas for improving the airline performance. It is common for cabin crew to come up with ways of cost-effectively serving champagne within the first class. The Airline has focused on fleet investment strategy which is the biggest investment for a full service airline. Singapore Airline has the youngest fleet of 85 months as compared to the industry average of 148 months. The aircraft that are new supports the Singapore Airlines strategy of premium service hence gaining from lower repair as well as maintenance costs together with low fuel consumption. A fleet that is young supports higher utilization permitting longer flight per day. The airline has a persistent focus on cost while profitability permeates throughout Singapore Airlines. The Airline outsources where necessary to lower-cost countries. Singapore Airlines’ business operation model has proved to be highly successful and it is aided by operational and strategic alignment throughout the organization. Operating four airlines in one umbrella is expected to give Singapore Airlines Group the leeway to attain wider regional exposure and the capacity to tap into budget and luxury consumer segments. The superior and quality service offered by Singapore Airlines begins on the ground. The airline has built a network joint ventures and wholly owned subsidiaries that offer operational support within areas like terminal management, catering, and aircraft maintenance (See Appendix 4). The airline terminal service provides a variety of terminal management services such as passenger and baggage handling, catering, and ramp operations. Use of information technology to support the operations The company targets to introduce Sabre’s new industry-leading crew management technology package in order to support more efficient training, scheduling and decision-making capabilities (Pires & Fernandes, 2012). Sabre Corporation is a global technology provider and AirCenter Crew Manager is a new crew management solution that has been developed by the company. Once implemented, the airline will be able to efficiently and quickly manage and track all the crew operations from a single, real-time and integrated web platform hence doing away with multiple systems. Using the innovative technology the carrier can schedule, plan, track as well as manage disruptions to rosters. This facilitates more responsive decision-making as well as improved productivity and efficiency which entail quicker staffing solutions to avoid flight delays. The technology will enable improvement in the planning capabilities of the airline in meeting training and qualification requirements. Capacity management Due rising customer demand staff knowledge becomes key to success. The company has four training centers for inspiring as well as demanding educational programs. The centers include Flight Operations, Cabin Crew, Management Development and Commercial (Lee & Worthington, 2014). The forms of study available are in classroom, on job or scale simulations. Singapore Airlines staff is often appraised for potential and performance. The senior management are well developed though frequent rotations in the top positions of the company. The management team has great depth and breadth. TQM Principles at Singapore Airline Implementation of TQM leads to enhanced business performance. Accrued benefits can be credited to traditional tools of TQM like quality improvement rewards and customer focus. The success of TQM principles depends on largely on its behavioral and intangible features like top management support, employee involvement and employee involvement. The recent years have witnessed the prevalence acceptance of TQM as a means of maintaining and gaining a competitive edge in the globalised market place (Daft & Albers, 2012). Singapore persistently emphasizes quality as demonstrated by success of Singapore Airlines and Port of Singapore Authority. Singapore Airlines has set high standards in service delivery with regard to handling passengers from the time they book their flights to the time of disembarking from the plane. Anything concerning the customer has to demonstrate quality and match up to premium positioning. Singapore Airlines headquarters are functional and simple demonstrating the drive of internal efficiency. The culture of Singapore Airlines management is to encourage high quality delivery in every aspect of the organization operation. The organization has invested heavily in workers training and recruiting highly trained chefs for quality delivery of services to customers. 4Vs Analysis The volume dimension Singapore Airlines has focused on a small size of fleet that is modern. The company focuses on quality as opposed to size. The company has over sixty destinations in about thirty-five countries across six regions. The volume dimension is particularly demonstrated in the number of flights that the airline is able to make within a given route. The volume dimension can be enhanced though increased routes and destinations for the airlines to other parts of the world. A young fleet provides efficiency and hence there is no delay in flights (Lee & Worthington, 2014). The management of Singapore Airlines quickly realized that the best thing to differentiate them from other competing players in the aviation industry is providing on-air services for its passengers. The focus has been on high quality and not the volume of the services provided. Variety dimension The company has exploited this dimension through providing variety to its customers. The highly trained chefs prepare excellent food to clients in flight service. The clients are at liberty to choose from the four classes provided by the airline. Variety of services raises the cost of service. Few services that are undifferentiated will lead to low costs as opposed to high variety dimension in operation (Chang & Hung, 2013). The variation dimension The company demonstrates variation in the services offered to customer in different classes. The passenger will enjoy services according to how much he or she can afford. Each service offered to customers is unique. It is one-time developed, rendered and consumed and it cannot be repeated exactly as it were in at another time, location and circumstance. Many services are heterogeneous and devoid of homogeneity and are often modified for every service consumer or for every new situation (consumerized) (Khedwal, 2014). Modifying services to fit the need of the customer creates great variation and satisfaction for the customers. High variation increases the cost of services offered by the airline. The visibility dimension The dimension refers the ability of customers to view, track their experience as well as order through the operation process. The company has the youngest aircraft in the airline industry and high quality defines its processes. The Singapore Airline crew are iconic and internationally recognizable as part of the airlines’ brand. The airline is established as a leader in high quality customer experience (Pires & Fernandes, 2012). Airlines operate in an environment that is very competitive. The main area of competition is customer service quality. Customer service assists in distinguishing one airline from another and further provides competitive advantage like the case of Singapore Airlines. The branding of the airline fleet makes it easy for customer to recognize the aircrafts wherever they are. Major strengths and weaknesses of the operation Major strengths Singapore Airlines has very good backing from the government of Singapore since it is able to raise the needed capital for expansion and successfully facilitate its operations. Ability to acquire modern and high quality aircraft depends on the availability of funds and the government supports the operation of the Singapore Airlines (Heracleous & Wirtz, 2010). Singapore Airline is one of the strongest brands from and it is almost iconic. The company has remained a trendsetter as well as an industry challenger over the years. This can be attributed to strong brand management driven by Singapore airline top-management. The Airline has a durable hub in Singapore where it taps customers and forms the basis of expansion. The Airline has a customer base that is satisfied and it is usually a desired airline for passengers due to high quality service. The airline is able to outsource some services in order to increase efficiency and concentrate on providing high quality services to customers. Singapore Airline is a tap airline brand with regard to the market capitalization as well as the number of passengers that are carried (Pires & Fernandes, 2012). The airline service development department performs trials, research, as well as mock ups to determine customer reaction in order to make sure that a service innovation is effectively implemented and appropriately supported by procedures. The company recognizes competition and hence employs broad benchmarking against the best companies in service delivery. Weaknesses of Singapore Airline Singapore Airline is amongst the most expensive airlines and it costs a lot of money to travel using Singapore Airlines. Moreover, the airline relies heavily on international traffic hence being prone to changes in the world’s geopolitics and realignment. The market share of the airline has declined owing increased competition in the aviation industry (see Appendix 2). Over the years the turnover ratio has also gone down because Singapore Airline has been ensuring a good financial performance is maintained in the past few years. Consequently, the airline has unbalanced portfolio. Through cutting of wages and downsizing during economic times has put the airline management at loggerheads with labour union movement. The high costs of operations make it a must for the company to provide its services at a high price hence excluding a class of passengers who cannot afford the services (Fu, Oum & Zhang, 2010). The need to create variety within the service delivery processes increases the cost of operations. Fluctuations in prices of oil have created a great challenge to the airline hence increasing operational costs. Recommendations and operations strategy development Singapore Airlines should be awake to changes in the external environment for the purposes of identifying threats and opportunities in business. The company has to remain competitive, make decisions quickly and appropriately in the changing and unpredictable environment. The Airline has to appoint qualified and high quality managers in the various departments for the purposes of dealing with forces in the business environment (Rodrigues & Cusick, 2012). The legal and public relations department is in charge of evaluating and overseeing the changes in regulations and laws. The accounting and finance department is responsible for evaluating and investigating the regional economy of Singapore Airlines. The research and development department is in charge of scanning as well as identifying the pressures within the social structure of a society together with the national culture. The strategic decisions of the Airline have to consider bringing down the cost and expanding region of operation in order to reach a wider customer base (Daft & Albers, 2012). Currently the airline focuses on the high-end market where affluent passengers are able to afford the high quality services provided the company. Diversification has also to include geographical diversification and price differentiation in order to widen the customer base to tap from. Modern day organizations such as the Singapore Airlines Group require a structure that will enable people to work and interact with each other in a co-operative and co-ordinate way as a way of working towards the set business goals. The airline has to be flexible for the purposes of providing the services wanted by customers (Lin, 2012). Singapore Airlines has to allow employees to make decisions that will take into account the changing circumstances within a variety of environments. It is for this reason that Singapore Airlines gives reasonable autonomy to every part of the organization as shown in the diagram. The airline can use the market penetration strategy to reach out to current markets in other regions of the world. The reputation of high quality services by Singapore Airlines provides it with a good opportunity of expanding to other unexplored territories through alliances and partnerships (Lee & Worthington, 2014). Singapore Airlines is at a stage that is important to explore the global markets. Joint ventures and strategic alliances are important in reaching the global markets. Strategic alliances will increase the presence of Singapore airlines in the global market. Singapore Airlines has to choose the most suitable path that is adaptable but less risky which offers the potential of maximizing the benefits of a global strategy (Heracleous & Wirtz, 2010). Operations of the airline have to be regional and localized to avoid duplication of duties. Product development is another strategy that can be used by the airline. The rising cost of living coupled with the implosion of ‘Budget airlines’ in Europe has demonstrated another kind of market that can be explored by Singapore Airlines. Following rising increasing cost consciousness among its market, Singapore Airlines can come up with a Budget Airline which will serve in short routes as very low cost and tap into the low-end market (Chang & Hung, 2013). Singapore Airlines has the mandate of being an excellent company and an excellent citizen of the world through enhancing peoples’ lives. The airline has made various commitments to the society and community which have to be fulfilled. The airline has also made a commitment in the preservation of the environment for posterity. This vision of Singapore Airlines will make it attractive to many regions of the world hence provide opportunity for expansion. The company has a great opportunity of expanding into India, the Middle East and China (Heracleous & Wirtz, 2012). Small stakes and alliances are the best way forward for Singapore Airlines since it may not be well-equipped to deal with political and other challenges that come with owning a foreign airline that will mean full scale-acquisition or expensive stake. Large scale expensive venture may be headline-grabbing but Singapore Airlines would be safe in choosing the path of alliances as opposed to being involved in mega projects that are risky. Conclusion Singapore Airline has demonstrated efficiency through maintain a small fleet of new aircrafts that attract customers. The focus of the management has been on high quality service delivery and not on the volume function. Variation is achieved through unique services provided to various customers. The volume dimension can be enhanced through expansion of the routes and destinations of Singapore Airlines. Effective training of the staff has proved very vital in service delivery and ensuring excellence in operations. The airline has been quick in adopting new technology that will assist in monitoring staff operations. The company is an industry trendsetter and challenger. The high variation in service delivery raises the cost hence making it expansive to travel with Singapore Airlines. However, the company has an opportunity of developing a budget airline that will focus in providing low-cost services within short routes. Strategic alliances and ventures seem to be the best way of expanding for Singapore Airline in order to avoid risk and other challenges. Ability to provide low-cost services will enable the airline to penetrate into more markets and challenge the status quo enjoyed by other airlines. References Chang, L.Y. and Hung, S.C., 2013. Adoption and loyalty toward low cost carriers: The case of Taipei–Singapore passengers. Transportation Research Part E: Logistics and Transportation Review, 50, pp.29-36. Daft, J. and Albers, S., 2012. A profitability analysis of low-cost long-haul flight operations. Journal of Air Transport Management, 19, pp.49-54. Fu, X., Oum, T.H. and Zhang, A., 2010. Air transport liberalization and its impacts on airline competition and air passenger traffic. Transportation Journal, pp.24-41, retrieved on 17th Nov 2016 at: http://www.jstor.org/stable/40904912?seq=1#page_scan_tab_contents Heracleous, L. and Wirtz, J., 2012. Strategy and organisation at Singapore Airlines: achieving sustainable advantage through dual strategy. In Energy, Transport, & the Environment (pp. 479-493). Springer London. Heracleous, L. and Wirtz, J., 2010. Singapore airlines’ balancing act. Harvard Business Review, 88(7/8), pp.145-149, Retrieved on 17th Nov 2016 at: http://www.iei.liu.se/program/ekprog/civilek_internt/ar_3/722g60/seminarier/valda-artiklar-infor-seminarium-1-artikelreview/1.257189/Singapore.Airlines.Balancing.Act.grupp.7.pdf Khedwal, AB 2014, The Low cost Airline: AirAsia, Service Marketing, retrieved on 17th Nov 2016 at: http://www.slideshare.net/ArunKhedwal/service-management-38765138 Lee, B.L. and Worthington, A.C., 2014. Technical efficiency of mainstream airlines and low-cost carriers: New evidence using bootstrap data envelopment analysis truncated regression. Journal of Air Transport Management, 38, pp.15-20. Lin, W.C., 2012. Financial performance and customer service: An examination using activity-based costing of 38 international airlines. Journal of Air Transport Management, 19, pp.13-15. Pires, H.M. and Fernandes, E., 2012. Malmquist financial efficiency analysis for airlines. Transportation Research Part E: Logistics and Transportation Review, 48(5), pp.1049-1055. Rodrigues, C.C. and Cusick, S.K., 2012. Commercial aviation safety. McGraw-Hill. Appendix Appendix 1: Performance Appendix 2: Market Share Appendix 3: Profitability Appendix 4: Subsidiaries Read More