Introduction
As the assistant for the Logistics and Operations Manager, I find it prudent to develop cost and management plans that correlate with the strategic plan of the Etihad Airways. The main idea is to develop a unique formula that would give the airline a competitive advantage over other rival companies including Emirates, Airways, Virgin Atlantic, British Airways, and Qatar Airways among others. Elements under assessment are the distribution and promotional operations within the firm. This will include a recommendation of the best plan that would help the firm get a sustainable competitive advantage (Menon, 2010). Competition remains the greatest aspect of management, especially in the service industry. Etihad has a differentiation strategy considering its private ownership in a capitalist society.
The company strives not to cancel flights for the passengers since this mostly upsets them. This among other strategies is a force that the company uses to remain relevant within its environment of operation. Etihad Airways deals in cargos and passengers; this makes it difficult to manage the businesses concurrently. In business, when such logistics fail, it becomes difficult to convince consumers to use the airline services again (Cole, 2013). To avoid giving competitors the benefit of gaining the advantage, it is important to carry out a review of the company in order to identify its strengths and weaknesses, while providing requisite solutions to the problems.
Etihad Airways
Etihad Airways commands the UAE market though rivaled by Qatar Airways. Among other rivals at the international platform are Sky Team Airways, British Airways, and Star Alliance. Etihad Airways has its headquarters in Abu Dhabi, and it officially began operations in 2003; it enjoys fame that most of its predecessors in the market do not have because of its differentiation strategy (Pederson, 2008). With its Boeing and Airbus planes, Etihad manages over 1300 flights in 7 days of operation. Etihad manages flights across Europe, Africa, the Americas, and Asia not forgetting the Middle East.
Throughout the week, the company manages to access over 86 countries with its passenger and cargo planes. People connect the company with nobility considering its establishment under a royal declaration. At this point, it was important for the UAE to come up with a private airline company that would provide services to the country, which is rich in oil and gas. There was need to come up with a luxurious airplane service that would serve the United Arab Emirates and to complement its established brand image.
The fleet of planes increases annually making it important to discuss logistics and transport issues at Etihad Airways. By 2012, the company managed to carry over 10,300,000 passengers and the amount of profits equally increased by $42 million. Besides physical expansion of the Abu Dhabi Airport, there is an ardent need to incorporate high-tech services in order to increase the speeds of operation. The space needed for cargo transfers and shipping services for Etihad might as well cover the entire Abu Dhabi International airport. In summary, over the past 11 years, the company enjoyed sufficient recognition from the population, but this does not encourage laxity in futuristic development for Etihad (Pederson, 2008).
Logistics activities
Logistics refer to physical activities that require improvement until customers display complete satisfaction for the product or service. Normally, such operations are overly complex even though they help in making life comfortable for service users. At Etihad Airways, material controllers carry out inventory management, plane maintenance, and other IT services within the Abu Dhabi Airport to serve the company. Proper servicing of planes reduces the possibility of accident occurrence while ensuring that they arrive within the stipulated time (Etihad Airways, 2013).
Checking arrivals and departures of the planes is equally a logistical issue under the management of IT experts. They ensure that the planes do not share the same airlines with other planes because this could cause accidents. Besides, they reduce delays associated with late arrival of planes. In unavoidable circumstances, they inform the passengers of such issues, especially when they cannot handle the problems using internal mechanisms. This could be a technical problem like the one, which occurred at Heathrow; it disabled transport to the UK for some period. The closure of Heathrow naturally affected travels between Abu Dhabi Airport and Britain (Menon, 2010).
Inventory management
Inventory or records management is a complex exercise at Etihad since the involved parties must be overly careful when managing catalogues for the busy airport. Etihad manages its Airbus and the Boeing planes in terms of maintenance even though it acquires the planes from other quotas including the US. In addition to this are the cargo planes; all of them need daily servicing from the control unit situated within Abu Dhabi Airport. Besides transport facilities, Etihad Airways has to manage Etihad Holidays, which offer many services during the holiday seasons. Such planes have a large capacity in comparison to the Boeing and Airbus. They also have value addition services, thus enabling people from the UAE, Australia, Europe, and other destinations to travel around the world at discounts and through coupons. In 2004, Etihad purchased five Boeing 777-300ERs and four Airbus airplanes (Etihad Airways, 2013).
The ordering took place only one year after launching the company; this has enabled the Etihad Airways to control over 1,300 flights in a week to over 80 passenger destinations. There is need to acquire other planes and cargo airlines to cater for the growing number of fleets to six different continents across the world. By 2013, the fleet of planes could accommodate 86 passenger destinations calling for an increase in the number of passenger planes. On maintenance, the firm has its own high-tech maintenance unit at Abu Dhabi Airport. Etihad also has to take care of fuel and catering services. Jet fuel used for the planes is eco-friendly, and they are affordable because the UAE is the hub of oil and gas in the world (Balakrishnan, 2011).
Etihad also has commercial aviation services in Beirut; this has enabled it to train prospective pilots, airhostesses, and other crewmembers. Students attending this school, equally, contribute towards economic stability of the firm. However, there is need to provide an excellent learning environment for the students. This includes reduction in noise while at the same time making planes available for practical sessions, which would help the students to learn fast. This also creates convenience because the students can easily practice on the planes. In most cases, the practical planes do not move unless the students acquire requisite expertise to use the real planes of Etihad Airways.
Another service that requires maintenance is the ability to offer different classes to passengers in the planes. The coral economy class is the latest executive option for Etihad Airways users. Passengers also experience the meet and greet product offered by Etihad. Passengers can use this free application in the mobile phones, tablets, or laptops when waiting for flights. Like a social network application, it enables passengers to communicate to family members and friends without moving physically from one location to another. In order to make new orders for their products, the company assesses its ability to manufacture some of them.
For instance, its IT team can easily improve entertainment and internet services within the airport. However, to acquire planes, the company has to see the ardent need to make such an order. Later, it sends a bill of quantities (BOQ) to the relevant service providers before receiving a quotation for purchase (Airlines established in 2003, 2010). Quality and value take precedence before purchasing planes, and price is only the third factor of consideration. Reordering occurs when the numbers of passengers and cargo requisition services increase. This way, the available planes may be insufficient, and this could cause delays. Another factor that determines reorder is increase in profitability.
ABC inventory analysis for Etihad Airways
This model of operation at Etihad airways enables the workers to manage materials depending on their levels of importance to the company. Group “A” items are overly significant for Etihad Airways; they include the cargo airline, Boeing flights, and the Airbuses. Group “B” are second in command to Group “A” materials and the Holiday planes, maintenance services, as well as the Beirut commercial aviation institution fall in this category (Cole, 2013). The final category in Group “C” incorporates the least important material complementing the first two. For Etihad airways, they include the meet & greet applications, and provision of in-flight entertainment facilities in the economy class of the planes.
The EOQ Model
The EOQ model mentions that in logistics, it is very important to assess quantity, costs, quality, and the profits likely to be accrued when ordering materials. Economic quantity order minimizes the cost of purchase, but it increases the annual and optimal quantities. EOQ model has many principles including the fact that costs of ordering materials remains constant, and the demand for services becomes predictable overtime at a universal level.
Instant delivery
Before ordering an item, especially from an overseas company, Etihad ensures that it makes a preorder. This means that it receives customized planes depending on the submitted requests. This could include a modification of the Airbus and Boeing in order to suit the needs of the company. After making a preorder, Etihad Airways expect the service delivers to do so in the quickest manner possible (Etihad Airways, 2013). Etihad demands this in order to avoid inconveniencing the customers and losing them to other airplane service providers.
Fixed purchase prices
When ordering materials, the airplane service provider expects to find fixed rates for the requisitioned products. For instance, without customization, the costs of the Boeing and the Airbus should remain the same for all airline companies purchasing the products from a particular company. Evidently, the company manages its inventory according to its selected strategy, hence explaining why it keeps improving since its inception. In addition, the company has an internal team supplying food for its staff. Notably, the cost of food remains the same through the year (Airlines established in 2003, 2010).
Models of transportation
Etihad has different modes of transportation for passengers and cargos. The Boeing and Airbus planes provide over 1,300 flights in a week. This includes over 86 passenger destinations across the world. Both the Etihad coral zone and Etihad pearl zone are in the Airbus and Boeing planes.
The planes offer deluxe, executive, and presidential suites and each of them vary with income levels. Another mode of transportation is the Etihad Holiday plane, which is only operational during holidays. It has the capacity of a cargo ship even though installed with the latest technologies in terms of entertainment. People have different holiday destinations, and within a short time, Etihad Airways is able to get profits that it normally acquires within an entire year of operation. Only the Boeing, Cargo plane, and Airbus for passengers are able to make trips daily within and outside the UAE.
The different planes have access to Heathrow, Dhaka, and Changi International Airports among other great destinations. The cargo plane provides services for products that do not need shipment and need to reach fast to their destinations. Cargo planes are very costly in comparison to the passenger planes used within the Abu Dhabi facility.
Intermodal transportation
Intermodal transportation refers to the use of more than one mode of transport as opposed to sticking to the one assigned for the same duty. At Etihad, there are two reasons for using the intermodal transport program. The first case involves an emergency, while the second case involves the freight services. Sometimes, the weather department fails to make the exact prediction of weather in a destined place. When the Etihad team suspects a sudden change in weather, they are likely to assign the Boeing or the Airbus to another mode of transport. In most cases, ships, boats, and helicopters provide services involving passenger emergences.
Passenger intermodal transportations are less common in comparison to freight intermodal transport at Etihad Airways. Etihad involves the services of ships, trains, or trucks when the cargos are too heavy to handle (Airlines established in 2003, 2010). There are affiliate companies that trust Etihad completely, hence making it impossible for Etihad to assign such duties to other firms. This forces Etihad to transport the cargos through other facilities, including the above-mentioned rails and trucks. However, the trucks either belong to the company or have a long-term contract with Etihad, thus enabling it to win consumers’ goodwill. In essence, Etihad should increase the number its intermodal transport facilities to reduce dependency on other companies.
Reasons for using the modes of transportation
Safety
The priority of Etihad Airways is to establish an excellent relationship with the consumers of its services across the world. This begins with the quality assurance in terms of safety provision. When the life of a passenger is in danger, the Etihad Airways have the sole responsibility of saving the person. This explains the company’s quick response to set up boats, life jackets, and other forms of emergencies to ensure safe transfer of passengers from one flight to another mode of transport. Depending on the nature of the danger and the facilities available, Etihad Airways has to respond adequately to the safety operations. In the end, if the intermodal transfer fails to achieve its objective, the company will have to compensate the affected family depending on the magnitude of the incident. The only excuse is when the accident occurs due to natural circumstances (Balakrishnan, 2011). However, accidents caused by technicalities in the plane amount to huge compensation packages.
Customer request
In most cases, intermodal transport occurs because of a customer’s request. At Etihad, the needs of the customer take precedence and fair treatment of all of them is a priority. Some customers want the trucks or rails from Etihad to carry their cargos; people have different reasons for making such requests. Some of the reasons include affordability and safety. Plane services are overly costly, and Etihad would opt to transport the cargo until a place is considered safe (Balakrishnan, 2011). During docking, it gives away such products to a ship, which would take a long time to transport. This mostly occurs when there is no urgency in transporting the cargos to the required destination. As such, the request of a customer becomes the main basis of transferring cargo from the plane to another mode of transport that is under the ownership of airline firm.
Nature of the cargo
The nature of the cargo determines the mode of transport used throughout the journey. Delicate materials require air transport, but overly bulky goods require rail, truck, or ship services. Bulky cargo might cause accidents, while, at the same time, consumes a lot fuel. Evidently, even a cargo plane would not take such a risk because it would eventually be costly to maintain the plane or to recover from the loss. This might equally daunt the image of the company that strives to provide quality services by reducing the number of accidents.
Accessibility
There are certain destinations that have no established international airports. They include islands, thus forcing Etihad Airways to reach the docking area of an ocean before transferring the cargo to the ship. The cargo might be light, but the island might lack a good international airport for a cargo plane to land. In such a scenario, it would be impossible to avoid using another means of transport after the cargo plane. Intermodal transport is inevitable for the company considering that the Etihad serves countries with different terrains. There is need to create a network in the intermodal transport services because customers rarely trust ship and rail transport from other companies when they request Etihad to carry out the task (Menon, 2010).
Role of distribution
Distribution is exceptionally significant to any service or product-oriented organization. Distribution refers to the places in which the service provider accesses the target market when delivering the same service or product. Distribution tradeoffs demand that Etihad Airways should analyze the cost of distributing its services against the expected profits. This includes inventories of transport costs, labor acquisition, and accessibility and the cost of managing the same and equipment management (Balakrishnan, 2011). Moreover, people management is extremely important, and it would be possible to ensure distribution through adverts and other marketing strategies.
Merits
Demand and supply
Distribution at Etihad is an element of balancing the demand for products and services with the supply. At Etihad Airways, there is demand for cargo services and passenger services among other requests. In addition, the company provides special holiday services in the Etihad Holiday plane. Through diversity creation, the firm has been able to fulfill the demands of various consumers who strictly seek their services. The workers have the demand for meals at work, which Etihad provides through its catering department. The only changes that should be made are provision of a variety of diets to complement different cultures in countries in which Etihad Airways operates. The planes also need maintenance and fueling, which Etihad should provide adequately (Airlines established in 2003, 2010). Demand and supply should be a prompt exercise because in the end, a company only needs to acquire the goodwill of the consumer in order to increase sales.
Dealing with uncertainties
Distribution also demands for protection against uncertainties. Etihad Airways has an air evacuation program outsourced from a private equity firm. The company is big and should be capable of investing in such services. According to the company executive, Etihad has many emergency services to offer, but the physical space at Abu Dhabi International Airport might not be sufficient for all the programs. However, the passengers have the prerogative to safety transport.
Demerits
Cost of providing emergency services
Distribution services are very essential, but are costly. In order to provide emergency services within the, limited space, Etihad Airways will have to invest in high-tech systems. In addition, this would interfere with other operations within the company. Sometimes this leads to accumulation of duties, which contradicts the laws of distribution. Emergency evacuations equally demand for the purchase of new equipment, which will increase costs of operation within Etihad enterprises.
Franchising caused by an increase in customer demands
Expansion is another method of distributing services to other regions that require Etihad Airways facilities. Physical expansions, acquisitions, or mergers are very expensive; they cost over $3 million. With a profit margin of $42 million, the company could invest in global expansion, instead of physical expansion (Airlines established in 2003, 2010). Franchising requires embracing the prevalent cultures, while providing quality services at the same time. This contradicts the global culture that people widely accept from different parts of the world.
Other demerits of tradeoffs distribution include inability to get sufficient labor force in countries that have high underemployment rates. This includes Australia and the Middle East in which only causal labor provides enough employees. The greatest concern is that the casual employees might lack the professional capability to manage a busy business environment.
Cross docking
Cross docking is a logistical practice in which freight companies offload material from a small truck to a big version without any storage. In most cases, this happens when the company intends to sort out the material later, or when the materials have different destinations. At Etihad, the logistics department has to be informed whenever such an activity is bound to happen. Etihad Airways shows concerns for its royal reputation, and this prevents it from carrying out certain activities within the organization. Though considered unprofessional, cross docking, as an element of logistics, helps in cases of emergencies.
Its freight services should invest in cargo trailers, rails, and trucks in such a way that the small versions can easily access certain areas initially considered inaccessible. Cross docking provides convenience for the customer, as it provides room for services to reach the closest place possible for consumers. At Etihad, cross docking would appear as a form of disorganization because each truck or trailer should have a specific destination.
Companies that engage in cross docking support it for its cost-effectiveness (Airlines established in 2003, 2010). In essence, using the same truck up to a certain distance and separating the commodities after the particular distance saves the cost of using different cargo facilities. Besides saving costs, Etihad will use few trailers to transport materials; this would help in enhancing maintenance purposes. In addition, the semi-trailers will not have to be at Abu Dhabi. Instead, they will have permanent residence at the destinations. This would help Etihad Airways in reducing congestion at the international airport.
Warehousing
Warehousing refers to the ability to have personal equipment in a company store to help during emergencies to store stock and service planes. Warehousing as a logistics concept ensures that a company reduces physical movements in ordering materials. In Abu Dhabi, Etihad Airways offers warehousing services, thus enabling the technical and IT teams to provide services for the planes (Menon, 2010). Different ways of handling materials in the firm are discussed below.
Consultancy
In some cases, pieces of equipment have complex problems, especially when they involve maintenance. Etihad prefers the intervention of consultants from the firm in which they purchased the products. This includes products and services outsourced from other quotas, including meals, fuels, trailers, trucks, or planes. According to Etihad Airways, all service providers are experts who can provide professional advice and make follow up services. This explains the incorporation of consultant services during warehousing.
In-house
In-house warehousing services are affordable even though less intense because the employees have the privilege of fulltime engagement at Etihad Airways. The in-house technique of warehousing mostly succeeds when a firm employs experts in such departments. So far, Etihad has a good in-house team managing its catering services and plane maintenance. Consultancy mostly arises in fuel distribution, when accidents occur, and during acquisition of intermodal transportation.
Channel distribution
The first type of channel distribution is the use of airplanes to deliver parcels, goods, and passengers. Etihad Airways equally distributes its products and services through freight. It uses trailers and rails to transport bulky goods like machineries. Etihad offers unlimited internet services to its consumers, hence enabling the company to advertise its products. In other cases, the firm incorporates shipping; this is a freight service that mostly deals with customer requests, which are made over the internet (Menon, 2010). Freight and airlines services are the main distribution channels used by the company. In other cases, the company has to consult with external service providers, especially when involving cross docking.
Strategic Distribution Decisions
When making distribution decisions, the Etihad Airways inventory management coordinates with the suppliers and customers. Distribution only occurs after the suppliers provide all requisite weight measurements of the cargo. In addition, the customer who is to receive the cargo should acknowledge receipt after confirming that Etihad Airways should transport the products. When this happens, the Etihad Airways offices at Khalifa building communicate with the offices in the country of receipt. Distribution decisions need to follow due inventory procedures because the records would assist in managing the firm in future.
Distribution Planning and Strategy
Distribution planning begins with crosschecking all the cargos that require transportation. When they are light materials such as letters, planning involves the selection of the best service of distribution (Balakrishnan, 2011). In addition, planning assists in the selection of the best mode of transport. This would enable Etihad to ensure safe cross-docking and intermodal transport when necessary. A third point of consideration is the capability of the mode of transport. At Etihad, the greatest concern is a natural occurrence that could affect safe transportation of cargos. Each strategy at Etihad Airways has a backup system to help in dealing with emergencies. This makes design networks imperative for the business in which people from different ends communicate, especially when the company contracts another firm for cross-docking purposes.
Customer service
Customer service at Etihad Airways involves elements such as telecommunication, follow-up services, sales promotion, and personal selling.
Telecommunication
Etihad Airways uses telecommunication services for communicating with customers, especially when the urgency for response is high. Etihad manages telesales by setting up units within Abu Dhabi International airport to respond to customers’ questions. Through this, customers can make reservations, book flights, and preorder tickets, especially during the holiday season. Sometimes, the company makes telesales through such avenues, and this helps in increasing the sale of its products and services through the most affordable techniques.
Follow-up services
Another element of customer service is the ability to make follow-up services. Constantly, the customer service unit makes calls to clients to listen to compliments or complaints. This helps in improving service delivery at Etihad Airways. The customer care departments have to respond to all questions. Sometimes, the department makes physical visits to most affected areas that require technical assistance. This could include the need to expand its services to certain area that requires the services of Etihad. Occasionally, it involves the need to set up an airline agency to ease bookings for flights. Follow-up services require expert opinion because when marketers believe in the product or service they sell, the client equally enjoys and develops faith for such services (Lipman, 2012).
Sales promotion
Sales promotion at Etihad involves setting discounts for customers during the holiday seasons. This complements the marketing plan at Etihad Airways, while providing excellent customer service. Other elements of sales promotion incorporate the provision of coupons that help customers acquire some services at a subsidized price (Lipman, 2012). Sales promotion provides an avenue of communication between the company and the clients. This creates long-term and mutually beneficial relations between a loyal customer base and service providers.
Personal selling
Personal selling involves direct communication between the customers and the management team at Etihad Airways. When introducing a new product in the market, such as the in-flight entertainment, the sales team has to be ready to provide information (Lipman, 2012). In addition, the meet and greet package requires explanations from the team at Etihad Airways. Through personal selling, it becomes possible to communicate to the clients about the new products and ways of using them.
Public relations
Public relations involve creation of goodwill between the public and the stakeholders at Etihad Airways. Maintenance of communication is important in order to avoid misinterpretation of information (Lipman, 2012). Public relations often help in customer service because they provide an avenue through which Etihad Airways can reach out to new customers, maintain the loyal customers, and avoid defection of customers to other airline service providers.
Improvement of customer service
Currently, Etihad enjoys excellent consumer communication within the firm. However, there are efforts to increase global outreach by initiating virtual strategies of enhancing the flow of information between the company and the target population. For instance, during telecommunication, the company incorporates follow-up services in case a customer raises a complaint. Through virtual means, Etihad Airways often provide professional advice to clients using YouTube, Facebook, Twitter, and other strategies, which are fast and affordable. This reduces time and money wastage when personally visiting the Khalifa offices. In addition, the channels apply to the different franchises owned by the company (Balakrishnan, 2011).
Competitors are also stakeholders in the industry that influence the performance of Etihad Airways in the target market. The group of airline companies strives to provide the best services to consumers through mergers and acquisitions because this strategy helps it in dealing with competition. Suppliers are also important to Etihad Airways including companies that provide spare parts for its Boeing planes.
Performance metrics
In order to check performance, the company assesses various comments on social media. When there are several negative comments, there is need to improve the services. Another aspect of performance is ability to investigate an increase in returns over the years. When the company launched its services in 2003, it made a profit of about $2.8 million. In 2012, the profits increased by 23%, thus making the firm to receive $42 million (Etihad Airways, 2013).
According to the firm, there was a significant increase in profits because many people opted for the services of Etihad Airways in comparison to services provided by competitors. When the purchasing power of consumers increases, the firm enjoys profits. When the customers reduce interest in a firm, the profits reduce as well. Etihad invests in quality communication and excellent customer service in order to increase customer interest in its products and services. When many people complement the firm, they will make other people opt for the company, and this is a measure of performance for the Etihad community.
Supply chain management
Supply chain management (SCM) refers to the logistical operations occurring from the point of a customer’s request to service delivery. This involves transforming the customer requests into benefits that incorporate processing bookings, getting flight attendance services, and flying. SCM begins when Etihad identifies the need to provide consumers with essential flight services. This follows a thorough research at the point of sale. In most cases, the company provides flight and freight services. Disruptions in the supply chain of a firm reduce revenue, as they cut into the market share.
For instance, a cut in the supply chain makes it difficult for a company to manufacture, deliver, or sell goods. When a firm cannot carry out its operations, there are high possibilities of investors’ withdrawal, as well as withdrawal of other significant stakeholders. When customers complain about service delivery, the logistics unit strives to provide the same within a limited period to avoid further complaints from other customers (Cole, 2013).
Differentiation strategies of the supply chain include incorporation of IT in almost all aspects of logistics management, as evident with the Etihad Airways. This occurs from the cash handling, luggage management, business transactions, and flight booking at the Etihad headquarters and airline agencies in other countries (Etihad Airways, 2013). Automated systems increase the speed of performance for the firm, thus enabling it to serve many customers within a short period.
The best companies the world over are those that have discovered the full meaning of competitive advantage. The supply chain offers a robust platform for competitive advantage especially when it encompass all the integral activities that outsource for products and services and brings the same to the market to satisfy various customer demands (Zigiaris, 2000). The supply chain management within the Etihad Airways operations integrates activities ranging from manufacturing, processes, operations, transportation and including even physical distribution in the company’s dispatch program.
Etihad Airways exhibit a robust supply-chain management program, seen in the lenses of a refined and coordinated activations that integrates all these operations into a continuous yet unified process. The operations within the Etihad Airways embrace and links all the coordinates that factors in their chain. Given the departmental processes within the Etihad Airways operations, their partners in the chain is a collection of stakeholders that that include but not necessarily limited to vendors, carriers, the third party companies as well as information system providers (Zigiaris, 2000).
The success of the Etihad Airways’ in the region has been attributed to its focus on firm foundation of supply chain which has given its management a competitive edge over other companies in the transport industry. Etihad Airways’ logistics structure is among the impetus that has impacted positively on its supply chain. Their logistics system focuses on visibility through enhanced information sharing within the management structure and between their partners in the corporate world, giving their suppliers an edge into the paradigms that keeps their business on course (Cole, 2013).
While numerous logistical functions have been accredited for its market visibility, the focus has always been put on its recently adopted Green supply strategy which focuses on environmental conservation. In an attempt to expand its supply chain, the Etihad Airways company has subscribed to these three major objectives; to deal in exclusively renewable energy, a zero tolerance strategy on industrial waste and to deal in goods that does not conflict with the company’s principles while giving environmental friendly habits a greater edge in their budget scheme. While most observers note that numerous strategies aimed at strengthening the Etihad Airways’ company supply chain have not been expressly successful, there is still room to believe the company is doing well in a market that is characterized by stiff competition (Cole, 2013).
Presented with an increased customer focus, logistics companies are intensifying their competitive advantage and the ever changing customer choices have forced most companies to approach the chain management very differently (Cole, 2013). Of much worry to most companies is the fact that customers too in the supply chain have not shown a willingness to retract their positioning from a tight lipped demand and accommodate the pressure-tight selling techniques that logistic firms face of late. To deal with these market discrepancies, Etihad Airways has strategically streamlined its purchasing agenda in ways that are expected to change its marketing scope for nothing but the better.
To ensure this situation is achieved, Etihad Airways embraced a program that is aimed at procuring its surplus directly from the manufacturers. As a result, Etihad Airways is succeeding in bypassing all the intermediaries that lay in wait to cash in their blood along the supply pipe. Now, with all the marketing conditions withheld, Etihad Airways might be able to tag its pricing with much aggression knowing that an impressive net profit margin lays in wait. To combat these market trends, Etihad Airways, according to Cole (2013), has embarked on investing much of its time and energy in championing its vendors to accommodate its new pricing strategies, which after all has the regional appeal currently. Etihad Airways has made it possible for the prospective market to evaluate its pricing strategy and eventually, most suppliers has been made to believe that Etihad Airways ‘ impressive offer could not be found anywhere else, making most suppliers to stick with the Etihad Airways company.
Conclusion
Organizations of different kinds supply products and services that seek to satisfy customer demands. Committing to deliver on these products and services consist of an efficient flow of ideas and materials. Logistics as a function is, therefore, responsible for all the actions that involve the storage and movement of goods and services. It moves goods from the suppliers into organizations through operations and finally out to customers for consumption, it is no doubt an essential aspect in all organizations including those that trade in intangible services. From the forgoing analysis, it is prudent to conclude that no single organization has the capacity to operate in isolation, in fact, seen under these lenses, organizations work in harmony with others with each forming a link in the broader supply chains.
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