Issues Faced by Global Supply Chains in Airline Industry

This document discusses the issues faced by global supply chains in the airline industry, including benchmarking, material request cycle, global vendor management, raw material sourcing, and supply disruption risk. It also explores the macro factors affecting the industry, such as political, economic, social, and legal factors. The document provides insights into the current outsourcing strategy and potential strategies for Flysafe, as well as logistics and inventory management issues within the company.

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Assignment Cover Sheet
Course/Unit Information
Course Postgraduate Diploma in Supply Chain Management and
Logistics.
Unit No. 102
Unit code PGDSCML/102
Instructor Information
Name Mr.Paul Gulston
Phone [phone] or [phone] (What Sapp # 001 868 688
9749)
Email [e-mail]
Assignment Information
Full/ Part Assignment Full Assignment
Date Assignment Issued
Date Assignment Due
Student Information
(To be filled by the student prior submitting the assignment)
Name
Email
Date of Submission
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Student Declaration
I,(Name) Hereby confirm that this assignment is my own work and not copied or plagiarized. It
has not previously been submitted as part of any assessment for this qualification. All the
sources, from which information has been obtained for this assignment, have been referenced as
per Harvard Referencing format. I further confirm that I have read and understood the Westford
School of Management rules and regulations about plagiarism and copying and agree to be
bound by them.
Students Signature : ______________________
Student Name : ______________________
Date : ______________________
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SUPPLYCHAIN MANAGEMENT
AND LOGISTICS
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Table of Contents
INTRODUCTION...........................................................................................................................5
MAIN BODY...................................................................................................................................5
TASK 1............................................................................................................................................5
(a)............................................................................................................................................5
Issues faced by global supply chains in airline industry........................................................5
Macro factors affecting the airline industry...........................................................................7
Industry related data...............................................................................................................9
(b) Current outsourcing strategy and potential outsourcing strategy for Flysafe.................11
TASK 2..........................................................................................................................................12
Supplier relationship Management.......................................................................................12
Kraljic Matrix.......................................................................................................................14
Supplier Preferencing Model................................................................................................15
SRM Software......................................................................................................................16
TASK 3..........................................................................................................................................17
Logistic Report on Flysafe...................................................................................................17
TASK 4..........................................................................................................................................17
(a)..........................................................................................................................................17
Assessment of the financial data and necessary recommendations......................................17
(b).........................................................................................................................................18
Inventory management issues within Flysafe.......................................................................18
Suggested solution for the inventory management faced by Flysafe...................................19
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20
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INTRODUCTION
Supply chain management is a very essential part of a business organization, An
organization has to make sure that the supplied material should be of finest quality and reach at
time frame allocated for the same with the best price possible. This can be achieved by managing
all the components of supply chain management in an effective manner, it is a long term process
that requires efforts and strategies from the side of management in longer run. Flysafe is an
Airline company based in Dubai, UAE. The company is engaged in the business of airlines
services (Colicchia & Strozzi, 2012). It was established in the year 1973 with only 5 aircrafts.
The company has grown significant overtime and currently, it is having around 2,000 employees
with state of the art aircraft fleet of 300 aircrafts. The market structure has changed since then
and it is necessary to make some radical changes in the policies and procedures of the company
to escape it from mounting losses and make it profitable again in the competitive sector. The
current report will going to discuss and recommend turnaround strategy to the board of Flysafe,
in order to make its supply side strong enough for conducting business overtime. The financial
impact on the organization will be considered in an effective way, and necessary strategy or
policies will be recommended to the company considering its current situation in a competitive
market like airlines industry (Ellram & Cooper, 2014).
MAIN BODY
TASK 1
(a)
Issues faced by global supply chains in airline industry
Airline industry is a very competitive industry and therefore the players within the
industry have to focus on every aspects of the business in an effective manner. Any mistake in
frontline and backline business issues can lead to serious damage in overall growth rate and may
hider profitability of these companies in an effective way. Supply Chain Management simply
refers to handling of stock in a better way (Ghosh & Shah, 2015). The Airline Industry is highly
focused towards reducing their maintenance costs, maintaining a high level of inventory
accuracy & deliver high quality service. SCM is the crucial tool to grab this.
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The supply chain in aviation sector in not an easy task, the industry deals in items which
are capital intensive in nature and therefore it requires efforts for its effective and efficient
management in the longer run. The items likewise cover numerous components. Various
components are moving which faces challenges in order to identify inventory. These challenges
make SCM more challenging for the aviation industry:
 Benchmarking as well as planning of supply chain for aviation. It includes forecasting of
customer requirements, management of capacity, effective analysis of the demand
patterns, addressing other issues related to the same like hangar space, logistics etc. The
current industry players need to spend additional amount on proper and effective
planning within the industry (Tako & Robinson, 2012).
 Oversee Material Request Cycle with complete examination of solicitations, days to
satisfy the request, delays in preparing, distribution centre measurements and need levels
and so on. The total lifecycle the board can be advanced utilizing SCM instruments.
Aviation companies need to recheck their material request cycle to ensure there is no gap
in requisition and delivery of orders in the longer run. Flysafe is facing difficulties in
effectively managing the whole process, thereby leading to mounting losses overtime.
 The SCM is complex process which knows global vendor management. The integration
of components, material and framework are required to have desired outcome for
attaining operational success (Seuring & Gold, 2012). The current issues faced by the
industry is in dealing with global suppliers, Flysafe had foreign vendors which were
delaying the process of sending aircrafts to the company on time, which has lead to
stoppage of certain flights due to non operation of certain planes for maintenance, this is
one of the issue for company’s mounting losses.
Due to the volatile nature of aviation industry, they are facing higher cost of insurance and their
access in the loan due to recession. This is likewise compounded by lowering in air traffic
volumes (Tako & Robinson, 2012). Though some of the developing countries in the region of
Asia and China are responsible for a reason for higher level of traffic volumes, but at the same
time the prices which they are ready to pay are not sufficient enough to make the sales as well as
profits of the company to grow as well as prosper in the longer run. It is essential that FlySafe
must implement specify geographical strategy for each region, in order to make the business
more cost effective and profitable in the longer run over period of time.
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 Raw material Sourcing is also a major issues faced by aviation companies. Materials like
steel, copper, titanium, nickel, chromium, magnesium, Aluminium and many others,
these are primary material that used for the manufacturing of aircrafts. No one country
has a monopoly of the supply and all these metal needs to be occupied from different
countries and different regions in the world (Agus & Shukri Hajinoor, 2012). These all
depend on the location distance and qualities of the manufacturing aircraft, and there are
other non metal raw material like plastic, wood, rubber, textile, and other quality of
component that need to be procured effectively by procurement managers.
 Supply disruption risk, There is always a risk in supply chain management, because of
limited prediction of future demand and supply. Inaccurate pricing, projection, political
disruption and many other environmental issues like climate change and natural disasters
are turning out difficult for companies like Flysafe in the longer run. In supply chain
there are two type of approach. The short term approach such as monthly, quarterly,
annually basis. The long term approach consider suppliers on contract basis and other one
considers them for long years like five to ten years both of primary and secondary
suppliers (Zu & Kaynak, 2012). So, Understanding the suppliers business is very
important to help aircraft companies understand the supplier relationships. Companies
need to work honestly and understand the market trends; this can be achieved by knowing
about the supply index and other raw material procurement efficiently.
Macro factors affecting the airline industry
Airline industry gets affected by the macro factors that prevail within the external
environment of the industry. Aviation companies have to manage their business operations
keeping in mind that aviation is a huge industry. Henceforth, there is a need of effective
management and understanding of global business policies for the company to achieve
substantial growth and prosperity overtime (Pagell & Shevchenko, 2014). Some of the macro
factors that affect the airline industry directly include, social change, economy, political changes
and legal as well as environmental changes. These factors are discussed in detail as follows:
 Political: It refers to the policies and procedures made by the concerned government of
that particular region. Any changes within the same can affect the growth of airline
industry and its players in the longer run. Government regulation on the sector plays a
very crucial role in the growth and development in an effective way. If the regulations are
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high, it will lead to constrained pricing decisions and thus overall structure of the
business will change (Aung & Chang, 2014). Profits will squeeze in longer run, making
the industry less competitive. Currently, the aviation market is growing rapidly around
the world, leading to deregulation of the sector in major economies.
 Economical: Monetary factors affect the aviation business. The ongoing financial
recession made the travelling market to see its least period. Both economy and premium
voyaging declined. Furthermore, carriers were likewise under the strain to adapt up to the
expanding fuel costs (Wang & Cullinane, 2015). These components made it hard to
create benefits. Additionally, carriers likewise battled with expanding salaries from
certain group of employees. All these financial components brought about expanded
insolvencies of real aircraft organizations.
 Social: Aircrafts additionally make social qualities like some other business as the
shopper of today has changed. So as to fulfil the changing needs of shoppers, aircrafts are
required to consolidate changes (Christopher, 2016). Presently travellers incline toward
those carriers which are giving broadened administrations at low fares. In the previous
couple of years, there has been a decrease in business class voyaging which is a gigantic
misfortune for the organizations. Automation is one more factor influencing the carrier
business as individuals utilize Skype features or conference call as opposed to travelling.
Flysafe needs to consider this model in an efficient manner for growing as well as
developing the business overtime.
 Legal: Just like financial or political elements, legal factors additionally hold exceptional
significance in analysis of the outside condition of the airline business. There are
numerous laws contrived for air traffic and the wellbeing and security of travellers. There
are numerous guidelines which expect aircrafts to offer safe travel alongside top notch
administrations (Golicic & Smith, 2013). Aircrafts are made in charge of air crashes or
some other sort of harm or debacle. Numerous laws have been proposed which manages
how the carriers treat its travellers, any discrepancies within the same is dealt with strong
actions against the firms.
Industry related data
Airline industry is one of the fastest developing industries, lot of innovation and
technological changes are taking place within this industry in an effective manner. The industry
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has revenue of around 600 billion dollars worldwide; however, the industry offers fairly low
margins and operates on a profit margin of 3 to 4% worldwide. The net profit of the whole
industry stands at around 36 billion dollars (Zhu, Sarkis & Lai, 2013). Flysafe needs to focus on
improving its supply chain management through dedicated policies for these particular business
operations. This will enhance efficiency in business operation and will help in generating profits
in the longer run.
(Net profit of commercial airlines)
Source: (ICAO, Statistics,2018)
Flysafe is facing losses, however it is not only company which is facing losses within the
aviation or airline industry, almost all the companies in the industry is operating on low margin
or less profits. The above chart clearly depicts that net profits of commercial airlines around the
world is very low (Bichou, 2015). The profits of all the players around the world are not even
$35 billion, which is very less as compared to other industries which offer lucrative profits. The
industry as can be seen are going through a phase of consolidation and most of the companies
which are either small or are not having adequate resources have not been able to survive. There
is lack of profit and revenue growth in some of the region, but still governments are operating air
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carriers in those regions due to lack private carriers in the sector. Existence of government in the
sector is killing the completion and taking down the level of pricing in the sector to a low level.
(Financial results of commercial airlines)
Source: (ICAO, Statistics,2018)
The above chart shows the EBIT margin of commercial airlines companies across the
globe. It is an effective and efficient depiction of squeezed profits and lower EBIT margins that
this industry offers to its players in the longer run (Fernie & Sparks, (Eds.). 2018). The highest
EBIT margin and highest profits has come from North America region, afterwards its Asia
pacific which offers fair amount of profits to the companies.
(Traffic results of airline industry)
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Source: (ICAO, Statistics, 2018)
The above data depicts the traffic results of the airline industry. The growth in traffic of
commercial airlines is highest in the region of Asia; thereafter it is highest in North America.
Therefore, if Flysafe has to become profitable again, it should focus on Asia and North American
regions (Sarkis, 2012). The company should focus on operating more flights in those regions, as
consumers in these countries are ready to pay more and the air traffic is also very high in these
regions.
(b) Current outsourcing strategy and potential outsourcing strategy for Flysafe
The dimension of re-appropriating has expanded all through the carrier business since
deregulation. Be that as it may, the development of redistributing has been inconsistent. Amid
poor financial periods, redistributing has developed quickly. In any case, the inverse has not been
valid (Wang & Cullinane, 2015). Amid great monetary periods, there has not been a sensational
move towards in sourcing. Given this pattern, it seems likely that throughout the following
twenty years, the dimension of re-appropriating will keep on developing in the airline business.
This has emotional ramifications for both administration and work.
Current outsourcing strategy Flysafe
The current outsourcing strategy suggests that catering contracts outsources have led to
operational delays and the food offered was also bad in quality. The relationships with suppliers
have not been very good. There were IT systems which were not supporting relationships with
suppliers. It is essential to make sure that right kind of focus is shown towards managing
suppliers in an efficient manner over period of time. There was lack of vendor support or
cooperation.
Potential outsourcing strategy for Flysafe
Ina better and effective outsourcing strategy, the company will aim to focus on improving
the relationship with its suppliers in an effective way, while at the same time, focus on improving
the business processes through in sourcing most of the catering work, this will be much cheaper
for the company as compared to buying the same from an external player. Company can develop
effective strategies for buying expensive parts at a much cheaper rate from different countries
around the world (Waters & Rinsler, 2014). Outsourcing strategy is long term plan and it
requires lot of efforts as well as planning from the side of management. Some other changes in
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outsourcing strategy could be installation of supplier friendly IT system in place, whoich will
develop healthy relationship with supplier in the longer run.
TASK 2
Supplier relationship Management
It is a process in a business under which an organization interacts personally with
suppliers and organizes the dealing of raw material of goods and services (Waters & Rinsler,
2014). It is a systematic approach of evaluating suppliers’ contribution and impact on success,
determining strategies to maximize suppliers’ performance and also develop strategic approach
for executing on these determinations. It can be appliance by software, developing and
maintaining it possible for organizations to perform businesses, goods, transactions and entire
procedure of the organization and its suppliers in an effective manner.
Supplier relationship management is a long process strategy, which can benefit the whole
firm and will help in implementation (Tako & Robinson, 2012). It is used by supply chain
professionals which covers in areas like procurement, project management and operations where
these experts regularly deal with suppliers. Organization focus on the supplier relations, there are
many type of supplier relationship management strategy, these are discussed as follows:
 Increased Efficiency: This improves communications, better relation and understanding
of their clients, suppliers understanding business goals easily. When problems and issues
come then the same has to be dealt with effectively. Identification of supplier problems
and control supplier relationship with effective management program.
 Revenue Growth: In supplier relationship management both party supplier and buyer
want to increase their revenue and want a increased relationship between each other.
Working in closed relation by a joint venture, supplier and buyer in a supplier
relationship management can have new opportunities like sharing market risks and
potential growth (Huemer, 2012). If one is thinking about the growth of business, it is
possible but he must make a good relation with clients. Focus on implement consistent, If
Flysafe want to increase revenue and growth of business, focus on marketing strategy
inbound marketing and outbound marketing these tools are very important to generating
consistency. Customer satisfaction, better quality, on-time delivery and innovation are
more important to increase performance.
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 Cost Savings: In supplier relationship management long run, SRM procedure can help to
minimize future problems, quality problems, and respites. By procedure and developing
long term relationships can be offset, suppliers and buyers, both of parties want to avoid
unnecessary costs (Näslund & Hulthen, 2012). Good relationship and interaction will
lead to minimum issues and problems of performance, which is lead to low costs for
relationship and minimize cost by failures. Vendors are very confident to share costs
through acquisition of new technologies of beneficial cost. Better relationship with
suppliers would make sure that negotiation with suppliers can be come easy and it is
possible to grow and make business more cost efficient over longer period of time. It is
even more important from the perspective that lower cost further generates better
profitability in the longer run, thereby increasing chances of growth in the organization.
 Training: When we talk about a supplier relationship management, training is very
important to educate the company and its workforce on its benefits and. As a large
dimension supplier relationship management is very important to manage at different
level. Every employee should understand their role for the higher level of success (Winter
& Knemeyer, 2013). If proper and effective training will be provided to crucial
employees of the firm, the same is going to result into better and effective productivity in
the longer run. It is a long term process and management should focus the same overtime
for better and effective results.
 Continual Improvement: Long term connections give the chance to purchasers to draw
in providers in a procedure of continual improvement of both goods as well as services
provided and of the related service levels. This can be accomplished through item
advancement, improvement of new procedures and methods and through building up
KPI's and SLA's throughout the agreement (Zhu, Sarkis & Lai, 2013). By adopting a
functioning strategy to guaranteeing that legally binding execution is met, purchasers can
guarantee that providers keep on improving in the manners in which give the most
significant improvement to the client association's items and administrations.
 Preferred buyer status: Continually changing providers is a costly and tedious
procedure as it will take the interior assets to asset for new reasonable providers and
arrange the agreement for better expense. Regardless of whether the new provider may
give lower cost, the long haul connections worked with key accomplices creates more an
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incentive over the transient additions (Zu & Kaynak, 2012). By keeping up provider
connections, purchaser can build up a more clear cost base and give absolute price
visibility.
Kraljic Matrix
The Karljic Portfolio purchasing model helps in assessing risks and increasing profits.
Kraljic Matrix is a part of supply chain management and is divided on vendor basis. From there
process, any organization match process and design of the supplier relationship management
strategies in terms of suppliers (Ahi & Searcy, 2013). The Kraljic Matrix is a most effective way
to deliver actual supplier segmentation. Kraljic matrix founded by Peter Kraljic in 1983, it means
segment of the supplier base (Priem & Swink, 2012). There are two dimensions that is against to
supply mapped risk and profitability. In this, risk relates to unexpected events in supply chain
management.
Kraljic Matrix aims to help purchasers and increasing supply and minimize cost. Flysafe
was not reducing their cost and the same turns out to be a very wrong procedure. Due to the
purchasing cost of company is quite high. Flysafe airline bears a large number of deficiencies
due to this supply chain management policy.
How to use the purchasing model tool
The model has four types of tools to increase profits and reduce risk, these are discussed
as follows:
 Purchase Classification- It is started by the classifications of all type of commodities,
product and service, buying any product according to the supply relationship
management its impact on the risk and profits. If supply and demand is not match and
particular ratio is depend on supply management, supply risk is very high when item a
raw material is not matched (Coimbra, 2013). Product purchasing is depend on the
leverage item, strategic items, on critical items bottleneck items that all are balancing
profit impact and supply risk- low risk and high profit.
 Market Analysis- we should know about the suppliers how much power they have, and
how much buying power you have. It understands best procedure is porter’s five forces
model. We should know about the market and analyse every procedure. Flysafe airline
didn’t recover marketing process. So, they should analyse market and take decisions for
low risk and maximum profit.
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 Strategic Positioning – It is concerned with the manner in which business operations of
the company is different from its competitors and delivers value to specific customer
segments. In this, one should know about the classification of materials and identified as
strategic plan. Applying to purchasing portfolio matrix as a supply market strength and
strength as a buyer (Afshar & Haghani, 2012).
 Action Plans- Last final procedure is action plan, it is a document that lists what steps
must be taken to complete the assigned task in an appropriate manner. It also means that
to develop action plan for product and materials. Because, purchasing is a big decision in
corporate strategy. It’s very important for purchasers to evaluate risk and profits
maximization.
Supplier Preferencing Model
According to supplier preferencing model, the buyer needs to be aware about the
suppliers like right cost and assessing. Most of buyers are not informed or aware about their
suppliers. So, Flysafe need to be aware about the suppliers, they should doing research and
development about the right cost and good material and services, their cost is not effective in
comparative to other airlines (Stadtler, 2015). Some of organization and buyers not to making a
good strategies for their organization, therefore they are going to be deficit. It does all about
depend on the market analysis and awareness of the product and services.
Supply preferencing model is an amazing process of procurement concepts. This is a
supply chain management and logistic concept. Quality cost, service, cost and delivery process
are the primary requirement of suppliers. In this direct cost of the production and all other type of
costs retaining the business calculated all over basis. Some of the attractiveness of this model is
as follows:
 Prompt Payment
 Opportunities for growth
 Concern with a high profile customers
 Basically, Simple and direct straight forward systems.
 Long life
 Stable and predictable planning
The Supply preference model itself is a process of measurements. These measurements
are amazing of account and valuable organization to the suppliers (Winter & Knemeyer, 2013).
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An amazing and attractive productivity explain the selling and purchasing quality off buyers. The
element of quality and reliability affect the business, its called supplier’s preferencing model,
means how a supplier views the organization.
SRM Software
Supplier relationship management is the infliction of planning and managing with third
party companies which supply goods and services to the other parent companies and
organization. Supplier relationship management procedure is a discipline business procedure
(Beske & Seuring, 2014). Flysafe airline is not to use in discipline way means strategically,
planning and other interaction which is must to run an organization for maximizing profit and
low risks.
Today Flysafe should do planning, managing, implementing and other way to complete
entire process that will help in raising their profit and quality (Kovacs & Spens, 2012). Because
of quality and profit always making a reputed brand and arising maximum profits. Every type of
business, whether small and large businesses they need a good as well as effective information
technology services and a couple of IT system in order to increase productivity in their business.
Information technology industry cannot survive without necessary IT infrastructure to make it
competitive and updated to the world by latest technology in the longer run (Beske, 2012).).
Every client would want latest and regular suppliers who are aware of new technology
and services. So, Flysafe should procure from suppliers who are aware about new technologies
and services. Now a day, every competitive organization is aware about product and services for
better services (Beske & Seuring, 2014). Supplier relationship management software helps in
managing businesses and their relationship by suppliers and buyers, contact to using computing
digital tools. Supplier relationship management software is a part of supply chain management
process which will help in growing and developing business in efficient manner overtime.
The recommended SRM software to Flysafe is Logiwa WMS is a cloud-based warehouse
management and order fulfilment solution built on a .NET framework. The solution supports
disparate warehousing processes, separate product groups and the needs of different sectors
within a single unified platform
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TASK 3
Logistic Report on Flysafe
Covered in PPT
TASK 4
(a)
Assessment of the financial data and necessary recommendations
Ratios 2015 2016 2017
profit margin 9.12 8.63 9.22
profitability 13.12 11.23 9.25
Return on Assets 23.15 16 14.23
Current ratio 1.62 1.45 1.21
Acid or Quick
Ratio
0.98 0.82 0.55
Stock turnover 5.1 6.12 4.25
Gearing Ratio 13.15 15.15 21.25
(Financial results of Food for the Skies)
The data above clearly reflects that profit margin of the company has seen a decline on
the year 2016 (Basu & Nair, 2012). However, it has able to regain the same profit margin in the
year 2017. The net profits of the company are also good enough and have seen a overall increase.
The current ratio as well as quick ratio of the company is also fairly good, which describes about
the financial position of the company, it is strong enough and is growing very fast as well. Fly
for skies can be considered as a supplier by any company‘s board. However, it is essential to
make sure that other factors like location of the company and because the company offers food
which is perishable in nature and therefore should be delivered to the customers in an allocated
timeframe, then the same should result be selected, otherwise not (Min & Kim, 2012). While
recommending the same to board, it can be said that company is fine from all aspects and
company’s financial position is also effective enough. The current relations with the company
has not turned out well for Flysafe and it is important that the relationship with this supplier
should be considered in a comprehensive manner, if relocation of Flysafe is done, this supplier
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can be useful for the company because of its financial strengths (Saenz and Koufteros, 2015).
However, currently no signs of improvement in the relation are visible and should be improved
overtime (Ross, 2016).
(b)
Inventory management issues within Flysafe
Traditional Inventory System aims to comprehend the stock administration dilemma
through better vision, enhancements in the request point/request amount process, or by changing
security stock dimensions (Basu & Nair, 2012). Nonetheless, request amounts, security stock and
lead time speak to just a minority of the sources of stock issues. Many stock issues are the after
effect of poor execution, poor correspondence, and/or poor basic leadership.
Poor correspondence is regular both inside and crosswise over inventory network
capacities, and incurs significant damage in information examination and joint effort.
Investigators, class administrators, team leads and inventory network staff take a gander at issues
in various ways and spotlight on various parts of them. Getting bits of knowledge from
information is regularly an intricate procedure for CPG information examiners, making
cooperation troublesome within Flysafe.
Suggested solution for the inventory management faced by Flysafe
By actualizing the PINPOINT-PRIORITIZE-PREVENT worldview in stock
administration, Airline companies can coordinate their network by upgrading execution,
correspondence, and basic leadership forms – utilizing buyer request as the key driver (Golicic &
Smith, 2013).
At the point when stock is driven by real interest, notwithstanding figure, the inventory
network works at more noteworthy proficiency and at expanded overall revenues (Fredendall &
Hill, 2016).
Airline companies that neglect to adopt a coordinated strategy to stock administration
may keep on battling with on-rack accessibility, and may find that customers (and retailers)
search somewhere else for the items they need.
CONCLUSION
Thus, from the above discussion it can be concluded that Supplier and logistics
management is a very important aspect of every business organization. It does not matter in
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which industry the company operates, a good relation will suppliers is very essential to get the
raw materials and other products at a very competitive prices from the suppliers. Most of the
business managers around the world focuses on the front end of business and aims to increase
customer satisfaction at the cost of every other stakeholder. Flysafe has done the same kind of
mistake which has led to its downfall in the aviation market. The company did not focused on its
suppliers leading to high procurement cost and less profits in the longer run. Airline industry is a
very competitive industry with very less profit margin, it is very important to make sure that
business is carried out in this industry with efficiency to obtain higher level of profits in an
effective manner. Flysafe must focus on improving its supplier management and procurement
strategy; it should reduce cost by merging suppliers. Install necessary software which will
develop better and effective relations with the suppliers in longer run. The above financial data
clearly depicts company is in a financial mess, it is essential to develop a strategic plan and
policies that will allow organization to grow and prosper in the longer run. There is a need for
comprehensive outsourcing and supply management strategy, which can help management in
reducing the overall cost and increase profit margin going forward.
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