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You are a consultant for the ABC consulting group. Your firm has been contacted by a XYZ Venture Capital Group, which is seeking a consulting outfit to give advice on where (which companies) it might make a significant investment. XYZ has no preference for investing in the service or manufacturing sector but does believe that operational excellence can lead to permanent value creation and superior profit and ROE performance. Because other consulting firms are also bidding on this large consulting project, XYZ has asked your firm to pick any 2 for-profit firms from one of the industries listed below, and to analyze them from an operations management perspective. XYZ will then compare your consulting firm’s depth and quality of analysis with other consulting outfits to finalize the consulting group. It will then perform an actual investigation.
XYZ has asked you to address the following in a “white paper,” using the outline structure demonstrated below.
Select 1 of the following industries, and then choose 2 companies within the industry you selected:
1. United States steel industry
2. Home movie-rental industry
3. Mass-merchandiser retail industry
4. Fast-food industry
5. United States passenger airline industry
6. Small package-delivery industry
I. Introduction
· Give a brief description of the industry background (the industry itself, not any particular firm in it).
· Give a brief description of the history of each firm of the chosen pair, including the market share, sales levels, and profit for the last 5 years.
II. Operational objective
· Research each firm’s stated mission statement.
· Narrow that down yourself to an operational objective. For example, an operational objective for a large mass merchandiser may be “to establish and execute a global supply chain to minimize product cost and meet customers’ quality expectations.” (Note: This part is NOT a research question. It is asking you to simply state what the operational objective is.) Another example would be the operational objective of an auto racing track pit crew, which may be something like “accomplish any necessary adjustments/repairs in 16 seconds or less, while also filling the gas tank and changing four tires.”
III. The specific operational challenges of this industry
· List and discuss at least 3 challenges. As an example, an operational challenge for any U.S. electronic equipment retailer could be political turmoil in a foreign country where products are sourced, leading to unreliable supply. This then might require dual sourcing and/or excess inventories. Another example might be the apparent need for high levels of inventory to keep customer service levels high, which hurts the company’s financial metric of ROE.
IV. Metrics of the industry
· Research at least 5 operational metrics this industry uses. If you cannot find examples to use, describe 5 metrics they should be using. The text gives numerous examples of these. Also, use the text examples plus your own critical thinking here (i.e., exactly how you would gather the data to calculate these metrics).
V. How has each firm addressed these industry challenges?
· Identify how each firm has addressed each of the specific industry challenges described in section III. This section should be written in the language of operations management. It should relate what each firm did to specifics in the text, such as work cell design, lean manufacturing techniques, SPC, quick changeover improvement, line balancing, design for manufacturability, and supply chain optimization.
VI. Conclusions for this industry pair
· Identify which firm is performing better. Specifically, identify why, from an operational perspective, the cycle time is better. Also give specifics regarding the lead time, percentage of customer complaints, reduction in waste, whether the inventory turn is better, customer retention, and so on.
· Compare each firm’s actual financial performance using metrics such as ROE, sales growth rate, inventory turn, and ROA.
VII. Applicability elsewhere
· To demonstrate to XYZ Venture Capital Group how broadly ABC understands operations management, discuss either the applicability of other industries’ operations management techniques to either of these firms success, or explain how the operations management techniques of either of these firms could be applied in other industries. Examples here could include how all U.S. companies learned the benefits of concurrent product development or JIT systems from the Japanese auto industry. Another example is how buying books and music online has now been widely adopted by most brick-and-mortar retailers.
Running Head
MGM 340 1301-A
Colorado Technical University
Individual Project 4
US Airline Industries
The airline Industry is one of the most convenient means of travel and exporting. Two of the most prominent American airlines that have become innovative and exploring the depths of operations Management at its best are Delta and Southwest Airlines. Delta Airlines is one of the second largest airlines and has aimed to be the best since the beginning of its journey in the 192o’s teaming up to eliminate the infestation of boll weevil in agriculture; soon after Delta proceeded to become a parent company. Nearly 4 airlines (Chicago, Northeast, Western, and Southern airlines) merged with Delta from 1953-1987. Through the decades they have cut its costs and have somewhat been on the line of bankruptcy issues. As of 2012, Delta has made a profit over $321 billion at $1.61 a share.
In the same industry Southwest Airline, starting in Dallas, is known for having low fares than any other airline service. Southwest has suffered the means of the economy, exceeding fuel prices due to oil catastrophes and more. Southwest incorporated in 1967, has over 3400 flights a day. Remaining profitable and is the largest operator of 737’s. Southwest has earned over $75 million at 9 cents a share with revenue of 1.9 billion.
Operational Objective
As 500 fortune companies the missions Statement of these companies are based around the core values, identity, employees of the business and fulfilling standardized duties. The mission statement of Delta Airlines is as follows:
“To be the carrier of choice for customers through operational excellence, second mile service and building emotional connections with the disability community is our mission.” Not only has this but they have a business slogan, “Delta Airlines. We love to fly. And it shows.”
Southwest has the opposite approach but more in depth that says, “Dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company spirit.”
Readjusted Objective statement (Delta) -To connect with all out customers & exhibit the utmost service to the disabled.
Readjusted Objective statement (Southwest) – Acquire empathy in the best regards of all circumstances that our integrity outshines all.
The Specific Operational challenges of this Industry
Like any other airline Delta has faced many challenges that have seemed to cause dismay in the Industry. One of the problems was to overcome some of its challenges and had decided to partner with Accenture, who is the outsourcing company they’ve chosen to handle their accounting and financing to level their service and cost saving solutions. However other problems were remnant such as escalating fuel costs, deregulation and competition from low cost carriers, which led to a decline in their passengers since September 11th 2001 (Accenture.com) Delta has been taking precautions to manage their baggage.
Challenges that are faced with Southwest are weakened economy, fighting to aim better at security changes due to terrorist attacks. This imposed the problem of having passengers wait long periods in line therefore the airline gaining reputation and also losing customers and having low business traffic.. At some point they’ve had a drop in demand for air travel which led to decrease in fares. Southwest began making changes by the number about the changes in the operation in Atlanta airport; numerous flights were dropped to small destinations, meanwhile avoiding larger airports like Philadelphia, Boston etc. to watch their fueling costs. They’ve adopted a new policy to help the company gain market share and goodwill with passengers.
Metrics of the Industry
5 Metrics that are used by Delta Airlines are:
Speed and availability-Baggage checking, assisting customers and issues in a timely fashion
Customer Satisfaction-Ensuring that customer’s get the utmost service and
Online Sales-For tourists, or customers obtaining souvenirs
Online check Ins-For any flight information, tickets, delays or changes
Measurement of performance- All aspects
5 Metrics used by Southwest
On Time Performance & Market Share performance-Comparison of other airlines, integration of new policies
The use of conflicts to build relationships-structure of organizational methods for all employees to ease situations
Problem Solving Communications
Safety-hazards, engine inspections, safety procedures
Creating Satisfied Customers
How each firm has addressed industry challenges
The airline markets are completely different now however several methods are used to improve quality, time, and costs (Stalk, 1988). To meet the challenges, some firms have taken progressive measures in cutting their operations costs to market but still offering quality(Stalk, 1988). Though there haven’t been any immediate signs of Delta using any specific measures to address its challenges besides outsourcing and using Corporate Social Responsibility in response to maintaining inner complex situations, The demand of supply chain has made an impact that technology enables collaborative relationships, end-to-end visibility, responsiveness, and fact-based decision making to maximize value and mitigate risk ( Abc news, n.d)
On the other hand Southwest has minimized its routes, creating policies to ensure their customers would be indeed safe and protected in the case of an emergency, they have merged with other airlines to avoid delays and losing more customers. Practices in the airline industry were to improve quality and control. Case studies have shown that the use of lean manufacturing in the airlines empowers employees to make improvements, reduce cycle times, reduce work in process levels, and eliminate non-value added process steps (USAtoday, 2012). The results of this is the reduction in set up time, the ability to cross train employees while they remain motivated, and taking control over production.
Conclusion
From a standpoint of analyzing critical situations, customer satisfaction, and maintaining quicker solutions to improvement, southwest airline is the better firm that ranks at #3. Some of its dedicated passengers have decided to depart while existing changes took place but sales have begun to rise again from previous years. I think it is extremely important that airlines have strategic goals and boundaries for their employers. Creating incentives to let their employees know they are valued determines the outcome of their work ethic. Providing flexibility, shift trading opportunities are important
In particular, strategic implications for business and travel industry revolutionized practices and processes, travel and tourism industries are or would be better off when using ICT, Information Communication Technology to provide powerful tools that promotes strength and competitiveness in the organization.
References
Stalk, George, Time-The Next Source of Competitive Advantage, Harvard Business Review,
Boston, MA, July-August, 1988.
Information retrieved from
http://www.usatoday.com
www.Accenture.com
