Issues Faced by Global Supply Chains in Airline Industry

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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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