The Troubled History of the Airbus A380 - Essay Example

The Troubled History of the Airbus A380 Executive Summary The given report presents an analysis and evaluation of systems and operations management practices at Airbus. In particular, the role of systems and operations management at the company is analyzed and evaluated in the context of labour, technology and organisational issues involved in potential improvement of the company’s operations and, consequently, performance. The report also defines the role of Soft Systems Methodology in analysing and determining the business requirements of Airbus. Soft Systems Methodology was used for analyzing and defining the business requirements of Airbus because this methodology is very appropriate in case of Airbus, where several different goals should be targeted. The results of the analysis show that the role of systems and operations management at Airbus is underestimated, and, as a result, not properly integrated into the business. This drawback, through poor organizational structure, inefficient HR practices, and weak organizational culture and leadership, has lead to lower productivity of the employees, and, as a result, financial losses of the company. Six Sigma or business process reengineering approaches to improving business processes have been identified as the most effective to be used by Airbus. At the same time, radical changes of BPR approach seem to be more appropriate - the faster Airbus introduces innovations, the faster organizational efficiency will improve. Communication channels and strategies, as well as leadership and organizational culture within the company should be improved in order for the changes to be effective. Technological advancements in form of management information, transaction processing systems, decision support Systems and Executive support systems should be used by the company in order to make its business processes more effective and efficient. Other recommendations presented include designing and implementing advanced time management, resource allocation, HR management and communication strategies and techniques. Introduction With the development of globalization and continuous changes in companies’ competitive environment, organizations should be constantly devoting more and more resources to improving their internal processes with the purpose of remaining competitive under the conditions of tough rivalry. In this context of systems and operations management is one of the keys to helping a company in its attempts to improve and strengthen its positions in the market. Therefore, the given report is an attempt to determine and analyze how in particular systems and operations management, as well as its integration within the business, works for supporting and improving organization’s business efficiency. Furthermore, the role of Soft Systems Methodology will be determined in relation to analysing and defining the business requirements. People, technology and organisational issues will be analyzed in order to define how in particular they contribute to the improvement of company’s operations. All the above presented purposes of the report will be drawn upon the example of an existing company with relatively long and comparatively successful history of operations – Airbus. Airbus’ practical experience and operations outputs will be used for analyzing and making recommendations regarding the effectiveness of the company’s systems and operations management. Operations management itself, according to Slack, Chambers and Johnston (2010), is a set of activities aimed at effective management of the resources needed for production and delivery of services and products. Information systems, in their turn, are aimed at gathering, processing, storing and distributing data required for making decisions and controlling an organization (Laudon and Laudon, 2007). As such, information systems are to optimize the working processes within the organization by means of structuring data and automating certain processes for them to become more effective. The role of systems and operations management at Airbus and its integration within the business. As Wild (2002) outlines the major task of operations management is to effectively use physical resources – materials, machines and labour. In the case of Airbus the operations systems involved are those of manufacturing, transport, supply and service. Furthermore, the major problem of the company can be defined as lack of proper management of the manufacturing system. Therefore, this particular area of organization’s functioning should be examined deeper. The process of designing and producing A3809 passenger jet of Airbus was, according to Slack, Chambers and Johnstone (2010), was very complex for two reasons. First of all, A3809 was the largest and most complex passenger jet ever made in the world. Secondly, the work on the jet was being conducted at two places - French and German plants of the company. Since the work was divided between two, in some sense, competing groups of employees, lack of integration between them caused major problems with the manufacturing process. Another important aspect of the company’s work was its information systems used for completing engineering tasks. The two groups of designers used incompatible software to design the wiring for the airplanes. This caused great time delays and, consequently, financial losses of the company. In addition, the overall structure of the company is segmented and, therefore, believed by some not to be effective enough as for such a large company. Therefore, the way in which Airbus managed its resources can be said to lower, instead of increasing, productivity. Since productivity is “endeavour to produce more and more with less and less inputs of resources” (Roy, 2007,2), it can concluded that inefficient operations management practices and decisions of Airbus caused the inefficiency, as a ratio of outputs to inputs, of the new jet’s development project. As for the systems management, though among the purposes of information systems are automation and, thus, optimization certain aspects of operations management, in case of Airbus they have only been preventing the company from creating the airplane faster. One of the major reasons for the delay was that French and German engineers used totally different and even incompatible software. This made the company transfer 2000 people form Germany to France first of all, and, secondly, spend so valuable time on adjusting the computer blueprints so that they could be used for further work. So, though information systems play a crucially important role in the work of the company, the management did not manage to organize their use effectively. First of all, in this area of operations the company lacked unification – compatible software packs and better communication channels integrated into the business would have helped the company to work more effectively in terms of initial design of the jet. Secondly, the overall structure of the company lacks organization and unity. This means the labour management aspect of the operations management was not organized and managed well enough. Therefore, it can be concluded that, while, according to Mahadevan (2010, 5), effective operations management “results in significant productivity improvements and cost savings,” the major aspects of the discipline were overlooked by Airbus executives. So the role of systems and operations management at Airbus is diminished (minimal), and this important aspect of managing an organization is not properly integrated into the business. This drawback has, in its turn, lead to lower productivity of the employees, and, as a result, time delays and financial losses of the company. Updating Airbus information systems and operations management to support and improve their business efficiency. The four major approaches to improving business efficiency are business process reengineering (BPR), total quality management (TQM), Lean and Six Sigma. Business process reengineering would require Airbus to implement a radical change in order to redesign its operational processes for them to be more effective. This would, first of all, require the company to clearly identify all the processes taken place within the organization. Then particular employees should be assigned to the performance of each process and, finally, all the processes should be continuously measured – monitored and controlled (Hammer and Champy, 2003). Total quality management approach would require Airbus to put more emphasis on quality and continuous incremental improvement. According to Deming's 14 Point Plan for TQM, this approach will be bringing continuous rise in productivity and, consequently, revenue. Improvements in quality are, in their turn, to improve productivity as a result. However, this approach to improving business efficiency requires a company to have strong leadership. In addition, in order for the approach work, goals set by the management should be effectively communicated to the employees (Deming, 1982). In case of Airbus it might be rather difficult, because the company has shown to have problems with leadership and constancy of management – executives are changed too frequently. Lean approach to improvement involves elimination of waste and costs associated with that waste on the basis of end-user definition of value (Reidenbach and Goeke, 2006). Airbus is both manufacturing and engineering-driven organization. For that reason lean processes might be a good solution for the company. However, the whole essence of Airbus business is in quality and smooth flow of items synchronized to demand – Airbus will not manufacture more jets than it is sure to sell. So lean manufacturing is simply not needed. The concept of this business makes it be lean naturally. As for Six Sigma, it might be a better solution for Airbus because this approach involves improving everything - products, processes, and transactions. Though the core of the approach is in minimizing defects, this result is based on the improvement of systems and operations management strategies and techniques. With Six Sigma Airbus would have to analyze the state of its business, design and implement plans for improvements in all the areas of operations, design and use measures to control improvement implementation, and standardize the systems (Patty and Denton, 2009). All this calls for continuous incremental change. So, the best approaches for Airbus to improve its business processes are Six Sigma or business process reengineering. Each of them requires a company to design and implement a number of changes that will improve employees’ and organization’s performance. However, radical changes of BPR approach seem in this situation to be more appropriate because, according to Heitger and Doujak (2009, 48), “the most productive innovations are not evolutionary, but radical ones.” So the faster Airbus introduces innovations, the faster organizational efficiency will improve. At the same time, for the purpose of designing and implementing such a change the company will need to improve its communication channels. Kramer (2003) outlines the importance of effective communication for managing change effectively. In addition, no matter what approach to change the organization decides to choose, it will have to provide the employees with strong leadership, as well as develop measurable progress and performance control tools. The role of Soft Systems Methodology in analysing and defining the business requirements of Airbus Soft Systems Methodology (SSM) was initially developed and viewed as a modelling tool. However, with time the methodology transformed into a tool for learning and meaning development. It major goal is in using systems rules and in order to structure the thinking about real world situations (Williams, 2005). The models used by SSM can be either descriptive or normative. In relation to Airbus situation the SSM’s roles is in constraining the thinking with the purpose of expanding it. The ideas for improvements of Airbus systems and organizational management practice are, then, based on the SSM outputs transferred into hard methodology later in the process. The major benefit of SSM in this situation is that it allows to “untangle the evaluative lessons from programs with multiple goals and multiple perspectives on these goals” (Williams, 2005, 2). Soft Systems Methodology is based on seven major steps. The first one requires an evaluator to define the problem situation. In case of Airbus this would be ineffective systems and operations management practices, the particular results of which are poor performance and financial losses. Here the structures, processes, people, people’s problems and conflicts, as well as possible solutions are identified. The second step requires to express all the above mentioned considerations. This is usually done in a form a picture, because this method allows to picture the situation in all its richness. The third step is determining issue-based and primary task root definitions relevant to the problem (Checkland and Poulter, 2006). This is one of the major points in the methodology since all the other stages will be based on this one. It can, actually, be said that this stage of the SSM defines the objectives of an organization. For Airbus the major of them would be, for instance, improving job performance, improving communication, structuring the organization in a more effective way, providing strong leadership to employees, etc. furthermore, these objectives may be broken into smaller ones. For example, structuring the organization may be separated into establishing stronger specialization, choosing the best organizational structure, assigning right people to corresponding departments, aligning the work of different departments, and so on. The most important in this process, however, is to address key perspectives separately form each and taking into account the implications of each. Then understanding of those implications will be used for drawing conclusions and making suggestions for further action, as well as for conducting a CATWOE analysis. At this point an evaluator may either switch to Hard Systems Methodology or continue with SSM and go to the next steps of SSM which involve creating conceptual models, comparing them with reality, evaluating potential changes to be implemented and agreeing the proposed innovations. SSM seems to be one of the best approaches for analysing and defining the business requirements of Airbus because this methodology makes an evaluator study the situation, first of all. Secondly, SSM is helpful because in case of Airbus several different goals should be targeted and SSM provides such an opportunity (Checkland and Scholes, 1991). In addition, oorganisational and social constraints are considered in the context of change, as well as two models of though – abstract and ideal systems thinking – are used. People, technology and organisational issues involved in improving the operations at Airbus People, being a labour resource, are one of the most valuable and important assets of an organization because people are, actually, a basis of an organization. Therefore, when designing and implementing change it is crucially important to take into account the people – employees – who will be participating in the change implementation lifecycle and who will be influenced by the change. However, since one the problems of Airbus is relatively disorganized structure, any changes should start with clarifying and organizing the company’s structure in the first place. Clear responsibilities, structure of subordination and composition should be defined for each department. Consequently, resources and tasks allocation, as well as communication channels should be clearly identified and defined for each department. Fragmented structure of Airbus, as experience shows, is highly inefficient and prevents the company from competing effectively. An improved organizational structure would, on the contrary, become another competitive advantage of Airbus. The new structure should, in addition, integrate design and manufacturing processes of the organization. Another organizational issue Airbus is recommended to deal with is internal rivalries. If this phenomenon is present within the organization then, probably, it is, in some way, whether direct or indirect, either encouraged or overlooked by the management. Therefore, some measures should be taken in order to encourage cooperative work of all the employees. This can be reached with the help of restructuring the organization or implementing specific HR practices aimed at developing cooperative relations between the plants of Airbus. Such practices should also target the lack of integration between the French and German sides of Airbus. Better time management strategies should be used by Airbus in order to prevent employees from the pressure of keeping up with intense production schedules. In addition, overcrowded conditions should be eliminated in order to increase job performance of employees and the organization in general. All these tasked can be better managed with the help of technological advancements. Management information systems will, for instance, improve the processes of planning and resource allocation, as well as improve efficiency of processes, thus lowering costs. Transaction processing systems are to be used for monitoring the status of ongoing operations and will help to make the processes streamlined and more industrially organised. Decision Support Systems are to be used for analysis and planning. Executive support systems should be used for analyzing and evaluating the effectiveness of organizational processes, as well as for long-term planning. Conclusions and Recommendations Though Airbus is a rather successful and well-established in its market niche company, its recent launch of A380 passenger jet has shown that the company has a number of internal problems related to its systems and operations management. The very first issue to be taken into consideration by Airbus executive is the fact that role of systems and operations management within the company is diminished. Since many of the processes taking place at Airbus are relatively disorganized, it can be concluded that systems and operations management concepts are not integrated into the business well enough. This drawback, consequently, results in lower job performance of the employees and financial losses of the company. Several factors contributed to the development of such a situation. Among them is absence strong leadership – key Airbus executives were changing too frequently. The structure of the company has shown to be inefficient in completing complex tasks that require cooperative work of different departments. In addition, poor communication between departments caused delays in work and resulted in people’s working under pressure of keeping up with intense production schedules. Therefore, it is recommended that Airbus applies Soft Systems Methodology for analysing and defining the business requirements of the company. Systems and operational changes should be designed on the basis of the analysis. In particular, such aspects of company’s operations as HR management, time management, resource allocation, communication and strategic planning should be improved. Business process reengineering approach to improving the business processes is recommended as one that allows for effective implementation of radical changes which, as literature suggests, are the most productive (Heitger and Doujak, 2009). References: Checkland, P. and Scholes, J. 1991. 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