Service Industry Operations Management: Southwest Airlines

Introduction

The service industry has undergone phenomenal growth over the past few decades. For example, the industry has created employment to a significant proportion of individuals across the world. The industry’s rampant growth has attracted numerous scholars, who are concerned with studying different aspects associated with it. One of the areas of focus relates to operations’ management. Yudoko (2012) argues, “operations management refers to the business activity that involves the design, development and maintenance of systems and processes that transform resources such as raw materials, technology, and labor into goods and services that meet the customers’ needs” (p. 100).

Previous studies have shown that operations are a critical element in organizations’ efforts to develop and sustain high competitive advantage. Prajogo (2003) argues that the interest in operations management with reference to the service industry has arisen from the view that “the core of service operations is similar to manufacturing” (p. 2). Consequently, firms in the service industry undertake similar processes in their quest to develop and deliver their products to the target customer. Services differ from products in a number of ways. Some of the characteristics that differentiate services from other products include intangibility, perishability, heterogeneity, customer contact, and labor intensity.

In addition to the above characteristics, firms in the service industry are more quality-sensitive as compared to the manufacturing firms. Chary (2009) asserts, “Customers are within the operations’ systems itself and are a part of the process “(p. 35). Chary (2009) further argues that it is impossible to recall a poorly delivered service. The objective of this research paper is to illustrate how firms in the service industry can achieve sustainable service excellence by improving their operational efficiency. In a bid to illustrate the applicability of operations management in the service industry, the research paper analysis the case of Southwest Airlines.

Conceptual framework

An organization’s ability to achieve business excellence in delivering products and services is influenced by its operational strategies, which refer to the diverse patterns of decisions that influence an organization’s ability to achieve long-term capabilities, hence improving the overall organizational strategy. This paper is based on the operational strategy, which is comprised of three main components, viz. the content, context, and process. Yudoko (2012) asserts that strategic decisions can be classified into infrastructural and structural decisions. The structural decisions refer to an organization’s physical configuration of its operations, while infrastructural decisions refer to the systems and policies that facilitate the structural decisions.

Yudoko (2012) contends that structural decisions are comprised of different aspects such as capacity, facilities, process technology, and information. On the other hand, infrastructural decisions are comprised of aspects such as work planning, resource allocation, human resource systems, and control systems. Yudoko (2012) contends that the operations’ strategy process is concerned with the procedures followed in formulating operations strategies. The context component entails the external environment within which the various operations are undertaken.

This research paper is based on the strategy formulation process, which is a core component in achieving sustainable development. Firms in different economic sectors have an obligation to integrate effective operations’ management in order to achieve the set goals and objectives. The diagram below illustrates the relationship between diverse concepts and the operations’ strategy.

Conceptual framework.
Figure 1: Conceptual framework.

Technical part

Southwest Airlines; company background

Southwest Airlines was founded in 1967 and incorporated in1971. Its establishment was motivated by the need to address the transport challenge between Dallas-Fort, Houston and San Antonio. Southwest Airlines is committed to maximizing its profits. Subsequently, the firm considers operations’ management as one of its core strategic management practices. The firm has incorporated international expansion as one of its strategies aimed at attaining its profit maximization. Currently, the firm operates in over 70 destinations distributed in 37 countries. The firm is of the opinion that creating such an environment will lead to improved company spirit and individual pride. Moreover, Southwest Airlines is focused towards nurturing a working environment that fosters innovation and creativity.

Design of service operations

Service operations aim at ensuring effective and efficient coordination of processes and activities in order to ensure that services are offered at an acceptable level. Service operations are a complex undertaking due to their labor-intensive characteristic. Achieving excellence in the process of delivering services requires an organization to engage in repetitive activities, which have to be consistent. Hawkes, Bailey, and Reidl (2011) assert that it is increasingly becoming difficult for organizations to manage their service costs while at the same time sustaining their level of service. Failure to improve service delivery can adversely affect the productivity of firms in the service industry. Therefore, it is vital for organizations’ management teams to design effective service models. The service model should be customized in order to meet the customers’ needs. Moreover, the service model should be cost sensitive (Hawkes, Bailey & Reidl, 2011).

Organizations must ensure that the daily operations in the service delivery process are conducted, controlled, and managed effectively. One of the key components in designing service operations entails integrating effective technology in order to provide adequate support in the service delivery process. Designing service operations also entails establishing a balance in the service operation. Consequently, it is imperative for organizational leaders to ensure that the service is continually improved. Conflicts might arise between the customer and the organization if the level of service is below the expected levels. Some of the areas that organizational leaders should take into account in establishing balance in service operations relate to business versus technology, reactive versus proactive, stability versus responsiveness, and quality versus cost.

Managing the workforce

Achieving excellence in service operations is subject to the extent to which an organization manages its workforce. Consequently, organizational managers must ensure that their workforces are competent and highly motivated. Iverta (2012) argues that how “the operations manager formulates a human resource strategy determines the talents available for operations” (p.333). The human resource strategy aims at ensuring that labor is managed effectively and that the various organizational jobs are designed effectively. Some of the issues, which are considered in the process of formulating the human resources strategy, entail ensuring that the organizations’ human resources are utilized efficiently despite the existing organizational constraints.

Quality management

Nankervis, Miyamoto, and Milton-Smith (2005) assert that quality is a fundamental component in service firms’ effort to attain a high competitive advantage. However, service firms experience a challenge in their quest to deliver high quality services due to the diverse groups of stakeholders involved in the supply chain. Furthermore, the quality challenge is increased by the existing variability emanating from the external environment. It is imperative for organizational leaders to involve customers in operational processes in order to enhance the effectiveness with which firms improve quality of their products and services. Some of the approaches that managers should take into account include the six sigma and total quality management (Nankervis, Miyamoto & Milton-Smith, 2005).

Layout planning and schedule management

According to Nankervis, Miyamoto, and Milton-Smith (2005), it is imperative for organizational leaders in service firms to formulate an effective layout strategy. Layout planning influences the effectiveness with which an organization delivers its services to customers. Subsequently, it is fundamental for operations’ managers to formulate effective service delivery systems. One of the issues that operations managers should consider relates to integrating high-contact and low-contact systems. Some of the aspects that operations managers should take into account in their layout planning process include evaluating the demand fluctuations and locating near customers.

Poor management of schedule is considered as one of the major hindrances to an organization’s productivity. Schedule management improves an organization’s operational efficiency by ensuring that the right activities are executed at the right time. Subsequently, a firm is in a position to achieve the desired outcome. Scheduling management enhances an organization’s competitive advantage by improving its reliability with regard to delivery of products and services.

Supply chain management

Nankervis, Miyamoto, and Milton-Smith (2005) define supply chain management as the process through which an organization ensures that the various networks of activities are managed effectively in order to promote effective and efficient flow. Subsequently, effective supply chain management ensures that the various supply chain activities are executed seamlessly. Furthermore, supply chain management enables an organization to develop a strong relationship with various stakeholders in the supply chain such as customers, suppliers, and other third party companies. Effective supply chain management improves an organization’s operational efficiency by reducing the supply chain costs with a margin of 50% to 75%. Thus, the total operating cost of an organization is reduced (Nankervis, Miyamoto & Milton-Smith, 2005).

Methodology

The researcher has adopted an effective research methodology by taking into account diverse components, which include research design, data collection method, data presentation, and analysis. Creswell (2003) contends that adopting an effective methodology aids in improving the quality of the study. In a bid o understand the effectiveness with which Southwest Airlines has integrated operations’ management, the researcher adopted qualitative research design. This research design was selected in order to provide the researcher with an opportunity to collect a substantial data in order to enhance the findings of the study.

The researcher considered Southwest Airline employees as the target population. Southwest Airlines operates in different countries. Therefore, it would be difficult to conduct a study on all its employees and to deal with this challenge, the researcher considered only one of its outlets in Dallas. Consequently, the researcher minimized the cost of the conducting the study. The researcher targeted respondents from different levels of management such as supervisors and managers. These respondents were selected on the basis that they are conversant with the firm’s service operations. The selection process was undertaken through random sampling in order to eliminate bias. Ten respondents were selected.

The researcher recognizes the importance of effective data collection in improving the reliability of a research study. Furthermore, effective data collection instrument must be incorporated (Creswell, 2003). This study relied on primary and secondary sources of data. Primary sources of data entailed interviews, while secondary sources included published financial reports and the company websites. In a bid to collect primary data effectively, the researcher used questionnaires as the main data collection instrument. The questionnaires were designed effectively and distributed to the respondents electronically via email. The researcher ensured that the questionnaires were comprised of open-ended and close-ended questions in order to gather the right and substantial data.

Creswell (2003) asserts that effective data analysis is crucial in enhancing the credibility of a particular research study, and hence its significance to the target stakeholders. The data collected was analyzed using Microsoft Excel. Subsequently, the researcher presented the data collected using graphs and tables. This aspect makes it easier for the target audience, which is comprised of the firm’s customers, regulatory authorities, investors, and the public to understand the study easily.

Advantages, disadvantages, limitations, suggested solutions

The study will be of great significance to a number of internal and external stakeholders. First, the study will enable Southwest Airlines managers to understand the gaps in its operations management. Subsequently, the organization’s managers will undertake the necessary improvement in its operations management strategies. On the other hand, the firm’s customers will gauge the company’s operational efficiency.

One of the major limitations of the study is that it only focuses on one of Southwest Airlines destinations. Furthermore, only a small sample of the total population is considered. However, it is assumed that the selected sample is representative of the total population. One of the major challenges that the researcher expects to encounter relates to ethical challenges. In a bid to deal with such challenges, the researcher sought permission from the relevant authorities. This played a significant role in eliminating suspicion. Furthermore, the researcher ensured that the respondents were respected and not coerced to respond to the set interview questions.

Evaluation of the case

The researcher intended to understand how Southwest Airlines manages its service operations. The study showed that Southwest Airlines has integrated different service operations management concepts in its strategic management efforts. The respondent’s opinion on the firm’s operations management efforts varied. Seventy-five percent (75%) of the respondents argued that Southwest Airlines has integrated effective service operations design. When asked how, the respondents argued that the airline’s operations managers ensure that the various activities undertaken in the firm’s service delivery process are controlled and managed effectively.

The respondents asserted that the firm has integrated modern technologies in an effort to achieve a high degree of operational efficiency. One of the technologies cited by the respondents entails using more precise airport approaches such as the Required Navigation Performance (RNP). This technology has enabled the airline to shorten its flight (McCartney, 2010). The respondents argued that the firm has automated most operations in an effort to achieve efficient service delivery. For example, the firm has provided customers with an opportunity to check in online by entering their passenger information such as the confirmation number. Process automation has improved the firm’s by operational efficiency minimizing the cost and the amount of time required to undertake a particular activity. One of the ways through which the firm has automated its process is by designing the Express Bag Drop service, which has greatly simplified the checking in process.

Eighty-seven (87%) of the respondent interviewed were of the opinion that the airline has integrated effective schedule management practices. The managers and supervisors interviewed said that the firm provides customers with the opportunity to view the flights daily and weekly schedules online. Subsequently, customers plan for their flights effectively. Moreover, automation of the firm’s operations gives passengers the opportunity to view route map and check flight status.

Furthermore, 90% of the respondents were of the opinion that the firm has integrated effective service design by providing customers an opportunity to manage their reservations. When asked how, the respondents cited the fact that customers can book reservations with regard to car, hotel, and vacations. This aspect has played a critical role in improving the level of satisfaction amongst customers.

The researcher also intended to understand how Southwest Airlines has managed to sustain a high level of customer satisfaction. In a bid to understand this aspect, the respondents were asked on the firm’s strategy with regard to maintenance. Forty percent (40%) of the respondents were of the opinion that the firm has not incorporated a comprehensive aircraft maintenance program. Despite this aspect, available literature review shows that Southwest Airlines understands the importance of effective aircraft maintenance. For example, in 2004, the airline designed its Next Generation Maintenance Automation Team.

The team was charged with the responsibility of conducting comprehensive aircraft maintenance (Global Logistics & Supply Chain Strategies, 2012). However, the respondents were of the opinion that the firm does not conduct periodic maintenance of its aircrafts. Furthermore, the respondents were of the opinion that most of the firm’s aircrafts are old and have high fuel consumption. Subsequently, the airline incurs a high maintenance cost. In 2008, CNN reported an incident whereby Southwest Airlines tried to conceal safety challenges encountered by the airline during inspection by the FAA (Bronstein & Griffin, 2008).

Eighty-nine percent (89%) of the respondents interviewed were of the opinion that the firm has integrated an effective employee-reward program. When asked how, the respondents were of the opinion that the firm has integrated monetary and non-monetary rewards. Examples of non-monetary rewards integrated include employee recognition through the SWAG program. The SWAG program offers employees the opportunity to accumulate points, which can be traded for awards such as Guest Passes, Gift Cards, and Rapid Reward Points. Employees are also rewarded by providing them with travel packages for their families and parents.

Furthermore, the firm manages employees by incorporating a comprehensive training and development program. Employees also receive diverse health and wellness benefits such as dental, vision, medical, pet insurance, travel assistance, wellness rewards, metabolic syndrome program, and diabetes prevention program (Southwest Airlines, 2014).

Ninety-three percent (93%) of the respondents were of the opinion that Southwest Airlines is focused to maintaining a strong relationship with different stakeholders in the supply chain. When asked how, the respondents said that the firm has partnered with i2 Technologies’ Service, which enables the firm to sustain interact with diverse supply chain stakeholders. The graph below illustrates a summary of the study’s findings.

Response on Southwest Airlines service operations.
Figure 2; Response on Southwest Airlines service operations.

Summary

The study shows that Southwest Airlines is committed to developing a high competitive advantage with regard to service operations. This assertion is evidenced by the extent to which the firm is committed to formulating optimal service operation strategies. For example, the airline is committed to nurturing a strong human resource management strategy, as evidenced by the diverse employee motivation strategies such as health and wellness programs, fair and equitable employee remuneration, and employee recognition. Moreover, the study shows that Southwest Airlines is committed to improving its service operations by integrating effective layout planning strategies as the firm seeks to improve is market reach by establishing new destinations in different parts of the world. Subsequently, a large number of passengers will access the airline’s flight services.

Southwest Airlines has also improved its service delivery by investing in effective schedule management strategies, as evidenced by automation of the flight schedules. Furthermore, the firm has integrated customers in its flight management processes, as customers can manage their flights online. Despite its efficiency with regard to service operations, the study has identified a gap with regard to the firm’s flight maintenance program.

Conclusion and recommendations

Numerous studies have focused on the significance of operations’ management in the operation of manufacturing firms. Subsequently, little focus has been paid on the applicability of operations management amongst firms in the service industry. The study highlights operations management as one of the most important components in the operation of firms in the service industry. The study shows that the extent to which organizations in the service industry achieve service excellence is subject to the nature of their operations’ management. Subsequently, it is imperative for organizational managers to implement effective service operations strategies.

The significance of operations management in the service industry arises from the view that a high degree of customer contact is involved in the service delivery process. Furthermore, it is difficult for firms in the service industry to differentiate their products. Subsequently, implementing effective service operations management strategies can significantly improve an organization’s competitive advantage. The study shows that Southwest Airlines has implemented a number of strategies aimed at achieving operational efficiency. However, it is imperative for the firm’s management team to consider the following.

  1. The airline company should consider improving the safety of its passengers, and in a bid to achieve this goal, it should conduct periodic maintenance of its aircrafts.
  2. Southwest Airlines should also focus on improving its operational efficiency by considering implementing fuel-efficient technologies. This goal can be achieved by considering alternative sources of energy. This strategy will improve the firm’s operational efficiency by lowering the cost of operation, which will trickle down to customers through low flight tickets.
  3. The airline company should focus on nurturing a strong relationship with different stakeholders in the supply chain. This move will improve the effectiveness with which the firm achieves operational efficiency in its service delivery process.
  4. The firm should focus on developing an effective knowledge management system, which should take into account the diverse stakeholders in the supply chain.

Reference List

Bronstein, S., & Griffin, D. (2008). FAA inspectors; Southwest tried to hide safety problems. Web.

Chary, S. (2009). Production and operations management. New Delhi, India: Tata McGraw-Hill. Web.

Creswell, J. (2003). Research design: qualitative, quantitative and mixed method approaches. New York, NY: Sage Publications. Web.

Global Logistics & Supply Chain Strategies: Southwest Airlines maintains its profitability with i2 technologies. (2012). Web.

Hawkes, H., Bailey, C., & Riedl, P. (2011). Service operations as a secret weapon. Web.

Iverta, G. (2012). Human resources key performance indicators. Journal of Competitiveness, 4(1), 117-128. Web.

McCartney, S. (2010). A radical cockpit upgrade Southwest fliers will feel. Web.

Nankervis, A., Miyamoto, Y., & Milton-Smith, J. (2005). Managing services. New York, NY: Cambridge University Press. Web.

Prajogo, D. (2003). The implementation of operations management technique in service organizations; an Australian perspective. Sydney, Australia: Deakin University. Web.

Southwest Airlines: Work perks. (2014). Web.

Yudoko, G. (2012). Sustainable operations strategy; a conceptual framework. Bandung, Indonesia: ICTOM. Web.