Operations management within the company
Operations management is a discipline within management that concerns itself with operational activities within a business (Greasley 2007, 2). Some of the activities involved include strategic planning, scheduling of activities and the designing of processes in a manner that will lead to the efficient acquisition, development and allocation of resources in an efficient way. Manufacturing companies, such as Airbus, need effective operations and systems management processes if they are to save costs and time in their manufacturing processes (Barkley 2004, 13). Large aircraft are particularly sensitive and complex to manufacture, hence an efficient operations and systems management should be in place.
Airbus, one of the leading large aircraft manufacturers in the world, has factories and assembly plants located around Europe, implying that its operations exceed boarder limits. Airbus has manufacturing plants in the UK, Germany and France, while some of its supplies are sourced from other countries within and out of Europe (Slack et al. 2010, 13). Airbus could be regarded as a system since the company is made up of dependent and interdependent elements that influence each other on a constant basis, either directly and indirectly, in order achieve the goals of the organization as a whole (Blyth 2009, 61).
Outputs produced from one part of the organization are used as inputs in another part of the entity. For instance, the facilities in the UK manufactured wings of the A380 Airbus, which were later transported to Toulouse in France (Slack et al. 2010, 13). Essential parts of the A380 were also manufactured in Hamburg, Germany, and later transported to Toulouse where they were assembled into the A380 plane. Staff of the A380 Airbus project moved between Hamburg and Toulouse in response to changes in the intense production schedule (Slack et al. 2010, 18). Such processes lead to the escalation of costs and cause delays in the production schedule, implying that Airbus needed an operation strategic plan in order to avoid production delays.
Presently, operations management has evolved, and is now concerned with concepts such as supply chain management, marketing, finance, service operations, operations strategy, and process designs and improvements (Kendrick 2009, 9). Therefore, operations and systems are integrated in a way that supports the organizational objectives. Within airbus, supply chains management offers procedures for the efficient and timely delivery of parts to where they are needed for processing within the company.
Marketing in operations management determines the quality expected by prospective customers, prior to the development of the aircraft. The marketing team works together with airlines that have expressed interest in the A380 to conclude on customer expectations, which are then relayed to the manufacturing department (Slack et al. 2010, 21). This not only enforces the customers’ commitment to the project, but also guarantees that their orders will meet their expectations (Kerzner 2006, 29). The finance interface makes sure that capital, equipment, and inventories are available and are managed appropriately (Kerzner 2009, 53). This ensures that there are no unnecessary delays in the production process due to lack of financing, and the efficient use of the organization’s resources.
Service operations are integrated within operations management to cope with service factors such as the delivery and consumption of parts in the Airbus A380 project, and performance measurements that will help the operations manager to evaluate the progress and performance of the project (Greasley 2007, 16). The operations strategy should be incorporated to ascertain that the project is consistent with laid company objectives, and other company policies designed for the manufacturing processes within the company.
Airbus frequently pushed back the delivery of the A380 aircrafts by several months. The company admitted to production delays, causing turmoil in the boardrooms of both Airbus and its parent company, EADS (Slack et al. 2010, 15). The first plane was forecasted to enter commercial service more than two years later than originally planned, which escalated costs as the company’s A380 project was not generating revenues due to lack of sales. The delays in the production schedule can be attributed to the Airbus’s weak and fragmented structure, resulting in lack of coordination within key departments in the project (Slack et al. 2010, 15).
Poor integration of the company’s structure led to internal rivalries, given the company’s complex structure that saw the division of operational tasks within Airbus manufacturing plants in France and Germany. Constant political infighting made it difficult for the company to integrate corporate and operational strategies, which could have resulted in miscommunication between department heads, causing confusion and inefficiency (Slack et al. 2010, 15). Due to lack of coordination, the input-output model cannot work, whereby a delay in one process will ultimately cause delays in other dependent processes and activities, wastage of resources and high costs of formulating and implementing different strategies in order to counter problems brought about by the lack of integration of organizational systems.
Possible improvements of Airbus systems and operations management
Suggested improvements of Airbus systems and operations management have to do with the proper and efficient integration of systems within the company. Each part and department in the company relies on each other for inputs, and departments expect that their output will be used in another department. Airbus has to implement an organizational system that will make coordination of work between the various departments in Europe easier and effective (Slack et al. 2010, 13). Production activities will negatively be affected if a clear and concise operations management framework is not put in place.
A lean and effective manufacturing system would ensure timely and efficient production of goods and services, which would save on delay costs, time, and also reduce the number of defects in the production process. Information management systems are needed to facilitate the coordination of the various production units within Airbus, thereby making the integration process possible. Separation of duties is also important in the integration process (Ronen & Pass 2007, 38), as various the manufacturing plants in Europe will be trusted with producing quality parts that will be assembled in a timely manner. In the development of the A380 planes, a schedule may be provided, with more realistic and reasonable lead times, so that each decentralized department can plan for its activities within a given timeframe as provided by the operational schedule (Slack et al. 2010, 22).
Improvements within Airbus could also be made to strategic and operational levels in the company, and improved communication with suppliers. An efficient communication system between the decentralized departments would ensure that operations carried out in the various plants are in harmony with top management specifications (Greasley 2007, 34). Allocation of duties and functions within departments should be done on merit, rather than on political pressure. Work should be divided according to the capacity of the various departments, and their competence to meet quality requirements of the project (Greasley 2007, 34).
Initially, the soft systems methodology (SSM) was developed to assist management in solving complex problems that exist in the organization as a system (Wilson 2001, 1-8). Airbus can utilize the SSM approach to identify problematic areas in its business model, operational strategies and its political system. The main advantage of SSM is its ability to offer solutions for problems that do not have clear definitions. As such, SSM may be used by Airbus to identify potential problems that have caused production delays, other than problems caused by lack of coordination of the various production units.
SSM can also be used as a tool for designing the organization, which may restructure roles of the various Airbus departments, and may also lead to the creation of an ideal corporate culture that will lead to more integration of the company’s structure, and therefore lead to the achievement of overall company objectives (Fielder 1967, 50). CATWOE is a tool used simultaneously with SSM in the identification of potential problems that have a significant probability of negatively affecting an organization’s operations. CATWOE is a simple checklist, composed of the six components that help make up the CATWOE acronym (Wilson 2001, 61)), that is; customers (or clients), actors, transformation processes, world view, owner and environmental constraints, which all help in defining a problem, as well evaluating the feasibility of possible solutions.
Actors are the people, departments, or structures that are responsible for implementing the current troubled system that is causing production delays, constant political infighting and lack of integration [between the French and German sides] within Airbus. The transformation process is simply the input-output process used by the company, which deals with the productivity of the production units (Kendrick 2009, 48). The world view component of CATWOE provides a bigger picture of the problem at hand, and tries to evaluate the wider implications of the problem.
In the case of Airbus, production delays resulted into escalated costs and other opportunity costs such as loss of business to competitors. Owners include people and departments ultimately responsible for the identified situations, whereby management evaluates their impact and influence over the system to be changed. Environmental constraints are those factors that are out of the control of the company (Dittmer 1997, 25), that bring about limits in changeover process. Airbus faces environmental constraints such as distance between manufacturing plants in Europe. Management therefore has to formulate strategies that will ensure the timely delivery of parts to the main assembly plant in Toulouse, France (Slack et al. 13).
Role of Soft Systems Methodology
Airbus should evaluate all possible solutions as to its production delay problems, inefficiencies and the complex organizational and structural problems (Slack et al. 2010, 15). A total restructuring of the company may be costly, hence Airbus should use a tool that will identify specific problems within its structure and operational strategies. A solution that calls for continual improvements in the structure and processes of the company would therefore be welcomed. SSM (soft systems methodology) may be used to formulate root definitions of the company’s systems, and therefore identify problems as well as potential solutions, and hence suggest long term alternative solutions that will lead to better integration of the company’s systems and subsystems (Wilson 2001, 7).
Airbus and its main competitor, Boeing, are the main aircraft manufacturers in the world; hence production problems in one company may automatically lead to the success of the other. Airbus has a complex manufacturing and organizational system that sees the production work split between European countries, including France, Germany, Britain and Spain (Slack et al. 2010, 13). It is therefore essential that there is full integration and harmony between the manufacturing plants. SSM is advantageous for incorporating human factors such as culture and psychological differences between people, and may thereby lead to the formulation of a strategic solution that incorporates all political differences (Wilson 2001, 7).
An information systems strategy would be a possible outcome of the SSM approach, whereby Airbus may be recommended to change over to a new and more efficient information systems technology. The new information systems strategy may call for modernization of communication processes within the company, so as to make the communication function of the aircraft manufacturer more efficient. Computerization will allow for better record keeping also allow for better access to data (Johnson, Scholes & Whittington 2008, 44).
An efficient information system would also reduce confusion and conflicts within Airbus. Once duties and roles have been specified, each department and manufacturing plant would be know its obligations, and creating better coordination of tasks within the company. Changes in management that previously ailed Airbus would be unlikely to disrupt the production process since all personnel know their key duties and responsibilities (Felkins et al. 1993, 73).
Soft systems methodology allows project managers to better understand complex situations, thereby making the decision making process easier on management. SSM stars with the identification and illustration of the root problems affecting a particular situation, in the process clarifying questions that the management had not identified (Wilson 2001, 16). By accurately identifying root problems will enable management to design an appropriate organizational structure that will allow for better integration of the company’s systems and processes (Hedley 2002, 2-11).
It is also through the accurate identification of system problems that management can come up with suitable information system designs that enforce better communication and coordination of Airbus’s departments and systems. The company will no longer have to replace processes that should be streamlined with temporary and less efficient ones, since such processes will only be replaced with recommended processes. Airbus will also be in a better position to harmonize processes used in the different factories, and therefore prevent future unnecessary delays such as the one brought about by use of incompatible software in the French and German plants.
SSM will be advantageous for Airbus since it can also be used in performance evaluation, apart from its main function of problem identification. SSM can be used to monitor organizational processes, for instance it may monitor the various components of a supply chain and thereby evaluate the effectiveness and performance of each (Capman 2005, 89).
Airbus may monitor production sites in Germany, France, the UK and Spain, and make strategies that will ensure that while production and delivery of parts is on a timely manner, quality is not compromised. Work and processes may be transferred to locations that assure quality, while other performance indicators will enable future planning of allocation of processes without having to follow political pressures (Capman 2005, 53).
Through CATWOE and SSM, Airbus would be able to understand who are likely to lose out the most if they continued to implement their current system (Slack et al. 2010, 23). The victims of production delays in this case include airlines that have preordered for the Airbus A380 planes, and had altered their operational programs and systems in anticipation of the timely delivery of the aircraft. Airbus, and its parent company EADS, would also lose out due to the loss of sales.
Operational resources
Operational resources such as people, technology and the organizational structure influence the efficiency of all organizations (Greasley 2007, 33). People are one of the most important organizational resources since they are ultimately responsible for carrying out organizational processes (Campbell & Stonehouse 2002, 31). The airline manufacturing industry is a complex sector which demands the best skills and experience in their workforce. Unlike other industries, labor turnover rates are low due to the high expectations and strenuous work in the job description. As such, a company like Airbus cannot risk losing its priced engineers to competitors due to the high costs of replacing labor in the industry (Apgar 2006, 59).
Since the soft systems methodology approach analyses human factors that may affect the system, SSM will identify human resource activities that will lead to improved productivity and welfare of employees. Identification of training needs will enable workers to be more flexible, and Airbus may not have to ship in two thousand German staff to France to solve cabling problems. Instead, the company could in the future send only a handful of electricians who would offer advisory and supervisory services in the event of similar problems in France, and thereby avoid disrupting operations in the Hamburg factory.
Airbus should implement a favorable employee compensation package since it cannot risk further delays in production that may result from employee strikes. Engineers’ strikes that faced Airbus’ rival, Boeing, led to delays in the production of the 787 Dreamliner aircraft that was set to compete with the Airbus A380 (Slack et al. 2010, 15). Internal conflicts within Airbus were brought about by political reasons, as well as lack of a cohesive framework within which the company was to operate in. integration of the company’s systems, and formulation of an appropriate organizational structure, may reduce future political crises (Fink 2002, 26). Coordination of various departments within the organizational hierarchy will improve communication which may prevent future confusion as to which software to use when designing aircraft parts.
Airbus should deploy the highest level of technology in its operations in order to produce the highest quality planes. The company could warrant that suppliers deliver the highest quality parts which may compromise on the performance of the A380 plane if not checked (Slack et al. 2010, 23). Since parts are manufactured in different parts of Europe, the technology used should be synonymous in order to ascertain that parts are not only in conformity, but also meet the set organizational value specifications. Defects in one part of the plane, such as the Rolls Royce engines, may cause future accidents that may undermine the safety of the plane, and of Airbus as a company (Slack et al. 2010, 16). Technology should therefore be focused on not only providing comfort, but also for ensuring safety for passengers and air crew. Numerous accidents may create a negative reputation of the plane, which may see the A380 grounded like the infamous Concorde planes.
Organizational issues involve the determination of the roles within a system, relationships and also the distribution of power (Civitello & Levy 2007, 101). It could be said that the Airbus organizational structure is poor due to the reoccurring conflicts and political infighting between the French and the German departments. Communication between Airbus and the parent company is also strained, given the failure of company’s executives to disclose sensitive information on a timely basis. Tools such as SSM may identify other faults within the organizational structure (Wilson 2001, 6), and identify possible solutions that will lead to better integration of the decentralized departments. A centralized organizational structure may not work because of the heavy government involvement (Slack et al. 2010, 24).
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