QANTAS AIRLINES
Qantas Airways is one of the most successful airlines around the globe, with a major focus on the Australian market, where it offers domestic flights. Since its foundation, its success has been largely attributed to its efficient supply chain model. This report has laid out some of the strategies that Qantas Airways has employed in its supply chain model to enable it to sail above its competitors in the market. The first strategy is the use of ethical outsourcing in its operations. Through ethical outsourcing, Qantas Airlines ensures that it only partners with companies that abide by its code of ethical standards. The second strategy is the use of sustainability and operations strategy. The operations strategy enables the company to give priority to sustainable practices like fuel efficiency that reduce emissions of toxic gases to the environment. This report has identified some of the challenges facing these strategies and come up with recommendations on how the company can mitigate the risks associated with the challenges.
Table of Contents
Sustainability and Operations strategy. 5
Supply Chain Recommendations. 8
Qantas Airways is the largest airline company in Australia offering transportation services for passengers through Qantas, its full-service carrier, and Jetstar, its low-cost carrier. The company operates on an international, regional, and domestic platforms. The company is classified under the passenger transportation industry within the consumer discretionary sector (Qantas, 2020). It is considered as the oldest airline in the world, with its foundation dating back to the 1920s when it began offering domestic flights. The company, however, began offering international flights in the year 1935, making it one of the best airlines in the globe. Since then, its success has been highly attributed to its seamless logistics and supply chain model.
In this report, I shall analyze and assess some of the logistics and supply chain strategies that Qantas Airlines has adopted, the challenges facing these strategies, and a raft of recommendations that Qantas Airlines can assume to mitigate the risks arising from the underlying challenges. Information from the progress report shall guide the development of this report. The progress report briefly outlines some of the strategies that Qantas Airways has applied to its supply chain scheme. This report shall, therefore, expound and deeply delve into these strategies to note the underlying challenges and hence guide the development of recommendations.
Supply Chain Strategies
Ethical Outsourcing
One of Qantas supply chain strategies is ethical sourcing. Given the unrelenting global pursuit of low-cost supply sources within the airline industry, ethical sourcing strategies certainly remain important to the agendas of any company involved in supply chain management. Collier and Evans (2017) define ethical outsourcing as the process of invoking positive social changes through a change in organizational behavior to suit the immediate society. The company has adopted a practical approach to handling any ethical risks within its supply chain. Whenever necessary, Qantas requests to have impartial due diligence for both its existing and new suppliers to make sure that the organizations from which it procures align with their ethical and compliance standards. The ethical outsourcing initiative of Qantas Airline has a raft of strategies. Some of the strategies within the ethical outsourcing scheme of Qantas Airlines include the verification of all its supplies, including fuel and spare parts. This verification entails determining the source of these products and the process that entails their manufacture or processing. Qantas also verifies all its suppliers to determine if the operation of these companies abide by the basic work principles like equal employment opportunity to all workers, prohibition of child labor, and upholding the rights of employees. Further still, the company provides detailed ethical conduct of its suppliers to the shareholders to ensure that the company only partners with companies that abide by the basic ethical conduct. Further on, in a bid to strengthen investor confidence that the company’s strategy matches its ethical standards, Qantas launched a supply chain assurance program (SCA) that formalizes risk governance all the way through its supply chain and focuses on critical areas. In case any material is identified, Qantas stops transacting with the supplier and subsequently does close monitoring of any mitigations put in place (Qantas, 2020).
Sustainability and Operations strategy
Another effective logistics and supply chain strategy that has been adopted by Qantas Airline is the sustainability and operations strategy. According to Collier and Evans (2017), operations strategy refers to a set of decisions within the supply chain value model that backs the implementation of crucial business strategies. The formulation of operations strategies involves the conversion of competitive priorities to operational priorities, ensuring that a business is able to meet its supply chain goals and objectives. Sustainability, on the other hand, refers to the adoption of practices and strategies that ensure environmental conservation at all costs. The supply chain practices of Qantas have often been centered on the sustainability of their airline business. The company has made considerable progress in reducing the environmental effects that their activities have. In its pursuit to become an industry leader in environmental sustainability, the company has managed to achieve fuel efficiency through the reduction of fuel consumption by approximately two percent on an annual basis (McGrath, Goss, & Brown, 2017). Through its operations strategy, the company has been able to give priority to sustainable practices like the reduction of fuel consumption by its aircraft hence reducing toxic emissions into the environment. This is evidenced by the implementation of its flight navigation technology that increases the fuel efficiency of its planes. One of the goals of the supply chain of Qantas Airways is to ensure customer satisfaction, provide seamless procurement process and efficient distribution of spare parts to all its seventy locations across the globe, for the maintenance of its aircraft. Through the operations strategy, the company has given priority to actions that lead to the achievement of these goals. Qantas has, therefore, adopted the use of its website to manage effectively with its customers and provide a variety of booking and payment options for flights. Further still, Qantas employs PTCs service parts management solution, which offers forecasting and optimization features that have lowered costs, boosted parts availability, and improved the company’s ability to predict possible changes within its network (Gregson, Hampson, & Junor, 2015).
Supply Chain Challenges
Collier and Evans (2017) posit that ethical outsourcing practices, despite being beneficial to companies, are always fraught with a raft of challenges. Therefore, the first challenge facing the logistics and supply chain model of Qantas Airline is the threats to its ethical outsourcing. Most of the organizations that face ethical outsourcing challenges are multinational corporations spread across various nations around the globe. Each country as its own unique policies regarding working conditions like wages, working hours, recruitment of workers, and the living conditions of workers. Ethical practices that define the production of goods also differ in various countries. Therefore, an ethical practice that may be acceptable in one country, maybe abhorred in another country (Lamba and Singh, 2017). The minimum labor requirements that Qantas Airlines has pegged on its suppliers may not be met in some countries due to the varying restrictions on the production of goods. Further still, the labor laws that Qantas Airways expects all its suppliers to comply with are not applicable to the labor restrictions of some countries. Equal employment opportunity laws, minimum wages, and the conditions of workers vary; hence the unified regulations set by Qantas become obsolete in some cases. Qantas, therefore, faces frustrations since its ethical outsourcing schemes fail to achieve their intended purpose of aiding the company in meeting its goals and objectives.
Another challenge facing Qantas Airlines arises from its sustainability and operations strategy. According to Meredith et al. (2019), more companies are embedding sustainable practices into their supply chain models to ensure that they directly contribute to the conservation of the environment. As the masses have become more educated on sustainable practices by companies, people are shying away from companies that fail to implement sustainable strategies. To ensure that it retains its market shares, Qantas, through the adoption of an operations strategy model, has been giving priority to activities than ensure the sustainability of the environment. Qantas’ major goal to ensure sustainability has been to reduce toxics emissions from its aircraft into the atmosphere. The company has therefore been regulating the consumption of fuel by its customers hence reducing toxic emissions to the atmosphere. The reduction of fuel consumption has not been practical to Qantas, owing to its ever-growing market share that raises the need for more flights. Attempts to reduce fuel consumption mean the reduction of flights that may end up turning away some of its esteemed clients. Qantas, therefore, faces a sustainability initiative that may reduce its market share and its revenue. The company, therefore, has to devise mechanisms of ensuring that its sustainability practices do not affect its revenue and market share.
Supply Chain Recommendations
As detailed in the previous sections of this report, multinational corporations whose markets stretch over multiple countries face challenges in the implementation of ethical outsourcing strategies. Qantas is one such company that serves many nations being one of the oldest and largest airlines in the world. According to Lamba and Singh (2017), a multinational company like Nike that has over five hundred contractors and suppliers spread across at least forty-one countries has been able to tackle the resulting ethical outsourcing schemes by the implementation of the Ethical Trading Initiative (ETI). The Ethical Trading Initiative, since its formation in the 1980s, has allowed organizations and companies to adopt unified ethical standards that are in congruence with the labor and good production laws of many countries (Jacobs et al., 2014). By being a member of the Ethical Training Initiative, Qantas Airways will have the potency of ensuring that its suppliers and partners abide by the ethical outsourcing regulations set by the ETI. The ETI eliminates the complications that arise from different regulations that vary from one country to another, making it completely difficult for companies to implement their ethical outsourcing strategies. Qantas, through ETI, shall ensure that its ethical outsourcing schemes are actualized and that the underlying benefits come along to the company.
One of the sustainable practices that Qantas Airways has incorporated into its logistics and supply chain model is the reduction of fuel consumption of its aircraft hence reducing emissions of toxic gases into the atmosphere. Qantas uses technology that increases the efficiency of engines and reducing the number of flights. Reducing the number of flights, however, reduces its market shares and revenue hence setting a major challenge. However, despite the challenges associated with reducing its fuel consumption, Qantas managed to lower the consumption of fuel by its aircraft by about two percent in the past year. To achieve a more efficient fuel reduction, Qantas Airways should employ drag reduction. Jacobs et al. (2014) argue that drag reduction is one of the surest ways through which air crafts can reduce the consumption of fuel. Drag reduction involves the lowering of the lift-to-drag ratio of the airplane. This makes the plane more aerodynamic hence lowering its weight and eventually, its fuel consumption. To ensure that the lift-to-drag ratio is completely lowered, all the planes attached to Qantas Airways should have winglets to lift air vertically hence reducing air flowing via the wings. Once little airflow through the wings, the ration reduces hence increasing the fuel efficiency of the aircraft. This mechanism will ensure that Qantas is able to lower its fuel consumption while maintaining its market share and revenue.
Conclusion
Qantas Airways, since its foundation in the 1920s, has been successful and is now amongst the best airlines in the world due to its logistics and supply chain models. Qantas has managed to embed sustainability into its supply chain cycle through the use of an operations strategy that has enabled it to give priority to activities that ensure the sustainability of the environment. The company has embarked on a fuel efficiency scheme in which it reduces fuel consumption by its aircraft by about two percent annually. However, the fuel reduction scheme has faced challenges due to the threats to the revenue and market share of the company. Qantas has also adopted ethical outsourcing to ensure that it is sensitive to the rights and needs of its partners. Going forward, the company should implement the recommendations detailed in this report to mitigate any challenges facing its strategies.
References
Collier, D., and Evans, J., 2017. OM 3. Cengage Learning.
Gregson, S., Hampson, I., & Junior, A. (2015). Supply chains, maintenance, and safety in the Australian airline industry. Journal of Industrial Relations. doi: https://doi.org/10.1177/0022185615582234
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Lamba, K., and Singh, S.P., 2017. Big data in operations and supply chain management: current trends and future perspectives. Production Planning & Control, 28(11-12), pp.877-890.
McGrath, J. F., Goss, K. F., & Brown, M. W. (2017). Aviation biofuel from integrated woody biomass in southern Australia. Wiley Interdisciplinary Reviews: Energy and Environment, 221.
Meredith, J.R., and Shafer, S.M., 2019. Operations and supply chain management for MBAs. Wiley.
Qantas. (2020). Annual Report. Retrieved from Qantas: www.qantas.com