Qantas Operations Case Study Flashcards
Strategic role of operations
Cost leadership
Product differentiation
Most organisational activity comprises the day to day activities within the operation function.
Cost leadership:
Qantas has minimised costs by over $5 billion in the last 10 years through:
- Economies of scale – Oneworld Alliance share route networks and processes, reducing costs by sharing them
- Standardisation – less destinations leads to less variation in operations
- Technology – capital-labour substitution saving on labour costs
- Waste minimisation – electricity, water and waste reduction
Product differentiation:
- Australia’s largest airline with the most comprehensive domestic and international coverage
- Jetstar is a budget option whilst Qantas has more premiums like meals and inflight entertainment
- Variety of classes offered (first, business, premium economy and economy internationally; business and economy domestically)
- Comfort based features like skybeds, lounges and online check-in and self service
Interdependence with other KBFs
Human resources
Finance
Marketing
Human resources:
- Staff recruitment for all operations
- Staff training and development
- Staff retention through rewards
Finance:
- Monitors, records and analyses financial transactions
- Provides regular, periodic reports on financial performance
- Acquire funds for purchasing and leasing planes
Marketing:
- Provide market requirements for all operations
Globalisation
- Qantas have launched new destinations and markets overseas allowing for it to become an internationally recognised brand
- Jetstar have also gone global with budget options in Asia
- Cost minimisation locally to be more competitive overseas
Technology
- Newer planes which are more efficient with greater capacity
- Inflight entertainment systems
- Increased training to upgrade to new technologies
Quality expectations
- Self-service check-in
- Q bag tags (permanent tags which can be used for all domestic Qantas flights)
- Newer planes
- Specially designed menus
Cost-based competition
- Outsourcing
- HR practice reform
- Capital-labour substitution
- Online bookings
Government policies
- Economic activity affects demand
- Fair Work Act increased labour costs
- Federal Government has been increasing access to Qantas protected international routes
- Environmental policy
Legal regulation (operations)
- Subject to the Civil Aviation Authority
- Required to hold operating licences
- Federal security regulations in response to terrorism
- State government labour regulations
Environmental sustainability
- Purchasing new, environmentally sensitive aircraft
- Fuel conservation
- More fuel efficient fleet
- Commercial flights powered by sustainable biofuels
Corporate social responsibility
- Health surveillance program continually monitors workplace conditions and helps employees achieve a healthy work-life balance
- Focus on employing Indigenous Australians increasing diversity
- Donations of millions to charitable causes
- Energy and water conservation, recycling, reduced carbon emissions
Inputs
- Transformed resources
- Transforming resources
Transformed resources: Materials: - Fossil fuels - Timber - Oil - Water - Food - Stationery - Computers Information: - Statistics - Market/industry reports - Previous performance data - Customer bookings/transactions Customers: - Moved from one place to another Transforming resources: Labour: - Assemble the inputs - Operate/maintain machinery and equipment - Fulfil sales - Distribute output - Deal with customers Capital: - Terminal buildings and contents - Maintenance facilities - Spare parts holdings - Aircraft - Computers - Motor vehicles - Can co-share with other airlines for mutual benefit
Transformation process
- Volume, variety, variation and visibility
- Sequencing and scheduling
- Technology, task design and process layout
- Monitoring, control and improvement
Volume, variety, variation and visibility:
- Volume – Process millions of people worldwide, must be able to adapt to change
- Variety – Produce a variety of domestic and international services so must be flexible
- Variation – Predictable increases in demand for school holidays and special events; events like 9/11 and Covid saw sharp falls in bookings
- Visibility – High as customer contact exists throughout the process
Sequencing and scheduling:
- Products must be out as fast as possible
- Planes must be cleaned and checked before take off
- Complex scheduling software is used to automate flight scheduling, helping to schedule the time between flights, repairs and downtime
Technology, task design and process layout:
- Technology – Capital-labour substitution
- Task design – Breakdown of individual tasks, analysis and assessment by HR
- Process layout – Occur in the terminal, hangar and maintenance area; machines and equipment are grouped by function
Monitoring, control and improvement:
- Qantas detect discrepancies between planned and actual activity, taking corrective action if necessary and then intervening to impose new plans
Outputs
- Customer service
- Warranties
- Net promoter score is a key measure of customer service
- Qantas Closed Loop Feedback Program enables direct feedback from frequent flyers
Performance objectives
- Quality
- Speed
- Dependability
- Flexibility
- Customisation
- Cost
Quality: - Transactions must be accurate - Aircraft is clean and tidy - Staff are courteous, helpful and friendly Speed: - Customers are processed swiftly - Online bookings Dependability: - Reliable and consistent service - Departures and arrivals are on-time Flexibility: - Must respond to market changes - Jetstar demonstrates flexibility in product and a response to low cost competition Customisation: - Oneworld Alliance membership offers worldwide services - Jetstar’s low costs - Different seating classes Cost: - Processes must be efficient - Measured through productivity
New product design and development
- Qantas has launched 4 new airlines in the Asia-Pacific region to take advantage of growth
- Qantas constantly updates services and processes to remain competitive
Supply chain management: Logistics E-commerce Sourcing Global sourcing
Logistics:
- Qantas ensure they have all physical inputs in the right places at the right time
E-commerce:
- Qantas have reduced manual processes
- Real-time information can be provided to customers
Sourcing:
- Quantity and quality requirement of every input must be forecasted
- Suppliers must be assessed
Global sourcing:
- Qantas sources pilots from NZ and cabin crew from Asia on lower wages
- Engine maintenance is carried out in Malaysia on a cost-benefit basis
Outsourcing
Qantas outsource nearly all IT operations and some call centres, flight attendance and maintenance
+ Saving in cost through labour and capital outlay
+ Increased dependability
+ Access to higher level skills
+ Increased flexibility
+ Saving in management
– Dependency
– Loss of control and security
– Quality
– Industrial problems can arise from downsizing
– Public image damage
Technology
- Leading edge
- Established
- Airline technology is very complex and continually being advanced and updated
- Qantas were one of the first businesses to place advanced orders on the A380 when it came out, however they made sure to not receive the first ones
Inventory management
Airbus Managed Inventory enables automatic replenishment of low-value inventory and non-repairable parts for Airbus
This allows Airbus to reduce costs whilst avoiding excessive inventory
Quality management
- Quality control
- Quality assurance
- Quality improvement
Qantas market themselves as having a high quality, perfect safety record with full service whilst Jetstar trade quality for price
Quality control:
- Inspections are periodically carried out to make sure processes are meeting standards
- If needed, management intervenes and takes corrective action
Quality assurance:
- Qantas monitors the level of quality at all stages by measuring against standards
Quality improvement:
- Qantas invites staff to give ideas and suggestions to improve quality
- Attempts to improve quality are both central and strategic within the airline
Overcoming resistance to change
- Qantas have spent billions in upgrading equipment and technology as well as making staff redundant and retraining
- Also have to overcome unenthusiastic management and strikes due to job changes
Global factors
- Global sourcing
- Economies of scale
- Scanning and learning
- Research and development
Global sourcing:
- Asian cabin pilots and NZ pilots have been employed to cut costs
Economies of scale:
- A380 is maintained in Malaysia
- Oneworld Alliance with global airlines helps share outputs, leading to a lower cost for each business
Scanning and learning:
- Qantas finds, learns from and tests large data volumes so systems will suit future customer bases
Research and development:
- Continual improvement of airport processes
- Boeing and Airbus develop the aircrafts
