What operations challenges are likely to be faced

Assignment Help Operation Management

Reference no: EM132305139

Begin your proposal with an explanation of how the approach to operations strategy will differ between the service side of Going and the manufacturing end, and what operations challenges are likely to be faced with each. Include specific examples.

Service Division

Mission Statement: Become the most successful provider of airline transport for the business traveler.

Marketing Slogan: "High society in the air"

Going, Inc.'s airline service has been losing business in regular service operations for 20 months now and is saddled with low performance in on-time delivery, baggage handling, and overall customer service. Several outside consultants have viewed these three areas for short-term fixes that could quickly improve the bottom line, but perhaps even more drastic steps are needed.

	Industry Avg	Going Inc. Avg.
On Time	83.91%	71.60%
Air Carrier	3.71%	9.82%
Weather	0.55%	2.62%
National
Aviation	5.01%	5.00%

Delay
Security
Delay	0.07%	1.20%
Aircraft
Arriving	3.50%	3.75%
Late
Cancelled	3.07%	6%
Diverted	0.18%	0.10%

Going's competitive strategy is now questioned by company executives because many previous business traveling customers are now seeking a less expensive air travel solution. Ten areas of operations strategy have been identified for study to gain a competitive advantage.

1. Service Design Strategy

a. Going, Inc. mainly serves long routes across the United States and international routes into Europe and Asia. It is also seeking new South America routes.
b. The company emphasizes in-flight service to its business and first-class passengers.
c. The company has been slow to adapt to the Internet, offering only general information about its airline on the company homepage.

2. Quality Management Strategy
a. The company has been content with average customer satisfaction rankings until the recent downturn in business.
b. The company concentrates its efforts toward the big budget frequent flyer and seeks to ensure top quality over other airlines in first and business class service. Numerous frequent flyer programs and marketing materials are sent to target customers.

3. Process and Capacity Strategy
a. The company owns many different commercial airplanes in its fleet-presently seven different models from two manufacturers (AirDyno and Cosnot).
b. Full meals are offered on all flights, and in-flight meal customization, designed to give the meal service a "Going, Inc. flair," is performed on each flight at the flight attendant stations. This includes folding napkins into the trademark Going, Inc. symbol, adding a Going, Inc. pen to the tray, and inserting a small Going, Inc. flag to the flower vase on each tray.

4. Location Strategy
a. Going, Inc. flies to all major cities and every state but rarely more than once per day (other than hub cities).
b. The company has a major hub in the East (JFK, New York), Central (O'Hare, Chicago), Mid-West (Denver) and West (LA) regions.

5. Layout Strategy
a. Going, Inc. gates are located at the best locations (closest to the terminal).
b. Going, Inc. boards its planes with first-class passengers and then by first-come, first-serve.

6. Human Resources, Job Design Strategy
a. The company does not have the best relationship with its unions. Minimal pay increases and hiring over the last 3 years has created a chasm between the two parties. Pilots frequently fly right up to their legal limit.
b. Employees have complained about lack of a voice and lack of up-to-date training programs.
c. After each flight, cleaning crews must go through each aisle, flight attendant station, and lavatory. Due to the number of models in the fleet, the cleaning cycle time is comparatively slow and contributes heavily to the poor air carrier delay performance.

7. Supply Chain Management
a. Going, Inc. has a very elongated supply chain, serving four major hubs in the US.
b. Going, Inc. has what can be termed has a lukewarm relationship with AirDyno, one of the company airplane suppliers, due to some past financial issues and a lack of support on AirDyno's part in supplying replacement parts.
c. The company maintains 4 models from AirDyno and 3 models from Cosnot, relying on each to supply replacement parts.

8. Inventory Management

a. The company's maintenance department must be exceptionally managed due to the number of models of planes in its fleet. Maintenance stations are located at each hub location, with a central larger facility at the airline's Denver hub.

9. Scheduling Strategy
a. Going, Inc. has 225 inland destinations and flies to every state in the US on its schedule on top of its Europe and Asia routes. For comparison, Southwest Airlines serves 53 airports in 27 US states.
b. Data demonstrates that Going, Inc. is higher than the industry standard in air carrier delay and connecting aircraft late arrival.

10. Maintenance and Reliability Strategy
a. Going, Inc. has experienced higher costs in maintenance, repair, and training in the last 2 years.
b. Going, Inc. airplanes are grounded or in repair and maintenance 18% more than the industry average.

Manufacturing Division

Mission Statement: Become the premier private custom airplane provider. Marketing Slogan: "Nothing comes close to Going"

Scenario- The manufacturing division of Going, Inc., unlike the airline service division, has been successful in its production and sale of small privately-owned airplanes. Going, Inc. airplanes have been wildly successful since its first plane rolled out from the assembly hanger 3 years ago. The public has taken to the marketing idea of flying a "branded" name of airplane. The concept for the planes has been to maintain a first class look and feel to the interior and exterior, in addition to providing "best in class" power/speed. As the company strategy was to build an expensive plane catering to a small market, it has been shocked by the increasing demand for its product. The company has been slow to react to the demand in forecasting, capacity, and process improvements.

Below are the key process measurements criteria that management wants to improve to meet sales demand.

Criteria	Going, Inc.	Bezna
Capacity	15 planes / month	100 planes / month
Quality Rating	Med	High
Flexibility Rating	Med	High
Order Accuracy Rating	Low	High
Speed (lead-time)	16 weeks	11 weeks
Mfg cost overhead	High	Low

Production numbers by month:

Month	2002	2003	2004
Jan	4	10	10
Feb	4	10	11
Mar	5	10	12
Apr	6	9	13
May	6	9	14
Jun	8	10	11
Jul	9	11	14
Aug	8	11	12
Sep	7	11	11
Oct	8	11	14
Nov	9	11	12
Dec	10	10	-

Sales order by month:

Month	2002	2003	2004
Jan	5	12	15
Feb	4	11	12
Mar	6	12	13
Apr	6	13	16
May	7	13	18
Jun	8	11	20
Jul	8	12	18
Aug	9	12	20
Sep	8	14	18
Oct	9	14	21
Nov	10	14	23
Dec	12	16	-

Note: Current backlog is at 100 planes.

1. Product Design Strategy
a. Going, Inc. airplanes are luxury-laden, patterned after high-end products such as Lexus, Eddie Bauer, and Sony.
b. Going, Inc. airplanes are built for speed and power to be "best in class" for small class planes that are designed for up to a 1,000-mile range.
c. Going, Inc. has three base models that can be fully customized to any customer request.

2. Quality Management Strategy
a. The company has been slowed in production by average quality, and rework/scrap is commonplace.
b. Currently, the company is emphasizing quality control by 100% inspection.

3. Process and Capacity Strategy
a. The company owns one assembly hanger that can build three planes simultaneously.
b. The company has estimated it can assemble a maximum of 15 airplanes per month with its current capacity and design.

4. Location Strategy
a. The company owns a large warehouse 20 miles from the assembly hanger.
b. The assembly hanger is located in Houston, Texas, and Corporate Headquarters is in New York City.

5. Layout Strategy
a. The Going, Inc. assembly hanger is rectangular and three planes can fit side-by- side for final assembly.
b. Due to the many customization options, minimum amounts of parts for all options are stored near the planes.

7. Supply Chain Management

a. Going, Inc. has maintained as much as possible a US-made-only parts requirement.
b. Going, Inc. has collaborated with many vendors to seek the lowest cost possible.

8. Inventory Management
a. The company has over 10,000 part numbers and three basic models of airplane in its software system.
b. Inventory is performed once a year.
c. The company does not have any vendor-owned inventory and tries to keep 30% of its stock in its assembly hanger.

9. Scheduling Strategy
a. Orders are taken on a first-come, first-serve basis.
b. A 16-week lead time is currently given to all customers, regardless of plane design.

10. Maintenance and Reliability Strategy
a. Going, Inc. has experienced costs in quality and owner warranties consistent with the industry average.

Reference no: EM132305139

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