Airbus 380 Case Study
Abstract & structure
This paper explores a given scenario – i.e. a case study about Airbus 380 – and goes on to discuss its issues of delays and limitations due to its current lack of systems and operational management within a technologically intensive set up. The Author argues that process intensive operations models are much more suited to large corporations, and so an organized process of innovation as a means to the end of achieve stable success, competitive advantage and growth is integral to entities like the Airbus 380 (Souder, 1987)
To this end the report will try to formulate a response to the following objectives
- Assessing the role systems and operations management at Airbus and its integration within the business.
- Evaluating the role of Soft Systems Methodology in analyzing and defining the business requirements of Airbus 380
- (a) Analyze the people, technology and organizational issues involved in improving the operations at Airbus through a SWOT analysis of its current and ongoing operations till date.
(b) Explaining how the Airbus information systems and operations management should be updated to support and improve their business efficiency.
The success of the Airbus 380 today is evident from the increasing demand for its aircraft design by many modern Airlines, despite the fact that as recently as three years ago in 2008, commentators who favoured Boeing 747 were very much pessimistic about the strategic success of the Airbus 380 in the Airline industry due to the lack of proper timing in releasing its product in the market. One commentator thus noted,
“In 2006 the 747 remain the largest and best known commercial airplane in service. Recent production delays for the new Airbus Model 380 double-decker aircraft have resulted in cancellations by early passenger and cargo airlines. Interestingly, these airlines are deciding to purchase advanced versions of the Boeing 747, an aircraft that first flew in 1969” (Robert et al, 2006:53).
Almost three years later, the Airbus 380 has outlived these predictions through a positive consumer response despite its delayed release. This is the story of a happy ending despite the fact of endless process, operations and system delays and conflicts which characterized the process of the birth, inception and conception of the Airbus 380. While the optimists would perhaps like to say “slow and steady” wins the race, due to Airbus’s recent triumph against Boeing 747 etc, there are more factors for concern and worry here especially those which caused this almost two decade long delay (Trott, 2004)
Objective 1: Assessing the role systems and operations management at Airbus and its integration within the business.
The most important thing to note while assessing the role systems and operations management at Airbus and its integration within the business is that the same is integral to the maintenance of strategic alignment within that organization (Tushman and Nadler, 1986). In the context of the Airbus 380, it can be recognized as the internal practices such as pay, promotion, staff selection, retention and organizational structure, which should positively support organizational efforts to change and innovate (Twiss, 1992). This kind of alignment is vital for the smooth operations of the technological and innovative information systems at Airbus 380 as it will provide an environment where change is actively supported (Rose, 2002)
Its business mission, objectives, and plans on the way information technology missions, objectives, and plans are supporting airbus 380’s success. This dimension of alignment refers to strategies, structure and planning methodologies which save time delays and maintain the integrity of the operations (ibid). Failure to take into account such strategic misalignment has in the past caused many system failures costing millions of dollars in revenues and losses of business goodwill, one example of which is Airbus itself which suffering to due to incompatible wiring difficulties (ibid). For example in 1999, the Siemens & the passport system prevented the passports from being issued on time in Britain. This was because new Siemens computer system was introduced without sufficient testing and staff training while at the same time new rule for all children under 16 when travelling abroad was first introduced too (Rose, 2002). This technological glitch caused hundreds of people to miss their holidays and the Home Office had to pay millions in compensation & staff overtime (ibid). Again in 2007 LA Airport flights were grounded as a software program hit systems at United Customs and Border Protection (USCBP) due to a network card failure, which persisted in sending the incorrect date out across the network instead of shutting down. As a consequence nobody could be allowed to leave or enter the US through the airport for eight hours and almost 17000 planes were grounded at Los Angeles International Airport.
Under the SSM model (discussed in detail below) it can be discerned that the Airbus 380 needs to work upon the creation of an effective supply chain as depicted in the CCOR, DCOR and SCOR models (below) to involve the identification and understanding of the partnerships, which need to be created to promote strategic alignment of the systems and operations at the innovation and manufacturing levels of the Airbus creation (Delbridge and Fisher, 2007). The case study clearly shows a deficit in the formation of aligned decision support systems that effectively give way to the understanding of the nature of the Airbus core competencies, delivery and performance measurement of each stage of the process integrity and quality management of the Aircraft. The company should for the future essentially be looking at a number of cycle time strategies for this new venture. Under the SCOR-DCOR-CCOR analysis it is interesting to note that Airbus 380 will have to, in order to improve its supply chain the management and operational and system effectiveness, focus upon the triangulation of reliability, responsiveness, flexibility and costs. Flexibility in production and the use of Just-in-time production facilities will actually bring in a better use of the current industrial good practices (ibid)
An Integrated Business Framework for Airbus
The author believes that through an integrated business framework (a mixing of DCOR – SCOR – CCOR strategies) the future of operations and systems can be effectively managed through the modernization of pull management strategies (Stewart, 1997)
The SCOR Level 1 model below shows boundaries between CCOR and DCOR Models in terms of the aircraft production and innovation patterns.
The Airbus SCOR model is based on the SSM can be used to build around a sound process strategy which focuses upon the use of strategic IT alignment on a larger scale which promotes the use of lean and Just-in-Time management strategies which will actually bring about real time visibility of production deficits and the elimination of wasteful processes (ibid).
Objective 2: Evaluating the role of Soft Systems Methodology in analyzing and defining the business requirements of Airbus 380
According to Price and John (2004:164 cited by Delbridge and Fisher, 2007:306)
“Systems thinking involves the realization that many of the things dealt with in day-to-day existence can be considered as systems (i.e. sets of entities related in some way, often organized or designed to achieve some purpose”
In the context of Airbus 380, the actual inculcation into the workforce of the skills required for Rich Picture Building (RBP) exercises may actually prove quite demanding due to the fact that such a strategy will push for enhanced creativity, managerial adaptability to changes as well as the competence required to cope with organizational politics (Ho and Sculli, 1994). Organizational politics tends to escalate on a macro scale even when culture and nationality /ideologies of the workers are at odds.
Delbridge and Fisher (2007:306) further suggest that:
“Soft” systems thinking does not assume that systems exist and sees human activity systems (HAS) as different from other types of natural systems; HAS are notional constructs which convey some purposeful human activity. Systems concepts are thus used as a means of learning in a “problem situation”, as an “epistemological device for thinking about some part of the world””
The diagram below, adopted form Ho and Sculli (1994) could actually explain the pathway which can be adopted by Airbus to control its systems and process through SSM and to regulate the glitches by improvising into problem solving strategies that promote taking into account the benefits of cross-functional systems. An alignment between Enterprise Resource Planning (ERP) systems which focus upon all of the transactions within an organization, including those to manufacture products and to extend this functionality to better Supply Chain Management (SCM) systems along with effective knowledge management to ensure all the vital knowledge about the business can be used across the enterprise.
As mentioned above in Objective one, the use of SCOR/CDOR/DCOR methodologies under the SSM will through the use of EDI applications and integrated order management strategies, which are also supplemented by integrated order financial management and activity based costing to be able to have in hand sound continuous replenishment programs and the management of remote sales. Once this methodology is adopted, the Airbus production processes will be manipulated through more technological harmony to ensure that the performance of the key supply processes is directly linked to cash flow and the credit line of the company (Tamas, 2000). This will bring about competitive business advantage for the Airbus enterprise through implementation into the technical operations and inventory management of the same. The objective will be to bring in the best information technology and enterprise resource planning practices to the linkages of the process to the way they support the measurements which are used to determine the success of their implementation.
(A): Analyze the people, technology and organizational issues involved in improving the operations at Airbus through a SWOT analysis of its current and ongoing operations till date.
(B): Explaining how the Airbus information systems and operations management should be updated to support and improve their business efficiency.
The following section will discuss the scope and approach of the people, technology and organizational issues involved in improving the operations at Airbus through a SWOT analysis of its current and ongoing operations till date as they pertain to the strategic business issues at hand. As a means to an end of facilitating this analysis, the author intends to utilize and evaluate the issues presented in the case study under discussion through the lens of business concepts and models pertaining to the meaning and metaphor of the principles underlying the best practices for systems and information management and their effective practical construction to the Airbus 380 case study.
Airbus’s constant quagmire till date has pertained to “control” that is whether to retain it or let go of it due to the complications created by the lack of coordination between the design and manufacturing processes. This was further heightened by the internal turmoil promoted by the disagreement caused by the fragmentation of design and processing between the French, British and German jurisdictions – (the wings and engines are made in north Wales and then have to be transported to France by barge because they are too large for any road. The ultimate improvisation of processes and the red tape caused a dip in the ultimate revenues and expected profits of the Airbus Company. In such a situation the Airbus company showed a very pragmatic subscription to a “freeze, observe and warm up” approach (Tamas, 2000). The approach does not entail large amounts of spending on new ventures but requires quite simply an acknowledgement of what is currently making the processes slowed down and unsuccessful (ibid).
Recommendations based on the SWOT analysis
It is possible to see from the SWOT analysis of Airbus 380 that the main strength of MIB has been until now its stability due to careful investment and the lack of any significant financial liabilities to date. The main issue is the composition and the current characteristics of the staff currently working at Airbus (Stock et al, 2000). There are differences of culture and the nature of technology and working mechanics, which are also a manifestation of this culture thus causing disintegration. For the same reason, during the production of something, which was nonetheless ultimately successful, Airbus was still lagging far behind its promised schedule (ibid).
Furthermore, the SWOT analysis (below) has brought to the fore the need for choosing between devolution and centralization of process and design functions especially when it comes to fundamental issues like process, operations and systems management. Essentially, Airbus’s future strategy should be more concerned with bringing about of and forming new external alliances, outsourcing and networking with the other organisations at a more horizontal and local level for the forming of good supply chain alliances. It must be remembered, of course, that the whole Airbus project was created by state bureaucrats using public money in the tradition of French ‘grands projets’, for ideological reasons (to create European harmony), and so is arguably much less efficient than a business-led approach as practiced by Boeing.
In terms of “people”, Airbus should be looking towards more co-operation between its internal organizational and people management factors, particularly its staff leadership skills, performance management and evaluation, compensation management, organizational structure and the current corporate culture within. It has been stated in the case study that the misalignment and mismanagement of the all these factors during the birth of the Airbus 380 led to delays in the project and to the ultimate resignations of Gustav Humbert, Airbus’ Chief executive, Noel Forgeard, EADS co-chief executive, and Charles Campion, the A380 programme manager.
The paradigms of technology and organization depict further that, while there was a definite presence of innovation in the inception of the idea of the Airbus 380, the concept itself being novel despite raging industrial competition from Boeing.
Trott and Hoecht (2004:387) define innovation as
“An information creation process that arises out of social interaction. In effect, the ﬁrm provides a structure within which the creative process is located. These interactions provide the opportunity for thoughts, potential ideas and views to be shared and exchanged”.
It follows from the above that there is a need to promote performance management within the people and processes at hand to cut down their cultural and technological incompatibilities made worse by the “geographical distance” which led to a distance in understanding and co-coordinating the dynamics of the Airbus operations and management.
Stephen and Roithmayr (1998:229) state and the author quotes,
“…We must shift from the traditional performance management focus of managing people- in effect, trying to gain some control over their activities to elicit suitable performance – to concentrating on managing the work context so that staff can be free to perform at their best.”
SITUATIONAL ANALYSIS – SWOT Analysis
• Well established Airbus brand name /Financially strong for current line or credit and liabilities
• Financially strong for embarking upon innovation many financial barriers.
· Innovative and creative enough to bring about future success if marketing and technology are handled properly
Airbus A380 suffers (2006) The different software did not match between the German system and French system. Difference in CATIA software version. The cables not being compatible without being changed caused the misalignment. This put the project two years back
Despite the delays Airbus 380 is all set to reap the awards of its innovation in the coming years, at a point when Boeing has to brave the same journey with the ongoing freeze in the global economy post the credit crisis.
• Strong competition from Boeing 747 and other major airplane brands.
Uncertain economic atmosphere fuelled by the economic recession
Qualified but scattered and fragmented staff whose incompatibility in management and strategies
Market/Competitor Audit: Porter’s 5 Forces Model (Jobber, 2007)
Rivalry within industry: There is a high level of rivalry within the current Airline industry in terms of the competition coming from established Airline companies like Boeing 747.
Entry Barriers: Delays, process and system glitches. Political factors have also had an impact here due to the fragmentation of operations between France and Germany.
Substitutes: Unlikely in the next one decade due to the amount of time innovation and process takes in formulating a new aircraft. Airbus also patented all of its processes and inventions as they occurred in the birth of the Airbus 380
Technological forces: Coming from rivals these will still take a lot of time to occur. Airbus can exploit the Airlines market for the next ten years quite easily then
The table below summarizes the areas of knowledge development and project management, which Airbus faced problems in during the last two decades.
|Integration Management||This has been Airbus’s main glitch and shortcoming.|
|Scope Management||Airbus should have strived towards a clear work breakdown structure and a clear decentralization of management within the firm|
|Time Management||Airbus lagged far behind in following its Gantt charts, project network diagrams, the strict application of which could have paved a clear way ahead for future business decision making.|
|Cost Management||Airbus has suffered badly in terms of it net present value, return of investment, payback analysis, earned value management of the marketing and staffing strategies undertaken since the inception of the Airbus 380|
|Quality Management||The succinct attention to quality metrics, checklists, and maturity models is the success of Airbus despite the delays|
|Human Resource Management||This aspect of Airbus is currently the weakest and this should now be supplemented by motivation, team building even across borders. Technical acumen may not be an issue but strategic misalignment between design and process surely is!|
For the future at Airbus, using the SSM, the use of technology will allow the management and control of the operations of loading, sequencing and scheduling the operations. Plan deviations from this main process of control should be monitored for flexibility. This is a commendable strategy of the current operation as an over-emphasis upon push systems inherent in the processes can cause exhaustion due to the over emphasis upon the goal setting and tracking metrics as they relate to the operations of the team. Inflexible production goals can cause a high rate of confusion and problems especially when based upon forecasts and rigid goals. The SSM management techniques, which should for the future become inherent in this company even at a short scale, now are compulsory for the further alignment of demand patterns with flexible supply strategies.
References & Bibliography
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