British Airways (BA) is a recognized commercial flying company that is renowned not only in Europe but globally. Currently BA is recognized as one of the largest in Europe with the capacity to fly over 550 destinations in more than 94 countries. In 2007 the airline boasted of taking more than 46 million passengers to their destinations. BA is centrally controlled from its head offices in England where servicing for its airplanes also takes place.
The headquarters are situated at the Waterside on the suburbs of Heathrow airport. Most of BA’s employees are either located at the Heathrow airport or at the Gatwick airport. BA is known for the quality products it has in terms of flights ranging from the high standard and relatively expensive economic class to the more pocket friendly business class. The prices are competitive with other airlines and it is for this reason that BA has managed to curve a niche for itself in the market in terms of quality and rates.
In the recent years the airline transport sector has been faced with many challenges ranging from fluctuations in demand to adverse losses by most airline companies, especially during the global financial crisis. Several airline companies have been forced into bankruptcies with other engaging in mergers and acquisitions just so that they can be cushioned, from the financial difficulties. Consequently, BA engaged in a number of strategies aimed at reducing the business cost of operation.
The strategy aimed at reducing cost in the areas of business operation and the cost of employees. BA has previously been able to survive hard times due to an experienced managerial team and numerous resources at disposal. It is therefore imperative that the company will continue to maintain its position as a giant in the airline industry in Europe and globally.
Present Situation of the Company
The present business atmosphere requires the management of a company to optimize on revenues and reduce costs. Consequently, the management realized that costs could be reduced significantly when the company had proper control and management of the supply chain. The company was already spending close to £ 6 billion on supplies logistics made up of close to half million orders annually.
Furthermore, the procurement method employed by BA dictated that close to 80 percent of all the supplies were done by selected suppliers. A closer look at the supply chain revealed that there were many discontinuities and irrelevancies in the supply chain that was already translating into additional cost. Such a supply chain, only adds to the costs of a company that is already operating in a fragile business environment. Therefore, there is need for an effective transformation programme to ensure that costs are reduced significantly. Management of supply should therefore be aimed at gaining more control over the supplies procedure and making more sound decisions concerning purchases.
In such a situation where a company is faced by a non-efficient procurement and supply logistics, it is important that the company engages all the parties involved in supply and procurement, in establishing order in the supply chain. The parties include suppliers, manufacturers, procurement manager and any other person or company that is involved directly or indirectly. Strategy should be geared towards reducing the costs and optimizing revenues by targeting directly at the supply chain.
A quick analysis of the situation revealed that the company’s supply chain has several loose ends that translate to costs. These loose ends included inability of suppliers to make their supplies on time, thereby inconveniencing the company in terms of production; purchases were not made in a timely manner, the company did not take advantage of technological advancements in procurements and the use of papers was proving costly and time-consuming and finally there was ineffective communication between the suppliers and the company.
This study aims at outlining the fact that proper project management can significantly optimize the supply chain of the organization, in terms of proper analysis of data and proper utilization of information in order to arrive at the overall business objectives of the organization.
Fishbone analysis
Adequate problem solving requires that the root of the problem is arrived at; otherwise a lot of resources may be spent concentrating on the irrelevant factors. Furthermore only parts of the problem may be addressed, resulting in a recurrence of the problem in future. Luckily, there are various management strategies that provide quick guidance on how the problem can be arrived. One such strategy according to Ray (1998) is by conducting the fishbone analysis. The areas of inadequacy that can be brainstormed include:
Suppliers
- Inability of suppliers to make supplies on time
- Suppliers charging comparatively higher prices
- Ineffective communication with suppliers.
- Costly cases involving supplies claims that are not readily honored by suppliers.
Distribution
- Untimely and costly distribution of supplies to various departments.
- Wastage caused by excess allocation of supplies to departments.
- Business loss due to lack of enough supplies to the departments.
Procurement
- The process of procurement has become costly.
- Procurement process is slow.
- The company does not make sound procurement in terms of quality and pricing.
- There is lack of control by the managerial of the procurement process.
Business position
- The company has not taken full advantage of its capacity in the industry
- Constant complaints from employees and clients regarding supplies
The following fishbone analysis enables the project planner to arrive at the root of the problem. This approach allows for the problem to be addressed from all possible perspectives in order to arrive at the actual problem and not just the symptoms. The actual problem in the case of BA is that the company lacks a clearly defined and effective supplies chain. The result is that the business aspect and the reputation of the company had been greatly affected.
Relevance of the Project
Although the airline industry in the U.K has recently been faced by many economic difficulties, there still hope considering the fact that the overall number of people travelling all over the world has increased. The industry is full of opportunities fuelled by the rise in the tourism industry in the U.K and the number of persons who visit the country annually either for educational or medical purposes. From a globally perspective where BA operates, globalization and the developments in international trade has seen an increase in the number of business people flying across the world to look for business opportunities. Therefore with a comprehensible supply optimization strategy, BA will have the capacity to increase revenue, reduce costs and ensure that it is a key player in the airline sector.
BA can therefore benefit significantly from an efficient supply chain management. According to Kerzener, (2009a) previous areas where the plan has been implemented, improvements in the business aspects have been registered and companies have been able to reduce their costs by close to 10 percent. The areas of improvements will include: reduced paper work, more efficient channels of communication with suppliers, sound purchasing, reduction in supply claims and efficient operation system.
The areas of concern for this particular project for the BA’s supply chain will be procurement, proper utilization of information, storage, transportation, distribution, and communication with suppliers, customers and other third parties involved. The plan will seek to:
- Establish a comprehensible and sound supply chain that will be adopted in all the supply points from the supply to the warehouses and finally to different departments.
- Establish a responsible and effective management system that will be responsible to make prudent judgments’ and command the supply chain effectively.
- Establish an evaluation methodology and procedure that will be used to determine whether the supply chain is registering positive growth.
Strategy of the Project
A successfully project management requires the drawing of a comprehensible plan with guidelines from the start to the end. In the case of BA the major objective is to reduce the cost and optimize the business operations. Furthermore, the plan aims at improving the customer satisfaction. Therefore it will be important that a project manager is conversant with these issues. Furthermore, Kerzener (2009b) emphasizes that the project manager will be required to collect relevant data in order to have a good background concerning the problem in the company.
Challenges Faced by BA
BA faced the problem of not being able to effectively serve its ever increasing clientele. The delays in supplies meant that the company could not efficiently offer timely air transport services. Due to the primary need to retain clients via provision of services, the company was forced to make quick procurement decisions sometimes resulting in huge costs. This was due to the inability to secure the best supply in terms of price, quality and time management.
Initially the company’s management had not taken the step of doing market research in terms of price and quality and this ended costing the company significantly. In the presence of a comprehensible supply chain, the management could have been able to make quick and sound judgments. The company’s supply chain was devoid of any data that would assist in making calculated future predictions.
As demand increased, it became imperative for the management to increase supplies of goods and services. Procurement was done haphazardly with instances where the management over-purchased supplies which led to wastage or under-purchased supplies which led to the inability of BA to offer efficient services to its clientele. The result was that the quality of the services offered by the company was significantly compromised and the reputation was also at stake. The plan was therefore required to be comprehensible enough to enable the management to effectively implement, it in order to bring quality to the supply chain.
Responsibilities of the Project Manager
In summary, the responsibilities for the project manager in this case will be to coordinate and integrate activities across functional lines. According to Leroy (1972) project planning forms the foundation of the project management and should therefore include all the relevant areas. In this case it will be necessary to integrate all the past financial and purchase data, resources, timeline, supply and demand when developing the plan. It will also be necessary to mobilize the required resources and manpower for the execution of the plan. Finally the proposed changes, as outlined by Kerzener (2009c) should be implemented in harmony with the overall organization’s objectives and culture to avoid unprecedented conflicts.
Responsibilities of the Functional Manager
In this instance, the project manager and the functional manager will be different; therefore according to Leroy (1972), there will be need to define the roles of the functional manager. The functional manager will be basically involved with the technical criteria of how and where the plan should be implemented. The functional manager will also supply the plan with the resources it requires for completion.
Project Planning
Demand and Supply
The demand for the services offered by the airline in terms of passengers will determine significantly the number of supplies required. Proper integration of supply and demand will ensure that the cost is significantly reduced. This will cover the anticipated demand for a particular period of time, taking into account factors such as seasonal fluctuations. The plan should also be able to provide room for future expansion including the possibility of venturing into new markets with unique demands.
The present level of supply will provide valuable information in terms of evaluating whether there is excess of short in the current supply. The present level of demand will also be evaluated to determine whether the company operates within its capacity. This, according to Stewart (1964) should be done on consideration of the company’s current expansion plans.
The distribution channels are also important in this case. Distribution to the various departments and the mode of transportation employed will also assist in optimizing supply.
The project manager will be required to collect data on the supplies needed by the company and evaluate the market performance of suppliers in terms of quality, punctuality and pricing. This will help the manager to come up with a list of suppliers that are both competitive and professional.
Technical Study
In analyzing the problems faced by BA, it was realized that the supplies are not always defined, due to the lack of integration between supply and demand. After integration of supply and demand, the project manager will be able to estimate the potential demand and use this information to predict demand. For instance, from the financial records it will be possible to determine the total annual wine consumption by passengers. The manager will therefore be able to estimate the wine consumption for a particular period of time and make predictions in terms of supply. The decision made in this perspective according to Kerzener (2009b) is dependent on financial information and purchase history of the airline.
Technological advancements may also be valuable in this case due to their ability to reduce the scale of operation. The airlines can make us of information technology when requesting for supplies and when making payments to avoid the usage of paper which is bulky, difficult to store and contributes towards waste.
Schedule
Considering the size of the company and the nature of the proposed changes, it will be important for the company to adopt the plan in a long term perspective. The overall implementation of the plan from beginning to the end should roughly take 5 years. However, one major drawback with long term projects is that there is the possibility that some of the predicted dynamics may change at some stage during implementation.
These changes can invalidate the previous assumption making it necessary for re-evaluation. In some instances the changes have even led to the cancellation of the project. Companies have opted to validate assumption during gate review meetings. Most plans also have sections for documenting assumptions. However as outlined by Cleveland (1964), with developments in the finance sector calculated predictions can be made with some degree of precision.
Forecasting requires that the understanding the strengths and weaknesses as dictated by the competitive situation, marketing, research, production, financing, personnel and management structure. It is important that a project conforms to a company’s policies; otherwise the project can be drastically affected by conflicts. Planning is important so that a cognitive simulation can be undertaken before irrevocable actions can be taken. The planning must therefore include:
- Agreement on purpose.
- Assignment and acceptance of individual responsibilities.
- Coordination of work activities.
- Increased commitment from the organization, employees and concerned parties on the goals of the plan.
- Efficient lateral communications.
Planning for the project takes place at two levels which are the corporate level and the individual approach. Breaking down of the plan into levels is important because it ensures that the project manager has control over the project. At the end of the project and even during various stages the sponsor, the project manager, senior management and even a consumer representative may converge in a meeting to evaluate the success and the progress of the project. These meeting are mostly referred to as critical design reviews. Project manager in BA can use the following life-cycle phases in order to make the planning easily comprehensible: Conceptualization, feasibility, preliminary planning, execution, testing and commissioning.
The conceptualization phase will require brainstorming sessions between the project manager and all the relevant parties to identify and define the actual problem and identify the potential solutions to the problem. The feasibility phase involves consideration and simulation of the actual project implementation to determine the technical aspects of the conceptual alternatives. This phase creates a firmer basis to the project and will give the project manager much more confidence.
After the project manager has established that particular suppliers will be much more efficient at making deliveries, the feasibility phase will enable the project manager to determine whether the implementation should take place. As emphasized by Watling (1972) all the aspects are considered in terms of the methodologies used to order and pay for supplies, the distribution methodologies employed, the procurements procedures, implementation and evaluation procedures and methodologies.
Critical Success Factors
The success of the BA project will be significantly dependent on the ability of the project manager to employ systems approach to project management by analyzing those variables that may lead to success or failure. Once BA has managed to pick the most efficient and competitive suppliers for products, it will be important that BA establishes proper communication channels with all these suppliers so that effective planning and implementation can be undertaken.
BA plan will also require that proper metrics have been put in place to allow for effective evaluation of the plan. The evaluation will monitor whether deliveries for supplies are made in a timely manner to avoid inconveniencing of passengers or undue losses.
The plan should also ensure that the management has complete control over all the supply chain processes from purchase, storage distribution and finally utilization. According to Kerzener (2009c) the processes should be defined in such as a way that they are distinct from each other and that in case of a problem it can be tackled from a particular stage instead of overhauling the entire process. Furthermore, the implementation of the plan should take place in a timely manner, being devoid of conflicts.
Risks Involved
The initial risk that the company may face is when the suppliers do not integrate well into the supply chain of BA. The supply chain significantly involves the suppliers and if for any reason they fail to cooperate, then it may put the whole project in jeopardy. The cost of implementation of the whole process is usually found in the budget. However, sometimes the project manager may underestimate the cost of continually assessing the quality and efficiency of the supply chain thereby requiring further allocation of funds that the sponsor may not be willing to provide.
Logistics require that procedures are followed to the letter to avoid overlapping or complete sidelining of important activities. According to Davis (1976) processes such as procurement procedures, risk management techniques, process evaluation and supervision should be develop and adhered to. Flexible solutions should also be available to any anticipated problems that may be experienced. The solutions can be created during the simulation process while looking at the feasibility of the project.
Risk Reduction
To optimize the whole process, the project manager should be able to come up with a risk reduction plan. The risks should be able to be analyzed in terms of priority and consequence so as to reduce risks that may adversely affect the whole program. In the same sense all levels of the management should also be aware of all levels that may trigger false alarm. As outlined by Leroy (1972) the whole process should have testing at various levels to ensure that assessment is conducted in a cost-effective manner. Implementation of the BA plan will require that proper evaluation procedures are placed at various levels of implementation as stipulated during the planning process.
The data obtained from various stages can be used to evaluate the subsequent stages in order to reduce the time taken to detect the particular risk and come up with the most effective solution.
According to Ray (1998) suppliers, project manager and employees should be completely conversant with the plan details so that in case they encounter a particular risk they may be able to report it in a timely manner.
The major objective in risk reduction should be dealing with the risks before they have occurred, by placing adequate risk prevention procedures and guidelines.
Recommendations
BA should be able to establish a supply chain that is aimed at reducing costs while optimizing the revenues. The company will therefore engage in advertisement ventures because clients will be assured of good quality from the company.
Referring to Robert (1986) the company should also be able to establish a quick response system that will ensure that any eventualities are dealt with in a timely manner. BA should also be able to implement a supply chain that is environmentally friendly in terms of waste reduction. The best way to arrive at this is to take advantage of developments in the information technology sector. The company can purchase its supplies digitally and make payments digitally to avoid the use of paper that puts pressure on storage and increases wastes.
According to Davis (1967) sales records can also be stored using the latest storage technologies that not only offer storage, but also provides tools for effective real-time analysis. The data can then be converted in a form that can provide future predictive tools. BA can also make use of batch procurement methods to ensure that the organization can enjoy economies of scale. Better distribution procedures should also be employed so that the company can distribute the supplies effectively to various departments.
Conclusion
The present business atmosphere requires the management of a company to optimize revenues and reduce costs. Consequently, the management realized that costs could be reduced significantly when the company had proper control and management of the supply chain, because the company was already spending close to £ 6 billion on supplies logistics made up of close to half million orders annually.
Furthermore, the procurement method employed by BA dictated that close to 80 percent of all the supplies were done by selected suppliers. A closer look at the supply chain revealed that there were many discontinuities and irrelevancies in the supply chain that was already translating into additional cost. Such a supply chain only adds to the costs of a company that is already operating in a fragile business environment and there is need for an effective transformation programme to ensure that costs are reduced significantly.
Management of supply should therefore be aimed at gaining more control over the supplies procedure and making more sound decisions concerning purchases. In such a situation where a company is faced by a non-efficient procurement and supply logistics, it is important that the company engages all the parties involved in supply and procurement, in establishing order in the supply chain. The parties include suppliers, manufacturers, procurement manager and any other person or company that is involved directly or indirectly. Strategy should be geared towards reducing the costs and optimizing revenues by targeting directly at the supply chain.
Project management is not just a onetime undertaking, but requires continuous evaluation and updating to keep up with the business dynamics in the economic environment. Therefore, as emphasized by Allan (1997) project managers constitute important aspects of all companies, as a way of ensuring that all processes are optimized towards the attainment of an organization’s goals and objectives.
Complete understanding of the dynamics, processes and applications of project management requires that a student actually gets into the actual scenario in order to get a grip of project management. Students are mostly required to study a particular organization and come up with a project management for a completely new process or an existing project. Project management studies are important because they determine the students that win scholarships offered by companies since the companies always offer limited vacancies. The most important aspect of project management is planning and it is greatly dependent on research and study
Most companies already have within their structure a defined project management team the overseas a particular project that has already been implemented or that is in the process of implementation. However, students can also come up with new projects because companies are always ready to welcome new ideas. Research is very important in this case because a student will not only learn about various loopholes in the current project, but also propose a new project.
During the period when a student is conducting a research proposal under scholarship some aspects of project management that are unique to a particular environment, that may not be apparent during academic studies are realized. Project management requires confidence in the process and continuous simulation and review to ensure that all areas of the plan are covered. Such aspects may also seem minor in the classroom, but their extent of importance becomes more apparent during scholarships when students have the opportunity to use their skill in real life situations.
Scholarships constitute an important part of students, towards the attainment of the required experience to gather skills towards a successful career. The opportunity to apply the skills learned in real life opportunity is therefore important, because most of the skills learnt are articulated and additional challenges and tactics are also acquired.
References
Allan, R. (1997) Understanding of Project Organization. New York, Oxford University Press.
Cleveland, D. (1964) Why Project Management? Indiana University Press.
Davis, C. (1967) Human Relations at Work. New York, McGraw-Hill.
Kerzener, H. (2009a) Bringing the PMBOK Guide to Life: A Comparison for the Practicing Project Manager. John Wiley and Sons.
Kerzener, H. (2009b) Project Management Workbook and PMP/CAMP: Exam Study. John Wiley and Sons.
Kerzener, H. (2009c) Project Management: A systems Approach to Planning, Scheluding, and Controlling. John Wiley and Sons.
Leroy, M. (1972) The systems Approach and Good Management. Indiana University Press.
Ray, W. (1998) Personnel management in the Project Environment. New York, Oxford University Press.
Robert G. (1986) Winning at Project Management. New York, John Wiley and Sons.
Stewart, D. (1964) Making Project Management Work. Indiana University Press.
Watling, T. (1972) Successful Project Management. London, Business Books.