Etihad Airways: Operations Strategy and Supply Chain Management Analysis

This report analyzes the operations strategy and supply chain management in Etihad Airways, highlighting issues and recommending solutions. It also discusses the implementation of lean management and artificial intelligence in the operations.

Running head: ETIHAD AIRWAYS
Assignment Task 1A: Project Format
[Etihad Airways]
Name of the student:
Name of the university:
Author note:

1ETIHAD AIRWAYS
Executive summary
The main purpose of this report is to analyse operations strategy and supply chain
management in Etihad Airways. The company is one of the leading airlines service provides
across the globe. However, the study finds a few of issues at its operations level. The
company does not have a capable supply chain to be able to handle its global operations
effectively. Additionally, technological advancements is also missing. The paper gives
emphasis on implementing lean management approach in Etihad Airways. Additionally, it
also recommends to implement the most relevant Artificial Intelligence (AI) system in the
operations.

2ETIHAD AIRWAYS
Table of Contents
1. Introduction of the Chosen Organization...............................................................................4
A detailed overview of the firm.............................................................................................4
A short brief of the operations strategy..................................................................................6
Quality issues related to the supplier.....................................................................................8
2. A review of the operations strategy of the organization......................................................10
The present operations strategy............................................................................................10
Current (short term) and long-term solutions (internal considerations) to address any
operations related challenges the firm is facing...................................................................11
Impact of SWOT factors......................................................................................................13
Impact of PESTEL factors...................................................................................................15
3. Supply chain management...................................................................................................17
Definition of supply chain management and organizational level objectives......................17
How these objectives support the operations and overall strategy of the firm....................17
Highlight the challenges.......................................................................................................19
Real world and best in class solutions to resolve the problems...........................................21
4. A discussion on lean management and quality management approaches............................22
Lean management (Define, benefits, and the types of waste)..............................................22
A discussion on quality management (Offline and online approaches to quality and TQM)
..............................................................................................................................................23
Several methods of addressing quality (FMEA etc) and linking objectives with the
operations strategy of the firm and also lean approaches....................................................24

3ETIHAD AIRWAYS
5. Artificial Intelligence...........................................................................................................25
AI (Definition, history of the technology and examples)....................................................25
AI as adding value to the firm’s operations objectives and the overall objective of the
organisation..........................................................................................................................26
Challenges of AI..................................................................................................................26
Conclusion................................................................................................................................27
References................................................................................................................................28

4ETIHAD AIRWAYS
1. Introduction of the Chosen Organization
A detailed overview of the firm
Sector
The section covers a brief introduction of the chosen company “Etihad Airways”. The
company was founded 15 years ago in 2003. The company belongs to the airlines industry.
Etihad Aviation Group is its parent company. The company has its hubs based in Abu Dhabi
International Airport. It operates in alliance with the Etihad Airways Partners. It has its
headquarters based in Abu Dhabi, Khalifa City, and United Arab Emirates. It is one of the
most reputed air companies in the world (Etihad.com 2019).
Mission
The mission of Etihad Airline is to maintain an utmost degree of adherence to ethical
policies, and offer innovative products and services to travellers. With regards to the mission
statement, Etihad has introduced quite a many signature travel experiences such as innovative
service offerings and world-class products. Innovative services include but are not limited to
like Flying Nannies, Inflight Chef and Food & Beverage Managers (Etihad.com 2019).
Vision
The vision of Etihad Airways is to become the best airline company in the world. It is
intended to establish a close connectivity between the globe and Abu Dhabi. This means the
company wish to become the busiest and most preferred option for airline services at the
global level. To ensure that the vision is attained, Etihad is constantly focused on portraying
Arabian hospitality and appraising the image of Abu Dhabi as the world class leisure and
business destination. It follows a combination of Emirati values and sets itself against the
world’s best hospitality services (Etihad.com 2019).

5ETIHAD AIRWAYS
Corporate strategies
Corporate strategies generally consist of a continued process, which is attained and
maintained to benefit the business. Corporate strategies can be broadly classified into three
types like stability, growth and renewal. ‘Stability’ is a process to maintain a stable market
position. It is about making strategic decisions to retain the market image, counter increasing
market competition, and adopt innovative strategies to stay competitive. ‘Renewal’ is to
produce and offer renewed products and services. A company that generally does not perform
or is facing declining sales and market shares is bought or acquired by another corporation.
The new corporation thus make changes to the product portfolio to give it a new life.
‘Growth’ is a strategy to expand and enter new markets. This is one of the toughest of
corporate strategies and requires a real expertise in different aspects of operations. These are
marketing practices, an understanding of external business environment, the nature of
competition in the target market, and continuously deploying innovative strategies.
In context to Etihad Airways, ‘Growth’ strategy is being followed. The company
does it by collaborating with strategic partners. In collaboration with partners, Etihad tries to
be competitive in the worldwide air transport sector. Etihad utilises its organic growth to
remain competitive in the airline industry. Apart from its organic growth, the growth factor in
Etihad Airways also consists of codeshare agreements with different and recognised airlines,
strategically making investments in various airline services. These services include like
offering signature services to travellers. Etihad Airways is constantly into identifying and
implementing innovative practices such as the introduction of inflight chef (Etihad.com
2019). This is one of very few airline companies, which is able to explore and introduce its
local culture at the global platform. Nonetheless, it has the success in expanding to new
markets, which is also why its services are well enjoyed at the global level.

6ETIHAD AIRWAYS
History
Etihad Airways was started and established as the secondary flight carrier of the UAE
in 2003. The person responsible for the establishment was Sheikh Khalifa bin Zayed Al
Nahyan who wanted to have a flight to Abu Dhabi. The airline was established by Darwish
Alkhoory who was the chief personal pilot for Sheikh Zayed. One of the milestones that
Etihad has ever achieved was the announcement for the largest aircraft order in the
commercial aviation history. It all happened in the year 2008 at Farnborough Airshow. The
order was for 205 aircraft that includes 55 options, 100 firm orders, and 50 purchase rights
(Etihad.com 2019). The year 2011 did bring some more happiness to the company when it
announced its full-year net profit, which was US$14 million (Etihadaviationgroup.com
2019). The same year did see some more achievements for the company as it announced to
have taken a 29.21% stake in the Europe’s sixth-largest airline, Air Berlin. It was followed by
some more number of minority stakes in other airlines like Virgin Australia, Air Seychelles,
and Aer Lingus. In the year 2013, Jet Airways sold its 24% stake to Etihad. It happened after
when the Indian government had announced that foreign airlines could head to take up to
49% stake in Indian carriers (Gulfnews.com 2019). In the same year, Etihad acquired 33.3%
stake in Darwin Airline, the Swiss carrier (Gulfnews.com 2019). In 2014, Etihad took 49%
stake in Alitalia, the Italian flag carrier. The deal cost around an estimated €560 million to the
Etihad (Equitystory.com 2019). In May 2016, the management structure in Etihad Airways
did undergo a reshuffle. With this James Hogan became the new CEO of the company. Peter
Baumgartner who previously was the Chief Commercial Officer in Etihad became the Chief
Executive Officer for the company (Statista 2019).
A short brief of the operations strategy

7ETIHAD AIRWAYS
Operational strategies are those that firms identify and utilise to reach their vision by
accomplishing both short-term and long-term goals. By developing a suitable operation
strategy or a set of strategies, a company can actually utilise its resources appropriately and
produce potential resilience to its competency. On a broader aspect, operations strategy can
be classified into four distinguished types. These are (Koch and Friis 2015):
Customer-driven Strategies: Strategies those are used to produce relevant products and
offer services to customers are termed as customer-driven strategies. Any firm will be said to
have executed and is following the customer-driven strategies when the business constantly
monitors the market. The monitoring includes identifying the changing perception of
consumers of the target market or the market of operation. An execution of these strategies
will require a robust understanding of the market behaviour and the firm’s ability to adjust
with it.
Product and Service Development: A company can be termed as following the products
and service development strategy when it adopts a distinguished set of strategies to offer
products and services. The set of strategies thus adopted depend on the market and planning
strategy of the concerned firm. A firm may try to implement and explore its innovation
capabilities to become the market leader and by offering a new product or a service never
being made before. For example, the “Nano Cars” is one of the examples of such innovation
from the Tata Company (Weyrauch and Herstatt 2017). In addition to this, a few firms wait
for an innovation to happen, so that, they could follow it and utilise the opportunities thus
created.
Corporate Strategy: Corporate strategy is the highest and one of the most complicated
strategic plan of an organization hierarchically. It defines the corporate goals, and the
resources and ways to attain these goals. An organization strive to achieve these goals within

8ETIHAD AIRWAYS
the strategic management. A vision and mission are also the parts of a corporate-level
strategy. The development process for this strategy involves the identification and application
of numerous analytical techniques like SWOT, PESTLE, and VRIO etc.
Competitive Priorities: Competitive priorities depend on a lot of factors like a market
analysis, corporate strategy, conducting a needs assessment, and defining core processes. To
create competitive priorities, an organization gets involved in numerous processes like
evaluating operational costs, and analysing the quality of a service or product. Competitive
priorities should include offering a quality product or service more efficiently than the
competitors. The level of efficiency will be measured as the follows:
 Selling best quality products or offering services but at premium rates
 Offering cheapest products or services but at a quality, which is acceptable
 Maintaining quality in flagship products or services
Developing Core Competencies: Core competencies can be referred to areas of competency,
which is exclusive only to the company. The list of core competencies can include a number
of thing like financial and marketing expertise, having well-trained staff, and optimal
business locations. By identifying and nurturing core competencies, a company will try to
enhance its customer satisfaction rate, build up effective relationships with stakeholders, and
encourage product development.
Quality issues related to the supplier
The supply chain management at Etihad Airways faces some challenges. These are
(O’Connell and Bueno 2018):
Ineffective maintenance of employer-supplier relationship:

9ETIHAD AIRWAYS
Due to an ineffective cash-flow management at Etihad Airways, it has faced
difficulties offering perks and benefits to suppliers. It does not at all mean that the company
does not offer benefits to its suppliers. Indeed, the company does so; however, there are still
some areas of improvement. One of those areas is offering benefits and incentivising
suppliers on their performance. These things are necessary and help to keep up an effective
bonding with suppliers. An effective bonding with suppliers is essential to receive high-
quality materials in quick time and at the most competitive price (Onyango et al. 2015). The
good thing is that the company has realised the importance to reward its suppliers with extra
benefits. To do so, it has appointed the National Bank of Abu Dhabi (NBAD) to facilitate and
establish a fully automated and an innovative programme “Supply Chain Finance (SCF)”
(Gulfnews.com 2019). The initiative will help Etihad to enhance its capability in regards to
establishing a deeper bonding with its strategic suppliers. This will also help to strengthen its
supply chain management process.
New Generation Aircraft:
Etihad has faced challenges in regards to dealing with the production of new
generation aircrafts. The fact that has kept the company troubled with, is a lack of effective
integration between Etihad and manufacturers for its new generation aircrafts. It appears as if
Etihad has failed to understand the level of attachment it needs to have with its
manufacturers. Indeed, there is a need for a collaborative approach towards the production of
new generation aircrafts. A collaborative approach with manufacturers will help to reach to a
range of trusted suppliers belonging to different tiers. The approach may create problems in
areas such as performance, financial risks, and reliability. However, the suggested way out of
the issue must be implemented to yield the best production capability in Etihad.
Battery Issue:

10ETIHAD AIRWAYS
Boeing’s 787 Dreamliner, which is the series of new generation aircrafts for Etihad
seems to be facing troubles from the malfunctioning battery. It has produced series of
incidents of a fuel and a fire leak causing two back-to-back incidents at two separate runway
(YouTube 2019). The fact, which mostly contributed to this incident was the use of the
battery that looks incompetent on a broader aspect. Considering the advanced technologies
being used in Boeing’s 787 Dreamliner, there was a need to use batteries, which is less faulty.
Indeed, battery issues have remained a common problem across a range of airlines. However,
the performance was never that bad as in the case of Boeing’s 787 Dreamliner. Battery
provides an alternative option to airlines for the power generation. Generally, Airlines
sometimes meet with power generation issues. In all such cases battery generates the much-
needed power to airlines. The incident indicates an ineffective management of supply chain
at the Etihad Airways. The manufacturing of Boeing’s 787 Dreamliner was outsourced.
There are speculations that these airplanes are not manufactured in Boeing. In fact, these are
just assembled there. Hence, the engineering technology in the Boeing’s 787 Dreamliner
according to a few speculations belongs to a company other than the Boeing.
2. A review of the operations strategy of the organization
The present operations strategy
Operations strategy broadly can be categorised into five different types. These are
product and service development, developing core competencies, corporate strategy,
competitive priorities, and customer-driven strategies. This section investigates the current
operations strategy deployed at the Etihad Airways. The company may be using one strategy
or even more than this.
Etihad seems like boasting to a significant extent on a “Product and Service
Development” operations strategy. The evidence for the cited fact can be traced in the

11ETIHAD AIRWAYS
expansion of operations of the Boeing 787-9 Dreamliner Service to new routes. Etihad is
planning to introduce the Boeing 787-9 Dreamliner to Hong Kong and Barcelona. The new
service such as that mentioned in this section would follow a new aircraft model comprising
of added services to both business and economy class passengers. The loading capacity in
belly-hold cargo will also increase. Such flights will have an improved in-flight connectivity
as compared to other airplanes (The National 2019). An introduction of the Boeing 787-9
Dreamliner Service in different routes indicates that Etihad is aiming at touching new heights
with innovative features being included in its new generation airplanes. It also shows that the
company is driving innovation to produce new products and services.
“Competitive Priorities” is the other operation strategy, which the Etihad is
concerned with now. Etihad Airways will now give priority to point-to-point operations of
flights. It means the carrier will put it focus back over the super-hub model, which helped the
carrier previously to attract customers those who make flights between Asia, Africa, Europe
and the Americas. With this in the plan Etihad aims to attain and maintain a long-term
sustainability. The carrier wants to be able to see through the challenges the aviation industry
is set to face. The carrier will introduce a divisional revamp influencing its seven different
operational divisions like commercial activities, maintenance, operations, finance, support
services and human resources. In addition, Etihad will also focus on a new “transformation”
function. Route networks will also be reanalysed to see which one to continue with and the
one to abandon (ArabianBusiness.com 2019).
Current (short term) and long-term solutions (internal considerations) to address any
operations related challenges the firm is facing
Short-term and long-term solutions for challenges with “Product and Service
Development” strategy:

12ETIHAD AIRWAYS
Etihad Airways has plans to operate with Boeing 787-9 Dreamliner Service in new
routes such as Hong Kong and Barcelona. The plan may come cross a certain challenges such
as an effective management of the supply chain. The supply chain management at Etihad has
already had a hit from its inability to identify quality suppliers. The battery used in Boeing
787-9 Dreamliner Service has complaints pouring in from all around. There are speculations
that the airplanes are not being manufactured in Boeing. It was according to a few comment
makers was outsourced to some different company. Accordingly, these planes lacked the
engineering technology of Boeing.
To ensure that no such incidents occur at the initial level of operation of Boeing 787-9
Dreamliner Service, Etihad Airways will consider to strengthen its bonding with Boeing. This
will help to identify and approach the quality suppliers. These suppliers will be closely
monitored for their engineering approach to be used in the making of airplanes (NJOKU and
OU 2015). However, an automated system to track the operations of suppliers is needed. This
automated system will help to detect a number of activities such as orders being made to
suppliers, progress of the shipment, pricing of the materials and etc.
Solutions for “Competitive Priorities” challenges:
Etihad Airways wants to attain sustainability with a returning back to the super-hub
model. With this model the company has planned to regain and generate new customers from
circuits such as Asia, Europe, Africa and the Americas. With intention to adhere to the super-
hub model again and attain sustainability in operations, Etihad Airways has identified a
certain areas of improvement. These are finance, support services, maintenance, operations,
commercial activities and human resources. However, the company can be tested for its
ability to effectively maintain these areas of operations. For example, in commercial activities
Etihad Airways may find it difficult to maintain a strong bonding with its suppliers. In

13ETIHAD AIRWAYS
finance, Etihad Airways can be troubled from ineffective cash-flows. It seemed like the
company has identified a long-term solution to deal with the issue. Etihad Airways has
collaborated with National Bank of Abu Dhabi (NBAD) to stabilise the cash flows (Bose
2018).
Impact of SWOT factors
Strengths
 Etihad follows a model as similar to
the one of Emirates, the largest,
busiest and most profitable airline in
the Middle East
 Advantage of geographic location as
it is a crossroads to East and West
 Highly experienced Western
professionals work in this company
 Green approach to environment
Weaknesses
 Positioning and branding
 Geopolitical threat like violence and
eruption of terrorism
Opportunities
 Continuous development of social
media networks
 Leadership
 Expansion strategy in developing
nations
 UAE as the crossroads between the
West and East and has the attractive
tourism features
Threats
 Geopolitical unrests can hamper its
business in some regions like the
Indian market
Table 1: SWOT Analysis of Etihad Airways

14ETIHAD AIRWAYS
(Source: Talwar and Mehta 2016)
The above table covers the areas of strengths, weaknesses, opportunities and threats in
the context of Etihad Airways. Etihad Airways has the advantage of Emirates as it follows a
model as similar to the one followed by Emirates. Emirates is the busiest, largest and most
profitable airline company in the entire Middle East region. The model benefitted to Etihad as
well. It has received a recognition for the best airline in the world in four consecutive years in
the past. Etihad Airways has the advantage of geographic location. The Middle East countries
form a crossroads to East and West and hence, because of this Etihad Airways receive a huge
passenger footfall. Etihad Airways is blessed with quality and experienced Western
professionals. The CEO of the company is well equipped with expertise to deal with day-to-
day management operations. One of the USPs of Etihad Airways is its “Green Approach” to
reduce its adverse environmental impact. With this the company is effectively engaged in
conservation of fuel and reducing the pollutants.
Etihad Airways has not really worked in areas like positioning and branding. It is not
that evident as it needs to be to be able to influence the purchase behaviour. Political
instability due to geopolitical threats like violence and terrorism can affect the number of
passengers in flights.
Etihad Airways is constantly involved in enhancing its social media presence. It has
an active website and is also effectively present across a range of social media sites.
Promotions and contests are also the essential parts of marketing in Etihad Airways. A
leadership practice is an opportunity for Etihad Airways. The leadership in Etihad Airways
encourages the technological progress and supports the necessary changes. Etihad Airways is
aimed at expanding further and sustaining its operations in the emerging nations. It enjoys a
healthier business in Australia, India and Asia. Since, UAE forms a crossroads to the East and

15ETIHAD AIRWAYS
West and also that UAE is undergoing a constant tourism development, the indirect benefits
will go to Etihad Airways.
As stated earlier, geopolitical unrest in the form of violence and erupting terrorism
activities can affect its business in some regions like in India. Passengers may have a feeling
of insecurity to board in Etihad Airways.
Impact of PESTEL factors
Political
 Exposed to
international political
developments such
as a ban being
imposed by Trump’s
administration on the
six Muslim countries
 Certain drops in load
factors on all flights
from Middle East to
the US
Economic
 Etihad Airways
operates in
international circuits.
The global economy
has a positive impact
on the airline
industry
 Performance in
emerging markets is
unpredictable and
hence, is a potential
risks for the earnings
of Etihad Airways
 A decline in the
crude oil prices in
recent past has
helped airline
Social
 The growth in
population and the
number of middle
class families in
developing regions
like Africa and Asia
is a boost to the
airline industry
 An increasing
number of
Generation ‘Y’
passengers

16ETIHAD AIRWAYS
companies to control
their operational
expenses. However,
it affected flights to
oil-rich region at
premium rates
Technological
 Needs for
technological
advancement for
reaching to the target
market and to attain
pattern for service
development and
delivery
 Online booking and
query making
process is on a rise
 Fuel efficiency
improvements has
emerged as a
competitive factor
Environmental
 Increasing carbon
footprint impact is a
huge challenge to the
airline industry
 Changes in global
climate can affect the
airline operations
Legal
 Access to the US
market has
temporarily been
denied in the name
of ban on flights
originating from
Muslim countries
 The American and
European airlines are
forcing their
respective
governments to
reduce the subsidy
benefits to Middle
Eastern airlines
Table 2: PESTEL of Etihad Airways
(Source: Belobaba, Odoni and Barnhart 2015)

17ETIHAD AIRWAYS
The above table shows how the airline industry is impacted from the several factors in
PESTEL. An airline company as such the Etihad Airways needs to work on a regular basis to
find out the possible way outs of some of the issues being highlighted in the above table.
3. Supply chain management
Definition of supply chain management and organizational level objectives
According to the theory of supply chain management, supply chain management
(SCM) is about managing the flow of goods and services, movement and storage of raw
materials, management of inventories, movement of finished goods and services to its end
users. The supply chain is an essential part of operations. A company with a better control of
its supply chain management process will be most certain to take the advantage of market
opportunities (Hugos 2018).
Supply Chain Objectives in context to Etihad Airways:
1. To be the best airline company in regards to delivering dedication to their service
delivery
2. To deliver the best service and attaining a global recognition
How these objectives support the operations and overall strategy of the firm
Etihad Airways has so far been able to deliver its objectives and support the
operations and the overall strategy of the company. It has effectively taken the inspiration
from and have implemented the business model of Emirates, the largest airline in the Middle
East. It is relatively easier to identify the most relevant business model than to keep it
delivering the results. It shows that Etihad Airways is committed to what they execute. It
does so with the help of an effective supply chain management. It also has supports in the
form of skilled Western professionals (Etihad.com 2019). Except a few areas such as

18ETIHAD AIRWAYS
positioning and branding and an effective management of the global supply chain, Etihad
Airways has been successful in delivering with everything it does.
Etihad Airways holds a global recognition for many reasons such as for belonging to a
region, which forms a crossroads to flights travelling from and to the East and West. Due to
the geographical advantage, Etihad Airways had the opportunities to explore its operational
efficiencies at the global level. Etihad ensures to deliver the best service by working
collaboratively with its strategic suppliers. The company understands the importance of
motivating factors in suppliers. It is due to this Etihad Airways has been at the forefront
largely to ensure that its suppliers are satisfied with the benefits that they receive from the
company. However, due to an ineffective management of cash flows Etihad Airways has
struggled with offering extra benefits to its suppliers to keep them motivated (Gallear,
Ghobadian and He 2015).
With regards to the supply chain objectives, Etihad Airways had needed to effectively
manage a few of its business functions like human resources, financial management, social
media activities, technological advancement and others. On a broader aspect, Etihad Airways
has successfully maintained many of these functional areas. HR managers were able to
encourage the management to give opportunities to Western professionals. In this way, the
HRM was able to bring some dynamism to the workforce. By and large these professionals
were able to take care of a range of operational activities like finance and marketing,
operations and support services. These skilled professionals also take care of the social media
network management. They effectively deal with the day-to-day operations like reading and
responding to the comments posted on various social media sites like Twitter.
However, the global supply chains in Etihad Airways lacks the implementation of
advanced technologies like the information systems. An advanced information systems is

19ETIHAD AIRWAYS
necessary to track the orders and to check the availability of materials. Moreover, this is
eventually helpful in enhancing the capability in demand forecast. It is because the
information systems will help to keep a track of the past orders and will also notify of the
availability of materials. Hence, the production time will also decrease (Garrido-Vega,
Jimenez and Morita 2015).
Highlight the challenges
On a broader aspect, the supply chain management at Etihad Airways faces two challenges.
These are:
Ineffective Management of Suppliers:
An ineffective management of suppliers can really affect the production and demand
forecast capability. Etihad Airways has already been facing the demand forecast issue. The
level of problem can be understood by studying the relevant examples of supply chain
failures. One of such examples is of “Boeing Dreamliner”. It all started with when Boeing
launched the production of a much anticipated twin-engine 787 in 2007. The production was
anticipated to break the previous record for production times. However, within just a few
months it fell miserably. It met with significant glitches in the first phase of the production.
The small delays due to an ineffective management of suppliers resulted into a revised
deadline. The timeline eventually amounted to years (Raconteur 2019).
“Yodel” presents an example of failure in effectively managing the demand forecast.
Yodel is the biggest parcel delivery company in the United Kingdom. It grew at a staggering
rate since after acquiring businesses from DHL in the year 2010. Yodel eventually went on to
become an e-commerce specialist. However, it failed miserably in understanding its capacity
to deliver parcels. It all happened in 2014 when Yodel bit off more than the company can
manage efficiently. As a result, it has to stop receiving the parcels from retailers during the

20ETIHAD AIRWAYS
Christmas rush. Yodel simply struggled under the demands for delivering the parcels
(Raconteur 2019).
The examples as illustrated in the two separated paragraphs in this section of the
report illustrate that an effective relationship with suppliers is essential to prevent the
production from being affected by ineffective demand forecasts. An effective demand
forecast plays an important role in preventing both over-stocking and out-of-stock issue. Both
of the situations can affect the operational productivity, operational costs and time and the
market reputation. Productivity will be affected from over-stoking and the shortage of stocks.
Over-stocking will affect the operational costs and time. This will affect the overall profit
margin. Shortage of stocks will question the credibility of the employer to fulfil the customer
demands. Nonetheless, these all consequences will directly impact the market image of the
concerned employer.
Information systems:
Information systems is about storing, organising and providing access to a range of
distinguished information. This can be used to enhance an organisational capability in storing
and accessing to large-scale data. An access to large-scale data is essential to understand the
frequently changing consumers’ perception of the products and services and to offer them the
relevant products and services. However, Etihad Airways seemed like have failed to manage
it effectively. An ineffective management of information systems can be a real threat. The
level of its severity can be understood from a few examples of failures of information
systems.
“Hilton Hotels” is one the employers to have been failed in appropriately executing
the information systems. The employer had wanted to enhance the experience of reservations
for hotel bookings and an online payment of car rentals. The information systems was being

21ETIHAD AIRWAYS
brought in with an intention to make the booking system easier for both the Hilton Hotels and
the consumers. However, after investing so much in the technology, it eventually ended up
with a missed deadline by 2 years (Dardeer, Tag-Eldeen and Salem 2017).
“Irish Electronic Voting” failure in 2004 is another example of an information
systems failure. It is perhaps very common in Irish politics. A very huge investment was
made to integrate the voting system with the information systems. This could have helped to
automate the voting and after-voting processes. However, it eventually turned on to waste the
tax payers’ money over not so useful information systems. The main reason behind the
failure was the lack of interest, which the system had received from the local public. The
local public had thought that the information systems would affect the level of transparency
in the voting process. The voting thus can be easily manipulated to produce fake and desired
results. The system was never implemented. On the other hand, it emerged as the reason to
waste a huge sum of amount (Vezzoli et al. 2015).
The examples of failure of information systems as furnished in the above two
paragraphs indicate that it is really very challenging to implement the information systems.
Etihad Airways has faced more of a similar situations as stated in this section and has
considerably failed in delivering with the information systems. There is now a need to
revamp the technology by following strategies required to implement it effectively in the
system. This could be done by following the examples of successful implementation of
information systems in few companies.
Real world and best in class solutions to resolve the problems
As suggested an effective management of information systems could be learnt from
those who have successfully implemented this.
Example Solution for the Demand Forecast

22ETIHAD AIRWAYS
One of such examples is of the US-based Kimberly-Clark, the healthcare and
personal products group. The company had wanted to shift from the traditional modal for the
supply chain to a more dynamic model, which is good at delivering the anticipated outcome.
As a result of which, the demand forecast was established in the company. Demand forecast
technology was a success in Kimberly-Clark. This can be understood from an example. The
company differed from others in regards to making an appropriate prediction of the market.
Kimberly-Clark was able to identify the everyday activity like whether customers are
returning back to normalcy after the destruction. This was not the case with many other
companies. Consequently, Kimberly-Clark did manage its stocks and delivered up to the
expectation (Ft.com 2019).
Example for the Information Systems
The use of predictive analytics is a good example of implementation of the
information systems. Netflix is the most popular and widely spread internet TV streaming
service across the globe. The business model that the company follows is extremely data-
driven. The company has a lot of data on their viewers. They are also aware of the contents,
which their customers mostly prefer to watch. The company uses the information and
predictive analytics to predict the content, which could be a potential success (Wamba et al.
2015).
Both demand forecast and information systems will help Etihad Airways to deepen its
bonding with the suppliers. “Demand Forecast” technology will help to communicate more
or less the required stocks, which is a good thing to happen from both the suppliers’ and
employers’ perspectives. Suppliers will be able to deliver in time. On the other hand, the
employer will be able to save money for hitting the market demand. “Information Systems”
will help to generate large-scale data. The use of an appropriate predictive analytics will help

23ETIHAD AIRWAYS
to utilise these data with absolute appropriateness. Hence, consumer behaviour on a daily
basis could then be predicted.
4. A discussion on lean management and quality management approaches
Lean management (Define, benefits, and the types of waste)
Definition: Lean management is an approach to help organisations successfully deliver and
achieve the process of continuous improvement. These organisations are intended at making
small but incremental changes (Rotter et al. 2018).
Benefits: Lean management software provides one point of access to accessing the set of
information to everyone. Unlike a typical mailing system and the spreadsheets, every users
are on the same page and can view and access to each one of the data. However, only the
authorised users will be granted an access to the data (Rotter et al. 2018).
Types of waste: It helps to get rid of over production. It does so by enabling the system to
produce greater quantities of products in relatively fewer times. It helps to reduce the wastes
of inventory. It helps to analyse the required quantity of raw materials. It also assists in
finishing goods, which do not have value added to it. It assists in eliminating people and
parts, which have been in wait-time for a week cycle or so. It removes an unnecessary
movement of parts, people or machines within a system. It identifies and fixes an
unnecessary transportation of parts or people in between different processes. It helps to
remove the number of occurrence of reworks by correcting the process. It also helps to avoid
over processing. It means the lean management discourages the processing beyond the
standard needed to customers (Nikakhtar et al. 2015).
A discussion on quality management (Offline and online approaches to quality and
TQM)

24ETIHAD AIRWAYS
Quality Management: Quality management is a process to ensure that all activities
contribute to fulfilling the operational objectives. This includes but not limited to like
determination of a policy to improve the quality, quality improvement and the quality control
(Molina-Azorín et al. 2015).
Offline and Online Approaches to Quality: Quality management in organisations can be
established by following both offline and online resources. Offline resources include but is
not limited to like doing the meetings. Meetings are good mediums to discuss the quality
issues and declare the possible way outs. Online resources will include many thing like online
surveys, emails etc. Data thus derived from online surveys and other resources could then be
analysed using techniques such as spreadsheets, statistical techniques etc. (Molina-Azorín et
al. 2015)
Total Quality Management: This can be defined as a continuous process to encourage
employee engagement and influence leadership approach in managers to ensure the
fulfilment of operational objectives (Obeidat et al. 2016).
Positive and negative impact of quality on lean management: Lean management is
implemented to attain a continuous improvement approach towards attaining the operational
goals. Quality can significantly impact the lean management. For example, poor quality
encourages over stocking, which will unnecessarily enhance the total operational costs.
Similarly, an incapable workforce will not be able to explore innovative ideas, which is an
emerging competitive priority for many reputed companies. On the other hand, an effective
demand forecast management in an organisation will enable the company to effectively
communicate with suppliers and timely deliver the orders (Obeidat et al. 2016).
Several methods of addressing quality (FMEA etc) and linking objectives with the
operations strategy of the firm and also lean approaches

25ETIHAD AIRWAYS
Several Methods of addressing quality (FMEA)
Following methods can be used to address quality issues (Obeidat et al. 2016):
Quality assurance: An in-house inspector is assigned to check and ensure the quality aspects
of the every single step involved from incoming of raw materials to products reaching to the
market. In context to Etihad Airways, there is a need to monitor every single process
involved in manufacturing, so that, no more battery failure cases happen in near future.
Failure Mode and Effects Analysis (FMEA): FMEA assures that processes and products
are failure free. It is done in two steps like identification of potential failures and their impact
and all causes that leads to such failures. With regards to Etihad Airways, the company can
figure out the possible causes of battery failures and ineffective management of the global
supply chain
Company Quality: It is about inspecting the entire process in the company to find the areas
of weaknesses. This could be related with the workforce or also with an ineffective human
resourced management. Similarly, Etihad Airways need to rethink how plans are made in the
company for using a technology or a strategy. This will help to find out the area of problems
and hence, similar issues like battery failures and ineffective supply chain management could
then be avoided in the future.
Statistical Control: A perfection in the process is hard to be attained. However, companies
those are really concerned with the quality, they also use the statistical control. It is a problem
solving method that uses a variety of techniques to identify and treat problems. These are
control charts, mean calculations and range charts to monitor customer complaints. Random
testing is done to ensure that statistical margin meets the specifications.
5. Artificial Intelligence

26ETIHAD AIRWAYS
AI (Definition, history of the technology and examples)
Definition: Artificial Intelligence (AI) is a way to automate the system by using software to
think intelligently and deploying a computer-controlled robot (Pannu 2015).
History: AI was invented by classical philosophers. Philosophers identified the process of
human thinking to be converted possibly into mechanical manipulation of the symbols. As a
result of this thought, a programmable digital computer was invented in 1940s. This machine
was based on mathematical reasoning. This device has encouraged scientists to think
seriously about the possibility of constructing the brain run by electronic principles. AI
research work had started at the Dartmouth College in the 1956. Those who were the part of
this research work would someday become the leaders of AI research works in decades to
come. Many of these researchers predicted that a machine can work as intelligently as a
human in less than a generation to come. Hence, these researchers were supported with
millions of dollars to make this prediction become a fact (Pannu 2015).
Examples: There are many examples of firms with successful deployment of Artificial
Intelligence (AI). Amazon is one of the companies to have applied AI. Amazon Echo is the
AI-based products, which the company uses for picking and packaging process. Amazon
could do it after acquiring a robotics company, Kiva in 2012. The automated process works
on the inbuilt ML algorithm (Forbes.com 2019). Microsoft is also engaged in handling a
range of projects on AI. These are CNTK, Cortona, industry-specific AI apps and cognitive
services (Forbes.com 2019).
AI as adding value to the firm’s operations objectives and the overall objective of the
organisation
AI if implemented appropriately in the system can produce positive results and add
value to the firm’s operations. For example, Alexa voice assistant by Amazon is doing worth

27ETIHAD AIRWAYS
for the company. It gives users of Web Services an opportunity to access to cloud-based
tools. It can also assist shoppers to grab items in reduced time and get finished off
immediately from shopping. Robots are guiding to shelves full of products (Pannu 2015).
Challenges of AI
Artificial Intelligence (AI) though being a revolutionary find of the fourth industrial
revolution still faces many challenges. AI Human Interface is one of the challenges of
artificial intelligence. The shortage of skilled professionals who can proficiently understand
the large-scale data science is a worry to the company. The data is so big; however, its
absolute utilisation is rarely known. ‘Financial Challenges’ is a potential barrier to AI. The
fact that AI implementation require a huge amount of sum many companies are not so keen
about it. Some companies are less interested in AI for a fact that Software malfunction is a
common issue with technology. ‘Limited Scopes’ with AI also contribute to disinterest
companies. AI cannot replace every single task and hence, think process starts happening like
whether it is really worth a technology (Helbing 2019).
Conclusion
Therefore, it is important for Etihad Airways to consider a makeover of its operations
strategy to be able to meet the increasing demands of the future and also attain business
sustainability. There is a need to revamp the supply chain management to help it deliver at
the global level. On a broader aspect, there is a need to implement lean management across
the organisation, so that, quality is assured in every aspect of the operations. Additionally,
identification and implementation of emerging technologies like AI is also recommended.

28ETIHAD AIRWAYS
References
ArabianBusiness.com 2019. Etihad Airways to scale back on global plans. [online]
ArabianBusiness.com. Available at: https://www.arabianbusiness.com/transport/399947-
etihad-airways-to-scale-back-on-global-plans [Accessed 15 Jan. 2019].
Belobaba, P., Odoni, A. and Barnhart, C. eds., 2015. The global airline industry. John Wiley
& Sons.
Bose, I., 2018. The Strategic Environment of the Aviation Industry in UAE: A Case Study on
Etihad Airways.
Dardeer, M., Tag-Eldeen, A. and Salem, I., 2017. The Influence of Physical Work
Environment on Hotel Back-of-the-House Employees’ Satisfaction and Productivity: A Case
Study on Hilton Hotels. JOURNAL OF TOURISM. RESEARCH, p.43.
Equitystory.com 2019. [online] Equitystory.com. Available at:
http://www.equitystory.com/Download/Companies/airberlin/Annual%20Reports/
GB00B128C026-JA-2014-EQ-E-00.pdf [Accessed 15 Jan. 2019].
Etihad.com 2019. [online] Etihad.com. Available at: https://www.etihad.com/en-in/
[Accessed 15 Jan. 2019].
Etihadaviationgroup.com 2019. [online] Etihadaviationgroup.com. Available at:
https://www.etihadaviationgroup.com/content/dam/eag/corporate/etihadaviation/en-ae/pdfs/
Annual_Reports/Annual_Report_2011_EN.pdf [Accessed 15 Jan. 2019].
Forbes.com 2019. 10 Powerful Examples Of Artificial Intelligence In Use Today. [online]
Forbes.com. Available at: https://www.forbes.com/sites/robertadams/2017/01/10/10-
powerful-examples-of-artificial-intelligence-in-use-today/#4eeab714420d [Accessed 15 Jan.
2019].

29ETIHAD AIRWAYS
Ft.com 2019. Demand forecasting pays off for Kimberly-Clark | Financial Times. [online]
Ft.com. Available at: https://www.ft.com/content/76cffe96-db1b-11e0-bbf4-00144feabdc0
[Accessed 15 Jan. 2019].
Gallear, D., Ghobadian, A. and He, Q., 2015. The mediating effect of environmental and
ethical behaviour on supply chain partnership decisions and management appreciation of
supplier partnership risks. International Journal of Production Research, 53(21), pp.6455-
6472.
Garrido-Vega, P., Jimenez, C.H.O. and Morita, M., 2015. Implementation of technology and
production strategy practices: Relationship levels in different industries. International
Journal of Production Economics, 161, pp.201-216.
Gulfnews.com 2019. Etihad aims to strengthen its supply chain. [online] Gulfnews.com.
Available at: https://gulfnews.com/business/aviation/etihad-aims-to-strengthen-its-supply-
chain-1.1892760 [Accessed 13 Jan. 2019].
Gulfnews.com 2019. Etihad Airways net profit surges 48% to $62m in 2013. [online]
Gulfnews.com. Available at: https://gulfnews.com/business/aviation/etihad-airways-net-
profit-surges-48-to-62m-in-2013-1.1298625 [Accessed 15 Jan. 2019].
Helbing, D., 2019. Societal, economic, ethical and legal challenges of the digital revolution:
from big data to deep learning, artificial intelligence, and manipulative technologies. In
Towards Digital Enlightenment (pp. 47-72). Springer, Cham.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Koch, C. and Friis, O., 2015. Operations strategy development in project based production–a
political process perspective. Journal of Manufacturing Technology Management, 26(4),
pp.501-514.

30ETIHAD AIRWAYS
Molina-Azorín, J.F., Tarí, J.J., Pereira-Moliner, J., López-Gamero, M.D. and Pertusa-Ortega,
E.M., 2015. The effects of quality and environmental management on competitive advantage:
A mixed methods study in the hotel industry. Tourism Management, 50, pp.41-54.
Nikakhtar, A., Hosseini, A.A., Wong, K.Y. and Zavichi, A., 2015. Application of lean
construction principles to reduce construction process waste using computer simulation: a
case study. International Journal of Services and Operations Management, 20(4), pp.461-
480.
NJOKU, D. and OU, K.A., 2015. EFFECTIVE SUPPLY CHAIN MANAGEMENT: A
STRATEGIC TOOL FOR PROFITABILITY ENHANCEMENT IN THE COMPETITIVE
MARKETING ENVIRONMENT. European Journal of Business and Social Sciences, 3(12),
pp.90-112.
O’Connell, J.F. and Bueno, O.E., 2018. A study into the hub performance Emirates, Etihad
Airways and Qatar Airways and their competitive position against the major European
hubbing airlines. Journal of Air Transport Management, 69, pp.257-268.
Obeidat, B.Y., Hashem, L., Alansari, I., Tarhini, A. and Al-Salti, Z., 2016. The effect of
knowledge management uses on total quality management practices: A theoretical
perspective. Journal of Management and strategy, 7(4), p.18.
Onyango, O.J., Onyango, M.B., Kiruri, S.N. and NjeriKaranja, S., 2015. Effect of Strategic
Supplier Relationship Management on Internal Operational erformance of Manufacturing
Firms: A Case of East African Breweries Limited, Kenya. International Journal of
Economics, Finance and Management Sciences, 3(2), pp.115-124.
Pannu, A., 2015. Artificial intelligence and its application in different areas. Artificial
Intelligence, 4(10), pp.79-84.

31ETIHAD AIRWAYS
Raconteur 2019. 10 supply chain disasters - Raconteur. [online] Raconteur. Available at:
https://www.raconteur.net/manufacturing/10-supply-chain-disasters [Accessed 15 Jan. 2019].
Rotter, T., Plishka, C., Lawal, A., Harrison, L., Sari, N., Goodridge, D., Flynn, R., Chan, J.,
Fiander, M., Poksinska, B. and Willoughby, K., 2018. What Is Lean Management in Health
Care? Development of an Operational Definition for a Cochrane Systematic Review.
Evaluation & the health professions, p.0163278718756992.
Statista 2019. Etihad Airways - revenue 2016 | Statistic. [online] Statista. Available at:
https://www.statista.com/statistics/529980/etihad-airways-revenue/ [Accessed 15 Jan. 2019].
Talwar, S. and Mehta, R., 2016. Jet Etihad Strategic Alliance: The Road Ahead.
The National 2019. Etihad Airways to deploy Dreamliner on Hong Kong route. [online] The
National. Available at: https://www.thenational.ae/lifestyle/travel/etihad-airways-to-deploy-
dreamliner-on-hong-kong-route-1.805907 [Accessed 15 Jan. 2019].
Vezzoli, C., Ceschin, F., Diehl, J.C. and Kohtala, C., 2015. New design challenges to widely
implement ‘Sustainable Product–Service Systems’. Journal of Cleaner Production, 97, pp.1-
12.
Wamba, S.F., Akter, S., Edwards, A., Chopin, G. and Gnanzou, D., 2015. How ‘big data’can
make big impact: Findings from a systematic review and a longitudinal case study.
International Journal of Production Economics, 165, pp.234-246.
Weyrauch, T. and Herstatt, C., 2017. What is frugal innovation? Three defining criteria.
Journal of frugal innovation, 2(1), p.1.
YouTube 2019. New problems for Boeing's 787 Dreamliner. [online] YouTube. Available at:
https://www.youtube.com/watch?v=R0i-p_aiwrY [Accessed 14 Jan. 2019].