Date of Submission:
TABLE OF CONTENTS
I. PART 1: BUSINESS PURPOSE 4
1.1 Supply chain management and competitive strategy 4
1.1.1 Brief background of the company 4
1.1.3. Supply chain for Emirates 4
1.2 Customer fulfillment and environmental scanning 7
1.2.1. Creating value for the customers 7
1.2.2. Monitoring the satisfaction of the end customers 8
1.2.3. Environmental scanning 8
1.2.4. Important forces of changes influencing the company supply chain strategies. 10
1.3. Supply chain processes thinking and order fulfillment 11
1.3.1. Strategies used by the firm as a part of the supply chain management SCM 11
1.3.2. Order fulfillment process using SCOR model elements 13
1.3.3. Sourcing processes 13
II. PART 2: AS-IS SUPPLY CHAIN 14
2.1. Strategic supply chain costing and performance measurement 14
2.1.1. Strategic cost management principles. 14
2.1.2. Tools to support strategic cost management. 14
2.1.3. Measuring the sourcing, operations and logistics processes and customer satisfaction 14
2.1.4. Measuring its SCM performance 15
2.2. Competencies and outsourcing 15
2.2.1. Core competencies 15
2.2.2. Outsourcing 16
2.2.3. Make-or-buy analysis 17
2.3. Supply chain rationalization 18
2.3.1. Supply-base optimization 18
2.3.2. Role shifting and competitiveness in the supply chain 18
III. PART 3: TO-BE SUPPLY CHAIN 19
3.1. Supply chain relationships 19
3.1.1. The right type of relationships with SC members 19
3.1.2. Practices promoting successful alliance creation and Utilizing the elements of an effective negotiation strategy 19
3.2. Sharing information across the supply chain 19
3.2.1. SC-related information technologies and information systems 19
3.2.2. Internet and e-commerce in supply chain management practices 20
IV. PART 4: THE SUPPLY CHAIN ROAD MAP 21
4.1. Supply chain mapping 21
4.1.1. Supply chain road map 21
4.1.2. Conclusion and recommendations 21
V. REFERENCES 22
I. PART 1: BUSINESS PURPOSE
1.1 Supply chain management and competitive strategy
1.1.1 Brief background of the company
Emirates Airline was founded in 1985 with only two aircrafts in the beginning. However, the rate with which Emirates Airline has grown has helped them develop a niche for themselves in the global aviation industry. Emirates Airline falls under Aviation industry (ZAWYA, 2016) and is a part of the Emirates group. It is entirely owned by the Government of Dubai (ownership type: government) but they have grown through competition and high standard of quality in airline business (THE EMIRATES GROUP, 2015). Due to various business divisions and subdivision, Emirates operates mainly in transportation sector with other emphasis such as food and beverages, education, tourism and leisure, retail and real-estate. The size of Emirates is large not in business sectors but also number of employees and business operations. Now, Emirates operates with 84,000 multinational team members compromising of more than 160 nationalities and across six continents (THE EMIRATES GROUP, 2015).
1.1.3. Supply chain for Emirates
Supply chain consists of the following functions that include the flow of information, goods and services and the financial resources across the organization.
For the Emirates Airlines, there are two types of supply chain diagrams.
A. Pre-travel and travel supply chain
i. Customer side
ii. Company side
B. Post travel supply chain
i. Customer side
ii. Company side
It has been shown in the figure below:
Pre-travel supply chain
Post travel supply chain
1.2 Customer fulfillment and environmental scanning
1.2.1. Creating value for the customers
Emirates Airlines has launched the world’s longest non-stop schedules commercial flight that operates between Dubai and Auckland. It spreads across 14,200 kms and has a journey of about 17 hours and 15 minutes in air (THE GUARDIAN, 2016). The aviation industry in the UAE has to face not only the national challenges but also regional ones. The reason is that UAE motivates excellent aviation, transportation and infrastructure with quality facilities and technology. Therefore, it is important that Emirates meets expectation of their passengers with quality services and offerings along with proper internal communication.
1.2.2. Monitoring the satisfaction of the end customers
In one such effort to provide the customers with an exclusive service, Emirates Airlines successfully completed world’s longest non-stop scheduled commercial flight between Dubai and Auckland that consisted of about 14,200 kms and lasted for about 17 hours and 15 minutes in the air (THE GUARDIAN, 2016). It is one of the most significant contribution in terms of strategic move taken by the company for the customers across the globe as it helps in connecting people from one part of the globe that is Dubai, to another part of the globe in New Zealand. It is a very innovative strategy move taken by the Emirates Airlines to secure and maintain their position in the Aviation industry. The strategies that are adapted by the emirates Airlines and an overview of the company’s profile has been discussed.
1.2.3. Environmental scanning
Environmental scanning can be referred to as the monitoring and assessment of the internal as well as the external factors that affects the working and profitability of an organization. It helps in deriving a future course of action and related framework that should be followed for establishing a niche for itself in the global market. An example of an environmental scan is provided in the figure below:
On the basis of this, there are several strengths, weaknesses, opportunities and threats that are identified for Emirates Airlines with several of its features related to the elements of supply chain management (SCM).
Table 1: SWOT Analysis
Strengths • Excellent finished goods in terms of quality service to the customers.
• Strong operating performance
• Efficient work in process inventory
• Strong market position and share (ZAWYA, 2016)
• Diversified geographic presence
• Continuously improving service (THE EMIRATES GROUP, 2015).
Weaknesses • Limited liquidity position
• Needs to establish more options in its services
• Flexible services are not available
• Substantial debt (McKechnie, Grant, & Katsioloudes, 2008).
• Weak diversification and unsuccessfulness
• Proper handling and movement and storage of raw materials is a major problem (BLOOMBERG.COM, 2016).
Opportunities • Strong business partnerships
• Strong growth initiatives
• Positive outlook not only national or regional but also global
• Great growth in airline traffic (BLOOMBERG.COM, 2016)
• Business expansion in number of destinations
• Increasing demand of the customers (ZAWYA, 2016)
Threats • Foreign currency fluctuations
• High increase in oil price (THE EMIRATES GROUP, 2015).
• Increasing the engagement of the employees.
• Un-recognition of demand
• Development of potential rivals in the global market (McKechnie, Grant, & Katsioloudes, 2008).
1.2.4. Important forces of changes influencing the company supply chain strategies.
Supply chain strategy play a very significant role in the management of a supply chain that involves developing several factors on the basis of the conditions prevailing in the market and at the same time, obtaining several solutions for the supply chain problems. There are many forces of change that are prevailing in the global market and the most significant among them are (Ross, 2013) :
It is one of the most important force that drives changes in the supply chain management and it includes constantly striving for attaining stability and achieving high level of predictability from the conditions that are prevailing in the market. This affects the maintenance of the inventories of the raw material and goods in a supply chain model and Emirates need to utilize it to obtain proficiency in their inventory management model.
There is a constant need to identify the purpose of developing new products and services in the market. This has to be carried out on the basis of deriving a successful strategic model in the supply chain management. For Emirates, the quality and comfort that they provide to their customers serves their main purpose.
It refers to developing control over the conditions and circumstances that are developed in the global market that is pertaining to the Airlines and Aviation industry. The parameters of the supply chain models that affects the business that is generated by the Emirates Airlines requires to be kept under control while establishing a growth in their handling and resources.
Connection refers to the bonding and relationship that the products and services provided by the company forms with their customers. It is one of the most important factor that helps in establishing the needs of the customers and helps in evaluating their behavior. Emirates Airlines carries it successfully through obtaining the real and measurable factors of quality and development that should be tackled for carving a niche for itself among the customers in the global market.
It refers to the forces that drive success across the organization. There are many parameters for determining it and it depends on the overall consistency of several operations and activities in the market. It is very crucial for obtaining the right balance of activities and operations as Emirates Airlines believes in delivering high quality and excellent customer service to be the success defining factors for them (Ross, 2013).
1.3. Supply chain processes thinking and order fulfillment
1.3.1. Strategies used by the firm as a part of the supply chain management SCM
The performance in an organization can be determined by the business that it generates in local as well as international markets. For the Emirates Airlines, the evaluation of the performance can be done through establishing the number of passengers that travel through them on annual basis. It also includes comparing the performance in terms of number of passengers in Emirates Airlines with other potential Airlines like the Qatar, Etihad, Air Arabia, etc. that are providing their service with their headquarters in UAE. There are many variables that are responsible for these statistics. It includes the strategic moves that are identified by these companies and are evaluated by them in such a way that it provides them with the required position in the market across the globe.
The below figure shows that the number of passengers increased tremendously since 1989. At the same time, when comparing with competitors of Emirates, it shows that Emirates is handling more passengers than Qatar Airways and Etihad Airways.
Figure 1: Number of Passengers in Dubai 1989-2014 (CAPA Centre for Aviation, 2015)
Mission and Goals
Emirates Airlines has strived on achieving quality par excellence since its very inception in 1985. The goals of the Emirates Airlines are:
1.3.2. Order fulfillment process using SCOR model elements
1.3.3. Sourcing processes
II. PART 2: AS-IS SUPPLY CHAIN
2.1. Strategic supply chain costing and performance measurement
2.1.1. Strategic cost management principles.
Cost management is a long term process that involves continuous evaluation and modification. It refers to managing the cost incurred in the management of the functions that are performed in the company. There are few principles that would help in obtaining effective cost management in strategies and they are:
• Establishing clarity in performance objectives
• Imparting knowledge and other tools
• Analyzing and obtaining true costs
• Develop simplicity and reduce the complexity in organizational structure
• Develop knowledge based and innovation driven decisions
• Critical use of organizational costs.
2.1.2. Tools to support strategic cost management.
Product cost management serves to be one of the most significant tool in supporting cost management.
• BOM cost management system
• New product Introduction (NPI) cycle
• Cost of goods sold (COGS)
• Cost control points
2.1.3. Measuring the sourcing, operations and logistics processes and customer satisfaction
The above scenario has been explained by Sundaram Nataraja and Abdulrahman Al‐Aali and they have identified the high quality performance strategies that have been adopted by the Emirates airlines that involve high quality of operational performance through developing intensive and generic plans and inculcating diversification element in its strategies (Nataraja & Al‐Aali, 2011). However, developing strategies for the growth and sustenance of the business does not imply that the employees should be at the suffering end.
2.1.4. Measuring its SCM performance
Emirates provide airline services and it is their main business activities. Therefore, they offer transportation and travel services, which also include in-flight entertainment, young flyer accommodations, first-class lounges, and air catering for serving worldwide customers (BLOOMBERG.COM, 2016). Emirates serves to be the largest Airline Company in the Middle East and one of the fastest growing airline across the globe. The Business models and structures that are adopted in Emirates are used as standard benchmark by other airlines. It has a significant contribution in the global aviation industry. There are many strategic moves that are adopted by the Emirates Airline Company that has helped them to achieve a leading position in the aviation industry. These strategies reflect the requirements of the customers that they want to accomplish.
There are 4 measures on the basis of which the supply chain management is evaluated and they are:
• Innovation (Pettersson & Segerstedt., 2013)
2.2. Competencies and outsourcing
2.2.1. Core competencies
The core competencies that are achieved in the Emirates Airlines refers to the quality of service that it provides and it can be obtained from its performance strategy that is adopted in it. Performance strategy refers to the development of various strategies and plans for ensuring competitiveness in the sharp edge competition that is observed in the Aviation field. Emirates have been extremely adaptive in developing strategies as per the customer’s needs and it has incorporated significant changes in its working, structure and service accordingly. It was observed that in 2009, there was a huge decline in the business of the Airline industry due to the reducing number of passengers and inefficiency of many Airlines to ensure quality management across its functioning. In such scenario, Emirates turned out to be an exception with a phenomenal increase in its business and a growth that overpowered other airlines by huge margins.
An example of the core competencies has been provided in the figure below:
Outsourcing refers to the provision of the rights for developing products or services or a part of it to some other company that has established expertise and specialization in it. The main aim of outsourcing is to save costs that would have incurred if the products or services were developed by the company itself (Al-Kaabi, Potter, & Naim, 2007). There would also be compromise in smaller ventures and non-significant parameters present in the products and services that are observed in Emirates Airlines. For example, to overcome this, they outsource many things like the fleet management, power plants and air frame systems that provide the utmost quality of products and services to their customers. There are many engineering sections that are outsourced to achieve specialization in the Emirates Engineering division (EMIRATES ENGINEERING.COM, 2015).
2.2.3. Make-or-buy analysis
Make or Buy Analysis refers to the evaluation of the factors that are existing in the market for an organization to develop a certain product or service that it wants to. It involves making decisions regarding the process of purchasing some required materials or making it by themselves. It is developed on the basis of the cost involved in developing and procuring the product as well as the availability of sufficient means to develop the product in terms of the finance, raw materials and the technology that is required for producing it (Al-Kaabi, Potter, & Naim, 2007).
(Al-Kaabi, Potter, & Naim, 2007).
2.3. Supply chain rationalization
2.3.1. Supply-base optimization
2.3.2. Role shifting and competitiveness in the supply chain
III. PART 3: TO-BE SUPPLY CHAIN
3.1. Supply chain relationships
3.1.1. The right type of relationships with SC members
• Transactional relationship
• Vertical relationship
• Horizontal relationship (Fernie, 2014).
3.1.2. Practices promoting successful alliance creation and utilizing the elements of an effective negotiation strategy
• Measuring the supply chain partner’s performance
• Sharing knowledge
• Identifying the strengths of the supply chain partners (Prajogo & Olhager, 2012).
• Maintaining the vertical as well as horizontal relationships within the supply chain
• Developing a Transportation management system in the organization
3.2. Sharing information across the supply chain
3.2.1. SC-related information technologies and information systems
There are many technologies that have been developed to inculcate innovation and high efficiency in the performance of organization. Few of these technologies involve:
• High tech customer support
• Easy online booking applications
• Online ticket tracking applications (Fernie, 2014).
These technologies have to be incorporated after establishing the below mentioned tools that were also discussed earlier:
• BOM cost management system
• New product Introduction (NPI) cycle
• Cost of goods sold (COGS)
• Cost control points (Prajogo & Olhager, 2012).
3.2.2. Internet and e-commerce in supply chain management practices
The use of internet has increased the speed and accuracy with which people can use the airlines and the different services that are provided by them can be easily assessed through technology and management system. It includes online ticket booking system, online PNR tracking system, online promotional offers during festivals and holidays, using internet for various operations and electronic inventory management for the supply chain management functions in Emirates Airlines.
IV. PART 4: THE SUPPLY CHAIN ROAD MAP
4.1. Supply chain mapping
4.1.1. Supply chain road map
(Prajogo & Olhager, 2012)
4.1.2. Conclusion and recommendations
Thus, it can be observed that supply chain management plays a vital role in the development of Emirates Airlines. There are few sections where Emirates Airlines need to improve its existing procedures and develop innovative strategies for the same. The relationship with the customers and maintenance of the supply chain operations are an integral part of the SCM process.
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