British Airways’ Logistics and Operations Management

Introduction

British Airways is one of the world’s leading companies in the aviation industry located in the United Kingdom. British Airways is the largest international airline in the scheduled passenger services. It is also involved in domestic and global airline cargo. The BA airline flies to more than 400 destinations worldwide and has an extensive international schedule in collaboration with codeshare and a franchise partner, which makes the BA company a leading airline (British Airways, 2013a). To be a leading airline in the aviation industry, BA has been employing information technology to anchor its operations management. This has been at the BA’s competitive base for many years and enabled the airline to respond effectively to its key operational objectives of quality, flexibility, dependability, speed, and cost-effectiveness. This essay provides a critical analysis of how BA has used technology in different areas of its operation towards achieving its goals.

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British Airways Logistics and Operations Management

The world has witnessed tremendous advancements in technology for the past decade. This has affected its businesses in every aspect. Operations management has not been spared either. The Enterprise Resource Planning Systems (ERPS), internet, and information technology have changed the way businesses are designing and managing their operations (Bettley, Mayle &Tantoush, 2005). More so, these technological changes have triggered businesses to re-define their operation strategies to enable them to compete in the dynamic market. Technology has raised the bar allowing businesses to re-organize their costs, quality, speed, and customization strategies competing on every operational dimension simultaneously (Bettley, Mayle & Tantoush, 2005). This has had a significant impact on the business operations allowing organizations to achieve superior performances, which are vital to the firm’s goals.

The services sector is one of the beneficiaries of technological advancement. The integration of technology into industry operations enhances a company’s competitive advantage (Rothaermel 2008). First, it provides the company with a competitive edge over its rivals, which is based on the fact that technology increases the efficiency of operations. Secondly, it develops customer service effectiveness. These two dimensions enable a business to gain a competitive advantage.

Organizations have to strategically plan their operations. This planning involves a long-term view of how a business is going to conduct its activities. Businesses dealing with the provision of services should strategically evaluate how they are going to interact with their customers. At this point, technology plays an important role with regard to how a company does business. Therefore, strategic planning from an operational perspective should integrate technology with substantially in order to contribute to the achievement of the company’s goals (Rothaermel 2008).

Operation managers in the services sector must acknowledge that the adoption of technology in organizational operations is geared towards increasing productivity and enhancing performance. The technology enables faster service delivery in company operations. Furthermore, it has facilitated the improvement of customer knowledge with regard to the products and services offered by various companies. Through various databases, the operations manager can easily get detailed information about customer characteristics, and the company’s past and present relationships with its customers. Additionally, through the use of technology, managers are able to customize their products and services so that they meet the specific needs of individual customers.

Technology increases the company’s efficiency. Organizations adopt innovations with the sole objective of reducing operational costs (Hall & Khan 2003). Through technology, companies are able to reduce the number of activities involved in its operations. This makes the organizations attain economies of scale, which can also be achieved through the reduction of overhead costs that are associated with large operational activities (Hall & Khan 2003). It is important to know that company costs can be reduced using innovations without necessarily having to attain economies of scale. Technology can be used by companies to cut costs by replacing labor. Moreover, it can support existing labor hence increasing productivity (Hall & Khan 2003).

From the analysis above, when incorporating IT applications in a company’s operations it is critical to evaluate how the BA airline is using technology in different sections of its operations in order to achieve its goals. It is important to note that innovation has been the core principle of the BA’s success in the past decades. The company has integrated technology in various areas of its operation with the aim of responding excellently to five operational objectives namely speed, flexibility, dependability, quality, and cost (Astute Solutions n.d.).

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The aviation sector is a volatile industry that is characterized by intense competition, high fuel costs, and regulations. These challenges are likely to have a heavy impact on airline companies. To survive and remain competitive in this industry, BA has invested heavily in information technology as a key to boosting its performance and competitiveness. The organization is applying technology in every area of its operation to drive the business process, remove complexities, and cut costs (Astute Solutions, n.d.).

In 2003, BA reviewed its operations and identified a number of issues and opportunities that were primary to its success. First, the company defined that its existing operational processes were lengthy and complicated. In addition, it had multiple customer databases and it was not easy to report the failure of services to the company. The organization’s technologies were separate and non-integrated, which meant that the firm did not have control over their recovery effectiveness. As a result of these technological mismatches, the company was experiencing high expenditure on customer relations (Astute Solutions n.d.).

The BA Company put in place a number of objectives that included the creation of a single global platform connecting all customer relations sites, improved speed, and lower service recovery costs through operational efficiency and productivity (Astute Solutions n.d.). In addition, the airline also suggested the use of technology to provide timely and relevant feedback and report service problems quickly. Increasing operational performance and productivity and improvement of passenger compensation across the airline were also given top priority. The company identified technology as having the capability of streamlining operations in these areas to enhance the achievement of its goals (Astute Solutions n.d.).

In order to achieve the above objective, the BA management chose Astute Solution to a technological solution to the issues. Astute rolled out ePowerCenter™ as a technological platform to streamline the BA’s operational issues. The ePowerCenter™ was a web-based single application that ran on a single global database replacing eleven non-integrated systems that BA utilized in over 25 countries across the globe (Astute Solutions n.d.). This single web database application enabled BA to manage costs across the organization thereby reducing total expenditure levels. The new technological platform allowed the company to view customer interactions and service issues across the globe from a granular level. The ePowerCenter™ was integrated with other systems including reservation, baggage tracking, and operational databases of customers enabling real-time viewing of customer information.

The second stage of the BA technological development was the establishment of methods to compensate passengers. The product was to be used in all the organization’s operations dealing with the issues connected with a loss of customers’ baggage and missing of onward flights. To resolve this, BA still involved Astute. In partnership with Travelex (pre-paid debit card issuer), a compensation solution was integrated with the ePowerCenter™. This extended the use of ePowerCenter™ from the contact centers to the company’s airport operations (Astute Solutions n.d.). From the implementation of this technology, airline representatives issue cards to passengers who can then use them to cash from an ATM, and also can use it to make purchases at different points of sale within the airport. The card’s compensation is in real-time and utilizes pounds, Euros, and dollars. It is now being used by airline customers in more than 140 airports across the globe.

The rolling up of ePowerCenter™ and its integration with airport network systems, as well as compensation solutions, benefited BA immensely. These technological platforms reduced the complex operational processes that took hours (Astute Solutions n.d.). By utilizing these platforms, operational processes were reduced to several hours. The platform also provided a comprehensive view of all customer services. Work-flow automation across departments and regions enables the company to improve the quality of its services. Furthermore, the technological solution has given BA a real-time touch enabling it to speedily allocate resources in areas that are in need. The airline is now utilizing the ePowerCenter™ to collect data and enhance proper reporting. Information on customer experiences from the system is used to enhance the quality of products. Finally, the technological solution has enabled BA to scale up its operations and is now capable of handling numerous interactions on one platform (Astute Solutions n.d.).

Technology can fundamentally change the nature of business operations witnessed at BA. After successfully rolling out the ePowerCenter™ business was not over for the company. It faced another challenge of integrating its technological solutions with industry-standard systems of departure and reservation (IBM 2008). Having realized a solution that enabled the company to collect information about customer experiences, BA stepped up efforts to contribute to improving customer services. The airline acknowledged that long queues at the check-in desks were frustrating to customers. On this note, the airline understood it was important because the new system was critical in eliminating long customer queues during check-ins. They embarked on building an application that would allow customers to easily check-in (IBM 2008).

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The BA Company engaged IBM Global Business Services (GBS) to design the application that would provide a solution to the long customer queues during check-in. IBM has designed and built self-service kiosks that allow customers to conduct their own check-ins. The kiosk application was built on the basis of the BA specifications and enables the management of the operations to be managed by the IBM middleware (IBM, 2008). The IBM middleware monitors the kiosks that are located next to check-in points and sends vital check-in information to relevant offices since it is integrated with back-office systems. Through subsequent functionality upgrades, BA has been able to enhance customer self-service through the kiosk check-in application. This has served to increase passenger self-service workability (IBM 2008).

The immediate benefit has been the agility of check-ins at airports. Customers are spending less time in queues and are satisfied with the benefits that the kiosks have brought. Since BA pioneered this application, it has gained a competitive advantage over its rivals in the industry. Through the kiosk technology, BA has been able to eliminate manual check-in costs hence making savings from its operations. At the same time, BA has successfully improved customer services (IBM 2008).

Ticketing operation has also been an area where BA has adopted the use of technology. The introduction of e-ticketing on the BA.Com website is inspiring. Customers can now pay and book their flights on-line. Through the IT department, the company is able to create an online ticketing and queries section, where customers can access the airline from the convenience of their house. Furthermore, the IT department has developed mobile applications that allow customers to book flights and manage them at the same time (British Airways, 2013b). In addition, these mobile applications have revolutionized their kiosk’s technology developed by IBM. Customers can check-in using mobile phone applications and choose a boarding pass. The Boarding pass can then be downloaded allowing the customer to gain easy access to future bookings. This technology has enabled the airline to reduce costs and simplify its operations (British Airways 2013b).

The BA Company is embracing technology in all areas to enhance its goals. The corporation became the first airline to sign “for Amadeus new revenue accounting solution” (Amadeus, 2012, par. 1). The company signed for a web-based Passenger Revenue Accounting Solution to help reduce its accounting operational costs and making financial decisions accurate and quick. The solution is a state-of-the-art technology that BA aims at utilizing in order to transform its revenues. The technology allows real-time processing of revenue information by eliminating accounting operations.

Innovative technologies have made BA ensure high quality, cost reduction, speed, and dependability of the airline. To sustain these benefits, the company is also out to improve the IT department’s capabilities in sustaining the infrastructure (Brown, Teale & Fabre, 2013). To achieve this, the company considered and adopted a number of technological strategies in order to support its technological infrastructure. The airline has started using cloud computing as a plan for improving service quality and reducing costs due to the economic unpredictability in Europe. The company selected SITA to facilitate the process of cloud computing, which is to build an IP infrastructure that would allow the company to have access to new technologies that would streamline its airport travel operations (Brown, Teale & Fabre, 2013). By the use of SITA technology, the airline has been able to reduce hardware costs and lead time. In addition, the technology provides a greater degree of flexibility to the company. The flexibility and compatibility of the SITA technological solution have enabled the company to seamlessly utilize its existing common IT infrastructure (Brown, Teale & Fabre, 2013). It is through such partnerships that the BA organization has advanced its technological base hence remaining ahead of its rivals in the airline industry.

Conclusion

Operations management requires the employment of technology for any company to succeed in this dynamic world. Technology is utilized in company operation enhances performance and productivity, which in the end improves the attainment of the organizational goals. Operations in the services industries such as airlines utilize technology to increase efficiency, reduce costs, speed up operations, and ensure quality service delivery. The British Airways Company in the past decade has revolutionized the technology in its operations hence contributing to a strong performance and sustaining its competitive advantage. The airline has developed one operational technological solution that links all the systems involved in the operations. This has resulted in a powerful system that has positively impacted its operations worldwide.

List of References

Amadeus, 2013, British Airways becomes the first airline to sign for Amadeus’ new revenue accounting solution, Web.

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Astute Solutions n.d., British Airways’ Global Customer Relations Program Takes Off, Web.

Bettley, A, Mayle, D, & Tantoush, T (Eds.) 2005, Operations management: a strategic approach, Sage, London.

British Airways 2013a, Annual Report and Accounts Year ended 31 December 2012, Web.

British Airways 2013b, BA on your mobile, Web.

Brown, A, Teale, N & Fabre, S 2013, “Integrating BMI into British Airways”, SITA, Web.

Hall, BH & Khan, B 2003, Adoption of new technology, No. w9730, National Bureau of Economic Research, Web.

IBM 2008, British Airways: Self-service check-in improves customer service, gives competitive advantage, Web.

Rothaermel, FT 2008, “Competitive advantage in technology intensive industries,” Advances in the Study of Entrepreneurship, Innovation & Economic Growth, vol.18, no. 1, pp. 201-225.

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