The Troubled History of the Airbus A380 - Essay Example

The troubled history of the Airbus A380 Executive Summary This report presents an analysis and evaluation of the role of systems and operations management at Airbus and its integration within the business. People, technology and organizational issues involved in potential improving the operations at Airbus are analyzed in light of the existing problems the company has, such as complexity of the projects being implemented, internal rivalries, frequent changes of management, inefficient design and manufacturing processes and others. Soft Systems Methodology was used for analyzing and defining the business requirements of Airbus because this approach was defined as the most effective for the purpose of getting a clear and deep understanding of major problems at the early stages of the analysis. In addition, Soft Systems Methodology allows to identify analyze multiple levels of the problem with purpose of finding the most effective solutions that take into account relationships and dependencies that might not be clearly seen using the Hard Systems Methodology. The analysis and evaluation have shown that the role of systems and operations management is underestimated by Airbus management in the process of managing separate projects and overall business operations. In addition, effective systems and operations management strategies have not been integrated within the company well enough due to lack of organization, strong leadership and communication, among other factors. Business process reengineering, total quality management, Lean and Six Sigma approaches to improvement have been analyzed with the purpose of determining the most effective for Airbus to use. The analysis has shown that business process reengineering would be the most appropriate for Airbus approach because it implies implementing radical changes within rather narrow time frames. Rapid changes, in their turn, show to be the most effective in attempts to radically improve organizational performance. It is recommended that Airbus uses business process reengineering approach for improving its systems and operations management. Furthermore, decision making and supporting systems, such as transaction processing systems, management information systems and decision support systems should be incorporated into organizational operations in order to align information systems and operations management of the company. Introduction Airbus is, as the company writes about itself, a technology-oriented organization that created its first jet in 1974 (Airbus.com, 2011). In 1991 the company started working an idea of creating a super-large passenger aircraft. The jet would become the largest airplane ever made. Consequently, the work on its creation was sure to be complex and demanding. However, it took the company 14 years, since 1993 when Airbus started working of the development of the ‘super jumbo’, for the new aircraft to take off in full service in 2007 (Slack, Chambers and Johnstone, 2010). As Slack, Chambers and Johnstone (2010) report, it took the company so many years to, finally, complete the project, because of a number of problems within the organization. Most of them, such as weak organization of production processes, poor leadership or use of incompatible software by different departments, are related to of systems and operations management practices of Airbus. Therefore, the goal of the given report is to determine and analyze how systems and operations management concepts are used by the company and how systems and operations management is integrated into the business. Soft Systems Methodology will be used for analyzing the situation and making recommendations about how the Airbus information systems and operations management should be updated to support and improve their business efficiency. Furthermore, people, technology and organisational issues involved in improving the operations at Airbus will be assessed and analyzed in order to clarify how in particular Airbus can improve its business processes through the update and improvement of information systems and operations management. Definitions Operations management is defined by Slack, Chambers and Johnston (2010) as activities aimed at effective management of resources needed for producing and delivering company’s goods or services. So, the goal of operations management is to effectively transform input resources, such as materials, information and labour, into output resources – goods and services for the use of customers. Information systems consist of “interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization” (Laudon and Laudon, 2007). As such, information systems can be said to serve operations management as support tools that help to manage and control organizational performance. Analyzing and defining the business requirements of Airbus: Soft Systems Methodology Soft Systems Methodology (SSM) has been chosen for Analyzing and defining the business requirements of Airbus. This particular methodology was used because its advantage, in comparison to Hard Systems Methodology, is that it gives an evaluator an opportunity to obtain a deep understanding of the major problems at the early stages of the analysis. In addition, this approach allows to form a clear and relatively structure vision of a situation. Also, SSM helps to clearly identify weaknesses of the system, as well as identify and analyze relationships and dependencies that might not be clearly seen using the Hard Systems Methodology (Patching, 1990). Another advantage of the SSM is that it provides tools for identifying the major problems which, in their turn, cause other problems that are also considered in the analysis. In case of Airbus a multiple number of minor problems caused by the lack of proper systems and operations management lead to larger problems of time delays and financial losses. So Soft Systems Methodology seems to be the most appropriate for analyzing this complex set of problems, their reasons and results. Role of systems and operations management at Airbus and its integration within the business Brown writes that “operations and operations management are of strategic importance to organizations” (Brown, 2005, 1). These concepts are crucially important because they are closely related to “core competencies, key performance indicators and critical success factors” of an organization (ibid). In general, operations management determines how well a company meets its strategic goals and objectives. In case of Airbus it can be said that several major problems exist within the company. They are: Complexity of the project – A380 was the most complex passenger jet built in the world at that time (Slack, Chambers and Johnston, 2010). Internal rivalries – work of French and German plants was not balances, the employees of different plants can be said to compete. Frequent changes of management. Lack of integration within the company - design and manufacturing processes were not integrated. Fragmented organizational structure. Incompatible software used by different departments. Temporary (improvised) and less efficient design and manufacturing processes instead of streamlined ones. Employees under pressure to keep up with intense production schedules and overcrowded conditions. Together all the outlined above factors had influenced organizational efficiency of the company in a negative manner. As a result, Airbus was loosing time and money on A380 project. Since the major goal of operations management is to use organizational resource in an effective and efficient way (Wild, 2002), it can be stated that operations management strategies has not been efficient enough to make the maximum use of time, labour, material and other resources. This resulted in the situation where industrial processes of Airbus were not organized properly and clearly. Furthermore, the ‘improvised’ design processes cost the company much more than if they were planned and streamlined. All these problems come, actually, from inefficient organizational structure which prevents the company from competing effectively. Organization structure here refers to internal structure of the relationships between separate employees and groups of employees working on the project (Harrison and Lock, 2004). Obviously, this aspect of organizational performance has been somewhat overlooked by company due to problems with communication and organizational culture. If communication and corporate culture of Airbus were at a higher level, the company would not experience the problem of internal rivalry. At the same time, it might be that internal HR initiatives had lead to such results. Such strategies should, of course, be examined deeper in order to determine how the problem can be solved. As for systems management, the set of problems outlined above leads to a conclusion that the company has relatively weak systems management practices and that fact resulted in operations management problems. If, on the contrary, Airbus used operational systems for managing ongoing operations, tactical and management systems for planning and designing short-term goals, and strategic systems for long-term planning, it would be enjoying better structured business processes and, consequently, improved performance, time, and cost management. Therefore, the number and character of problems Airbus experienced while designing and manufacturing its ‘super’ jet lead to an assumption that the role of systems and operations management in running a business is underestimated by Airbus management. Furthermore, both effective systems and operations management strategies have not been integrated within the company. Recommendations on updating Airbus information systems and operations management to support and improve the company’s business efficiency. Information systems and operations management approach and strategies of Airbus should be improved in order for them to work for improved productivity and decreased design and production costs of the company (Mahadevan, 2010). As the organization’s experience showed, poor information systems and operations management lead to great time delays and financial losses of the company. In order to avoid such problems in the future Airbus may choose to apply one of the following approached to improving its business processes: Business process reengineering (BPR); Total quality management (TQM); Lean manufacturing; Six Sigma. Business process reengineering (BPR) is the most radical approach to change. It involves redesigning business processes of an organization for them to be more customer oriented. However, through creating business processes that “create value to the customer, the company is likely to achieve dramatic improvements in performance” (Tsai, 2003, 42). This approach calls for total analysis and rethinking of the existing business processes with the purpose of designing and implementing a radical change that will significantly improve organizational efficiency. Following total quality management (TQM) approach Airbus would have to design and implement systems, strategies and tools for total control of the design and manufacturing processes. This approach is aimed at improving quality. However, since quality of output is not the most crucial problem of the company, TQM is, probably, not the best option to implement with the purpose of improving overall organizational performance. Furthermore, TQM is focused on continuous incremental changes. Incremental changes, however, though are, of course needed by any organization, are not as effective as radical ones. Continuous change should be for Airbus a natural process – a part of adapting to the changing external environment. However, in order to improve the business efficiency significantly, more wide-scale and radical changes should be implemented. Lean manufacturing approach would make a company reduce waste by means of synchronizing the flow of input resources with customer demand. However, it should be remembered that this concept is naturally followed by a manufacturer like Airbus: the scale of the business simply does not imply that the company has huge volume of orders. The nature of Airbus business naturally prevents the company from overproduction. Therefore, lean manufacturing is just a part of regular resource planning of such companies (Conner, 2009). Six Sigma methodology would make Airbus improve all the aspects of its operations. However, the major focus of this approach is in reducing the amount of defects. In addition, Six Sigma is partially based on “measurable TQM” - ongoing and measurable control (Tennant, 2001, 86). This, of course, would be a great strategy for Airbus. However, its implementation requires clear vision, leadership and organization – the areas where initial problems of the company are. Therefore, before turning to such approaches as Six Sigma or lean, Airbus has to design and implement changes that will solve the existing problems related to organizational structure, communication, time management and so on. The best approach to deal with these challenges is business process reengineering because it implies implementing some radical changes. Rapid technological change of information systems management, as well as rapid change in operations management would be the most effective for Airbus because, according to Heitger and Doujak (2009), radical changes are the ones that help an organization to become extremely more effective and productive within a short time frame. People, technology and organisational issues involved in improving the operations at Airbus People – labour resources – are one of the most important assets of an organization because individual, as well as group performance, of employees determines the effectiveness of the overall organizational performance. Therefore, any changes and innovations, if being implemented, greatly depend on how people percept and accept them. For this reason Airbus, when designing and implementing any changes, should put a greater emphasis on human resources aspect of the business. The role of HR should, consequently, be better emphasized: HR department is the structure within the organization that should, in addition to dealing with ongoing HR issues, be working on supporting and promoting corporate culture. Furthermore, employees, being the ones whom innovations influence most of all, should participate in such processes as decision-making and change design. This will ensure the change is accepted well and resistance to change is minimized. Culture and leadership, in their turn, are the keys to effective implementation of the changes. Strong and clear vision should be developed by the management in order for HR and leaders to incorporate it into organizational culture and, then, in all the work processes. Strengthening and improving organizational culture will, as a result, help to avoid resistance to change first of all, and, secondly, unite separate employees and departments for them to productively work in cooperation with each other. A separate role should be devoted to leadership. A good leader will always be able to organize the work of its department in a better way. Frequent changes of executives Airbus had, thus, caused some disorganization of the overall company’s operations. For that reasons the company should reduce the turnover of employees and provide proper training and guidance for the managers. As for technology issues, the very first recommendation would be to unify the technological and information systems processes of the company. That is all the aspects related to technology and information systems of the company should become standardized across all the departments and divisions of the organization. This will help to avoid such problems as Airbus had with the development of A3809 aircraft - incompatible software used by engineers of different divisions. In addition, standardization of processes will help managers and employees to work in a more integrated and organized manner. Another useful technological advancement Airbus may use is decision making and supporting systems. Transaction processing systems will help to manage and control the ongoing operations. Management information systems and decision support systems will help executives to monitor and analyze the operations, as well as draw decisions on the basis of the collected data. Executive support systems will be a good basis for making managerial decisions regarding long-term objectives. Specifically, in the process of designing and implementing change, strategic alignment between information systems and operations management is crucial for the company’s success (Hirschheim and Sabherwal, 2001). Finally, one of the problems Airbus has is fragmented organizational structure that leads to inefficient operations. In addition, absence of a clearly defined structure and communication channels has lead to such problems as lack of integration between departments, internal rivalries, pressure to keep up with intense production schedules and overcrowded working conditions. That is why the company should clearly outline the roles of each employee and group of employees, as well as define communication channels and levels of integration between all of them. Conclusions and Recommendations It can be clearly seen that time delays and financial losses of Airbus are caused by a number of the company’s internal problems. Some of the most crucial of them are lack of clear organizational structure, inefficient resource allocation, poor systems and operations management practices, as well as lack of strong leadership and communication channels. These problems, in their turn, lead to such smaller problems as employee’s working under pressure to keep up with intense production schedules, internal rivalry and lack of integration and cooperation, among others. Combined together, all these, large and small, problems result in organizational inefficiency. For that reason Airbus should take measures that will, first of all, eliminate the existing problems, and, secondly, improve individual and organizational performance within the company. With this goal in mind a clear picture of the situation can be drawn with the help of Soft Systems Methodology. This approach for analysis and evaluation of the problem gives an evaluator an opportunity to analyze the issue in view of all the interrelations and interdependencies between the seemingly unrelated components of the system. Based on the analysis of the situation it is recommended that Airbus, first of all, uses business process reengineering approach to change. This will let the company implement innovations in the fastest and most effective way. The aspects of the company’s operations that require improvement include organizational structure in the first place. Defining and clarifying structures of interactions and roles of separate employees and groups of employees will help to unite the staff and improve performance via work processes standardizing. Consequently, clear and effective communication channels should be established. In addition, technological advancement, such as decision making and supporting systems should be used by the company in order to standardize and improve the processes of monitoring and analyzing operations and making decisions. Information systems management should be strategically aligned with operations management in order for the company to operate in the most effective and efficient way. Finally, the changes and innovations proposed in the given report will help Airbus to become more completive. Implementation of at least some of them will create new competitive advantage for the company and make it more successful in the world marketplace. In addition, it should also be mentioned that, since external environment of the organization is continuously changing, the company should be constantly monitoring those change and respond to them accordingly. This process should be expressed in continuous change and be an adequate and timely response new trends and market conditions. 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