Etihad_Airways_Case_Study_Supply_Chain_M.pptx

R
A CASE STUDY OF SUPPLY CHAIN MANAGEMENT
TEAM MEMBERS
1. Bader Ahmed Al Ali – Introduction to Case Study
2. Muhammad Usama Abid – Supply Chain Practice, Key Elements & Role
3. Hedi Arboun – Operational Practice and Strategy
4. Iman Kamil – Key Issues, Recommendations and Roadmap
INTRODUCTION
OF CASE STUDY
INTRODUCTION
• One of the youngest and fast growing airlines in the world
• Based in Abu Dhabi, United Arab Emirates
• First National Flights: Al Ain (Nov 3rd, 2003)
• First Commercial Flight: Beirut (Nov 12th, 2003)
• Covering 103 destinations
• Across 63 countries
• Currently having 150 office Locations
BACKGROUND
• In July 2003 established as the national airline of UAE by Royal (Amiri)
Decree issued by Shiekh Khalifa bin Zayed Al Bahyan
• National Carrier of UAE
• Headquarter in the Capital of UAE, Abu Dhabi
• Started Operation in Nov 2003
MILESTONES
YEAR MILESTONES
2003 Launching - 12th November 2003
2008 The world's largest aircraft order at the Farnborough Air show, 205 aircraft, worth an estimated $43 billion at list prices
2009 Rolls-Royce, Engine Alliance and International Aero Engines.
2011
- Reached net profitability of S14 million
- 29% stake in air berlin, Europe's sixth largest airline.
2012 Winning ATW’s Passenger Service Award
2013
Developed from an airline to a wide ranging aviation and travel business. (By building 42 code share relationships, minority
equity stakes in four airlines and creating the largest network of any Middle East carrier.)
2014
- ATW Airline Market Leadership Award
- Receiving the aircraft # 100 &,101 airbus 321
- Enrollment of 3,000 member to web-based loyalty program
ORGANIZATIONAL STRUCTURE
Organizational Structure includes:
• Board of Directors
• Chief Executive officers
• Management Layer
BOARD OF DIRECTORS
Chief Executive Officer
James Hogan
Chief Financial Officer
James Rigney
Chief Commercial Officer
Peter Baumgartner
Chief Operations Officer
Richard Hill
Chief Strategy & Planning Officer
Kevin Knight
Chief People & Performance Officer
Ray Gammell
Legal Counsel
Jim Callaghan
BUSINESS MODEL
SUPPLY CHAIN
PRACTISE, KEY
ELEMENTS AND ITS
ROLE
WHAT IS INCLUDED IN ITS SUPPLY?
Main Product (Service)
• Air Transportation of Passengers
Other Products (Services)
• Etihad Ground Services
• Etihad Cargo
• Etihad Holidays
• Etihad Flight College
AIR TRANSPORTATION
• 63 Countries
• 103 Destinations
ETIHAD CARGO
 Dangerous goods
 Mail
 Cold Chain
 Sky stables
 Human Remains
ETIHAD GROUND SERVICES
Etihad Airways acquired 3 subsidiaries of ADAC in 2013
 Abu Dhabi Cargo Company (ADCC)
 Abu Dhabi In-Flight Catering (ADIFC)
 Abu Dhabi Airport Services (ADAS-Ground handling Business)
Now, it created its own Subsidiary
 Etihad Airport Services
 Catering (Food, Beverages, Duty Free, Cleaning etc)
 Ramp (Luggage Handling, catering trucks, passenger stairs, and
wheelchairs for passengers, refueling, ground power)
 Cabin (Passengers assistance and in flight)
ETIHAD HOLIDAYS
Etihad holidays is yet another product servicing its customers
throughout the destinations including:
 Travel Packages
 Hotels
 Cab Services
 Cruises
 Events (One good example is Etihad AD Grand Prix-Formula 1)
ETIHAD FLIGHT COLLEGE
• Etihad Airways is in the process of establishing Etihad Flight College, a
world-class flight training facility in the United Arab Emirates for Emirati
and international cadet pilots
• Based in Al Ain, Etihad Flight College will provide fixed wing flight training
for ab-initio cadets, for the Airline Transport Pilot License (ATPL), Multi
crew Pilot Licence (MPL) etc
KEY ELEMENTS-SCM
Etihad Airways Important Supply Chain elements which help executing its
Supply Chain Strategy are:
 Facilities
 Information
 Sourcing
 Pricing
 Inventory
 Transportation
Etihad_Airways_Case_Study_Supply_Chain_M.pptx
OPERATIONAL
STRATEGY
OPERATIONAL STRATEGY POLICIES
• Operational strategy involves establishment of policies and working
practices in order to execute the crucial processes and operations of the
company including effective utilization of resources and personals.
• The basic purpose of operational strategy is to meet the demands of
market and goals and objectives of the company.
SUPPLY NETWORK STRATEGY
• Operations of a company are not complete without successful supply
network.
• Supply network refers to the degree to which it is determined whether
operations are being conducted in-house or out sourced
• Supply network is web of interdependencies between key parties who
help to streamline the operations.
PROCUREMENT AND SUPPLIES
FUEL
• Procurement of fuel is one of the most important functions of supply
chain management
• Etihad Airways is working on project of streamlining the supply of bio fuel
in UAE
• This will result in Administrating smooth and steady operations of airline.
PROCUREMENT AND SUPPLIES
In-flight
• Motivation of passengers
• Entertainment (games, customized IPad)
• On board Shopping
PROCUREMENT AND SUPPLIES
Maintenance Spare Parts
• The purpose is to ensure no delay in flight shortages
• Periodic meetings with contractors and subcontractors in order to ensure
timely availability of material.
• For purchasing of Etihad consumables, effective monitoring and control
system is placed in action by the airline company
PROCUREMENT AND SUPPLIES
Fleet Capacity
• Capacity deals with size of operations in meeting demands of the
customers or clients
• The company is adding more planes to its portfolio in 2014
• Number of aircraft by Brands
Aircraft Family A319-100 A320-200 A321-200 A330-200 A330-300 A340-500 A340-600 A380
Airbus 2 23 3 18 6 4 7 1
Aircraft Family B777-200LR B777-300ER B777-300ERM B777-300ERS B787
Boeing 5 6 2 1
PROCUREMENT AND SUPPLIES
Fleet Capacity
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
6
12
22
37
42
52
57
64
70
89
Number of aircraft (at year end)
Number of aircraft (at year end)
PROCUREMENT AND SUPPLIES
Fleet Capacity
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
1,761 2,116
3,468
5,563
7,058
7,828 7,855
9,038
10,656
13,535
Number of employees
Number of employees
PROCUREMENT AND SUPPLIES
Fleet Capacity
0 0.3
1
2.8
4.6
6 6.3
7.1
8.3
10.2
11.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Number of passengers (m)
Number of passengers (m)
FACILITIES
• Facilities involve focus of operational resources including size and location
• Improvement of ground services at airport facilities, and waiting lounges
• Warehouses and facilities closed to airport to secure smooth supply of
requirements
• Etihad is in the phase of expanding its network with other airlines and this
is also one of the most important strategies regarding operations
COMPETITIVE OPERATIONAL STRATEGY
Airline Contracts
Aer Lingus Virgin
Australia
Jet Airways Air Berlin Darwin Airline Air Seychelles Air Serbia Alitalia
4%
23% 24%
29%
34%
40%
49% 49%
Etihad Equity Alliance
Etihad Equity Alliance
PROCESS TECHNOLOGY
• Technology is being used in each and every part of operations
• SAP implementation
• Etihad Training College
INNOVATION
• Etihad is establishing technology centers in UAE in order to foster innovation
and creativity
• Flying Nanny Service in which specially-trained flight attendants provide
expert child care
• Customized IPads onboard
• A state-of-the-art chair “GoSleep “that converts into a sleeping pod innovated
product customized to Abu Dhabi International Airport specifications
CONTINUOUS IMPROVEMENT
• Improve performance and upgrade systems that deliver ease and quality.
• Initiative of supporting bio fuel supply chain in UAE
KEY ISSUES,
ROADMAPS AND
RECOMMENDATIONS
KEY ISSUES
KEY
ISSUES
FUEL COST
Fuel represent the highest cost of aviation operations.
INFRASTRUCTURE
Size of hub ,types of facilities, systems & implemented Tech. are backbone of
the growth of any airline.
OPERATIONAL DIFFICULTIES
Due to Governmental Regulations & Airports policies.
WORK FORCE
Shortage in domestic skills & professionals.
UNIQUE BUSINESS MODEL
Focus on stakes acquisitions & codeshare agreements.
ROADMAP
Vision
“Become one of the main legacy carriers around the world.”
Strategy
“Expand globally by adding largest possible number of destinations.”
Next Step: India market 24% stake of Jet Air & Canadian market
Subsequent Step: South American market
RECOMMENDATIONS
By considering several factors :
• The competition globally and within the region
• The strategic location as the midway between Asia, Europe & Africa .
• having strong economy and governmental encouragement for the
aviation industry compared with other governments that burdening its
airlines with high taxes and limited infrastructure investments.
• Fuel & headcount are the most highest cost elements within airline
business ( around 60% of cost).
RECOMMENDATIONS
We can advise some recommendations to enhance and reinforce Etihad
future success:
• Optimize operation costs by developing long term agreements with
ADNOC to trade Etihad services for a special fuel prices
• Withdraw gradually from small share investments and focus on the
expansion of distinctive and innovative logistics’ services.
• Invest in the development of local and regional talents to manage and run
various sectors of aviation and its associated industries.
CONCLUSION
• The operations of Etihad airline are widespread across multiple countries
of the world
• Etihad airline has state of the art supply chain management system that is
based upon collaborative efforts of the company with its key stakeholders
and partners
• Etihad Airways is a Hybrid Business model whereby it is responsive for its
demand and its effective for needs of its customers
• Finally, supply network is one of the most of most important role playing
factors that Etihad utilizes in order to create value for passengers.
Q&A (please come forward and enlighten us …)
ANY QUESTIONS?
(In case the audience requires deeper knowledge into the topics, please feel
free to reach us)
Thank you !
Bibliography
• Walker, J., Kelly, P. T., & Beckert, L. (2010). Airline policies for passengers with obstructive sleep apnoea who
require in‐flight continuous positive airways pressure. Respirology, 15(3), 556-561.
• Balakrishnan, M. S., Jayashree, P., & Michael, I. (2011). Etihad: contributing to the UAE vision through
Emiratisation.
• Abeyratne, R. (2008). Civil Aviation in the United Arab Emirates-Some Legal and Commercial Perspectives. J.
Air L. & Com., 73, 3.
• Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future research. Journal
of management, 37(4), 1019-1042.
• Chesbrough, H. (2010). Business model innovation: opportunities and barriers.Long range planning, 43(2),
354-363.
• Chen, C. T., Lin, C. T., & Huang, S. F. (2006). A fuzzy approach for supplier evaluation and selection in supply
chain management. International journal of production economics, 102(2), 289-301.
• Cooper, M. C., Lambert, D. M., & Pagh, J. D. (1997). Supply chain management: more than a new name for
logistics. International Journal of Logistics Management, The, 8(1), 1-14.
• Lee, H. L., & Billington, C. (1992). Managing supply chain inventory: pitfalls and opportunities. Sloan
management review, 33(3).
• Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D., & Zacharia, Z. G. (2001). Defining
supply chain management. Journal of Business logistics, 22(2), 1-25.
• Tan, K. C. (2001). A framework of supply chain management literature.European Journal of Purchasing & Supply
Management, 7(1), 39-48.
• Stewart, G. (1997). Supply-chain operations reference model (SCOR): the first cross-industry framework for integrated supply-
chain management. Logistics information management, 10(2), 62-67.
• Lambert, D. M., Cooper, M. C., & Pagh, J. D. (1998). Supply chain management: implementation issues and research
opportunities. International Journal of Logistics Management, The, 9(2), 1-20.
• Balsmeier, P. W., & Voisin, W. J. (1996). Supply chain management: a time-based strategy. Industrial Management, 38(5), 24-27.
• Lambert, D. M., & Cooper, M. C. (2000). Issues in supply chain management.Industrial marketing management, 29(1), 65-83.
• Tan, K. C., Kannan, V. R., Handfield, R. B., & Ghosh, S. (1999). Supply chain management: an empirical study of its impact on
performance. International Journal of Operations & Production Management, 19(10), 1034-1052.
• Beamon, B. M. (1999). Measuring supply chain performance. International Journal of Operations & Production
Management, 19(3), 275-292.
• Christopher, M., & Towill, D. R. (2000). Supply chain migration from lean and functional to agile and customised. Supply Chain
Management: An International Journal, 5(4), 206-213.
• New, S. J. (1997). The scope of supply chain management research. Supply Chain Management: An International Journal, 2(1),
15-22.
• Hobbs, J. E. (1996). A transaction cost approach to supply chain management.Supply Chain Management: An International
Journal, 1(2), 15-27.
• Chan, F. T., & Qi, H. J. (2003). An innovative performance measurement method for supply chain management. Supply Chain
Management: An International Journal, 8(3), 209-223.
• Jüttner, U., Peck, H., & Christopher, M. (2003). Supply chain risk management: outlining an agenda for future
research. International Journal of Logistics: Research and Applications, 6(4), 197-210.
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Etihad_Airways_Case_Study_Supply_Chain_M.pptx

  • 1. A CASE STUDY OF SUPPLY CHAIN MANAGEMENT
  • 2. TEAM MEMBERS 1. Bader Ahmed Al Ali – Introduction to Case Study 2. Muhammad Usama Abid – Supply Chain Practice, Key Elements & Role 3. Hedi Arboun – Operational Practice and Strategy 4. Iman Kamil – Key Issues, Recommendations and Roadmap
  • 4. INTRODUCTION • One of the youngest and fast growing airlines in the world • Based in Abu Dhabi, United Arab Emirates • First National Flights: Al Ain (Nov 3rd, 2003) • First Commercial Flight: Beirut (Nov 12th, 2003) • Covering 103 destinations • Across 63 countries • Currently having 150 office Locations
  • 5. BACKGROUND • In July 2003 established as the national airline of UAE by Royal (Amiri) Decree issued by Shiekh Khalifa bin Zayed Al Bahyan • National Carrier of UAE • Headquarter in the Capital of UAE, Abu Dhabi • Started Operation in Nov 2003
  • 6. MILESTONES YEAR MILESTONES 2003 Launching - 12th November 2003 2008 The world's largest aircraft order at the Farnborough Air show, 205 aircraft, worth an estimated $43 billion at list prices 2009 Rolls-Royce, Engine Alliance and International Aero Engines. 2011 - Reached net profitability of S14 million - 29% stake in air berlin, Europe's sixth largest airline. 2012 Winning ATW’s Passenger Service Award 2013 Developed from an airline to a wide ranging aviation and travel business. (By building 42 code share relationships, minority equity stakes in four airlines and creating the largest network of any Middle East carrier.) 2014 - ATW Airline Market Leadership Award - Receiving the aircraft # 100 &,101 airbus 321 - Enrollment of 3,000 member to web-based loyalty program
  • 7. ORGANIZATIONAL STRUCTURE Organizational Structure includes: • Board of Directors • Chief Executive officers • Management Layer BOARD OF DIRECTORS Chief Executive Officer James Hogan Chief Financial Officer James Rigney Chief Commercial Officer Peter Baumgartner Chief Operations Officer Richard Hill Chief Strategy & Planning Officer Kevin Knight Chief People & Performance Officer Ray Gammell Legal Counsel Jim Callaghan
  • 10. WHAT IS INCLUDED IN ITS SUPPLY? Main Product (Service) • Air Transportation of Passengers Other Products (Services) • Etihad Ground Services • Etihad Cargo • Etihad Holidays • Etihad Flight College
  • 11. AIR TRANSPORTATION • 63 Countries • 103 Destinations
  • 12. ETIHAD CARGO  Dangerous goods  Mail  Cold Chain  Sky stables  Human Remains
  • 13. ETIHAD GROUND SERVICES Etihad Airways acquired 3 subsidiaries of ADAC in 2013  Abu Dhabi Cargo Company (ADCC)  Abu Dhabi In-Flight Catering (ADIFC)  Abu Dhabi Airport Services (ADAS-Ground handling Business) Now, it created its own Subsidiary  Etihad Airport Services  Catering (Food, Beverages, Duty Free, Cleaning etc)  Ramp (Luggage Handling, catering trucks, passenger stairs, and wheelchairs for passengers, refueling, ground power)  Cabin (Passengers assistance and in flight)
  • 14. ETIHAD HOLIDAYS Etihad holidays is yet another product servicing its customers throughout the destinations including:  Travel Packages  Hotels  Cab Services  Cruises  Events (One good example is Etihad AD Grand Prix-Formula 1)
  • 15. ETIHAD FLIGHT COLLEGE • Etihad Airways is in the process of establishing Etihad Flight College, a world-class flight training facility in the United Arab Emirates for Emirati and international cadet pilots • Based in Al Ain, Etihad Flight College will provide fixed wing flight training for ab-initio cadets, for the Airline Transport Pilot License (ATPL), Multi crew Pilot Licence (MPL) etc
  • 16. KEY ELEMENTS-SCM Etihad Airways Important Supply Chain elements which help executing its Supply Chain Strategy are:  Facilities  Information  Sourcing  Pricing  Inventory  Transportation
  • 19. OPERATIONAL STRATEGY POLICIES • Operational strategy involves establishment of policies and working practices in order to execute the crucial processes and operations of the company including effective utilization of resources and personals. • The basic purpose of operational strategy is to meet the demands of market and goals and objectives of the company.
  • 20. SUPPLY NETWORK STRATEGY • Operations of a company are not complete without successful supply network. • Supply network refers to the degree to which it is determined whether operations are being conducted in-house or out sourced • Supply network is web of interdependencies between key parties who help to streamline the operations.
  • 21. PROCUREMENT AND SUPPLIES FUEL • Procurement of fuel is one of the most important functions of supply chain management • Etihad Airways is working on project of streamlining the supply of bio fuel in UAE • This will result in Administrating smooth and steady operations of airline.
  • 22. PROCUREMENT AND SUPPLIES In-flight • Motivation of passengers • Entertainment (games, customized IPad) • On board Shopping
  • 23. PROCUREMENT AND SUPPLIES Maintenance Spare Parts • The purpose is to ensure no delay in flight shortages • Periodic meetings with contractors and subcontractors in order to ensure timely availability of material. • For purchasing of Etihad consumables, effective monitoring and control system is placed in action by the airline company
  • 24. PROCUREMENT AND SUPPLIES Fleet Capacity • Capacity deals with size of operations in meeting demands of the customers or clients • The company is adding more planes to its portfolio in 2014 • Number of aircraft by Brands Aircraft Family A319-100 A320-200 A321-200 A330-200 A330-300 A340-500 A340-600 A380 Airbus 2 23 3 18 6 4 7 1 Aircraft Family B777-200LR B777-300ER B777-300ERM B777-300ERS B787 Boeing 5 6 2 1
  • 25. PROCUREMENT AND SUPPLIES Fleet Capacity 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6 12 22 37 42 52 57 64 70 89 Number of aircraft (at year end) Number of aircraft (at year end)
  • 26. PROCUREMENT AND SUPPLIES Fleet Capacity 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1,761 2,116 3,468 5,563 7,058 7,828 7,855 9,038 10,656 13,535 Number of employees Number of employees
  • 27. PROCUREMENT AND SUPPLIES Fleet Capacity 0 0.3 1 2.8 4.6 6 6.3 7.1 8.3 10.2 11.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Number of passengers (m) Number of passengers (m)
  • 28. FACILITIES • Facilities involve focus of operational resources including size and location • Improvement of ground services at airport facilities, and waiting lounges • Warehouses and facilities closed to airport to secure smooth supply of requirements • Etihad is in the phase of expanding its network with other airlines and this is also one of the most important strategies regarding operations
  • 29. COMPETITIVE OPERATIONAL STRATEGY Airline Contracts Aer Lingus Virgin Australia Jet Airways Air Berlin Darwin Airline Air Seychelles Air Serbia Alitalia 4% 23% 24% 29% 34% 40% 49% 49% Etihad Equity Alliance Etihad Equity Alliance
  • 30. PROCESS TECHNOLOGY • Technology is being used in each and every part of operations • SAP implementation • Etihad Training College
  • 31. INNOVATION • Etihad is establishing technology centers in UAE in order to foster innovation and creativity • Flying Nanny Service in which specially-trained flight attendants provide expert child care • Customized IPads onboard • A state-of-the-art chair “GoSleep “that converts into a sleeping pod innovated product customized to Abu Dhabi International Airport specifications
  • 32. CONTINUOUS IMPROVEMENT • Improve performance and upgrade systems that deliver ease and quality. • Initiative of supporting bio fuel supply chain in UAE
  • 34. KEY ISSUES KEY ISSUES FUEL COST Fuel represent the highest cost of aviation operations. INFRASTRUCTURE Size of hub ,types of facilities, systems & implemented Tech. are backbone of the growth of any airline. OPERATIONAL DIFFICULTIES Due to Governmental Regulations & Airports policies. WORK FORCE Shortage in domestic skills & professionals. UNIQUE BUSINESS MODEL Focus on stakes acquisitions & codeshare agreements.
  • 35. ROADMAP Vision “Become one of the main legacy carriers around the world.” Strategy “Expand globally by adding largest possible number of destinations.” Next Step: India market 24% stake of Jet Air & Canadian market Subsequent Step: South American market
  • 36. RECOMMENDATIONS By considering several factors : • The competition globally and within the region • The strategic location as the midway between Asia, Europe & Africa . • having strong economy and governmental encouragement for the aviation industry compared with other governments that burdening its airlines with high taxes and limited infrastructure investments. • Fuel & headcount are the most highest cost elements within airline business ( around 60% of cost).
  • 37. RECOMMENDATIONS We can advise some recommendations to enhance and reinforce Etihad future success: • Optimize operation costs by developing long term agreements with ADNOC to trade Etihad services for a special fuel prices • Withdraw gradually from small share investments and focus on the expansion of distinctive and innovative logistics’ services. • Invest in the development of local and regional talents to manage and run various sectors of aviation and its associated industries.
  • 38. CONCLUSION • The operations of Etihad airline are widespread across multiple countries of the world • Etihad airline has state of the art supply chain management system that is based upon collaborative efforts of the company with its key stakeholders and partners • Etihad Airways is a Hybrid Business model whereby it is responsive for its demand and its effective for needs of its customers • Finally, supply network is one of the most of most important role playing factors that Etihad utilizes in order to create value for passengers.
  • 39. Q&A (please come forward and enlighten us …) ANY QUESTIONS? (In case the audience requires deeper knowledge into the topics, please feel free to reach us) Thank you !
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