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Analyze And Evaluate The Operations Management Of Airbus

Management Essay
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Published: 23rd March, 2015

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The operations process of Airbus can be most clearly characterised as a job process. This is because, even though the majority of the company's planes are very
similar, and use similar manufacturing techniques, they are so large that it is physically impossible to see the plan manufacturing process as being anything
other than a job process, when analysed using these speci c models of the operating process. This can be seen in the case of the manufacture of the A380
superjumbo aeroplane. According to Levers (2003, p. 42), the manufacture of this plane is such a signi cant engineering and operational undertaking that
speci c operations are needed for areas such as the upper wing skin panels. This is because the manufacturing process used to shape the plane's wing skin is
on a vast scale, and hence each skin needs to be formed and tooled separately to ensure it meets to rigorous requirements of a modern airliner (Levers, 2003, p.
42).

At the same time, whilst the company's operations process strongly resembles a job process, Airbus is still looking to maximise e ciency wherever possible,
through the use of more modern production techniques and the adoption of other operations processes where possible. For example, Woodru (2007, p. 20)
noted that "Airbus recently completed a major research project that is resulting in greater levels of automated drilling within the aerospace giant". Speci cally,
the company has developed low cost robotic platforms that can be used in some areas of the manufacturing to turn a job process into more of a batch process,
or a mass production process. This argument is expanded on by James (2006, p. 30) who notes that Airbus has developed horizontal spindle machining robots
which are able to produce the structural 'ribs' for aeroplanes in a fast and e cient manner, much faster than in a pure job process. This thus allows Airbus to
manufacture the ribs of its plans quickly and e ciently, and hence turn part of the manufacture into a mass production process, with the rest of the project
nished in a more traditional job process manner (James, 2006, p. 30).

In addition to this, the company has attempted to turn the production of individual planes into more of a batch process through the use of what Haas and Sinha
(2004, p. 1) describe as "Concurrent Engineering". Under this approach, the Airbus Concurrent Engineering initiative uses digital design and engineering
approaches to allow engineers and designers to work on multiple aeroplanes at the same time. As a result, the company is able to bene t from higher levels of
e ciency, in line with a batch process. This is particularly valuable in enabling Airbus to build planes faster, and to vary speci cations as the production
proceeds, thus allowing Airbus to be more responsive to changing customer demands (Haas and Sinha, 2004, p. 1). A key aspect of this has been the
development of virtual reality systems that are used to assist in designing the company's manufacturing processes. These systems enable Airbus designers to
work together on large projects, such as making the wings for the Airbus A350 XWB (Davies, 2009, p. 68), and thus help improve operational e ciency when
compared to a pure job process.

The company has also looked to develop lean production and supply concepts within its operations processes, despite these concepts having "scarcely been
applied to aerospace, an industry sector of great importance" (Ehret and Cooke, 2010, p. 300). Speci cally, Airbus looks to use outsourcing and supply chain
improvements to maximise the leanness of its operations, including relying on suppliers to provide components and other work at minimal cost wherever
possible. Whilst this approach has some limitations, notably the fact that "lean neglects the relevance of knowledge to outsourcing, however, and fails to
recognise the diversity of the Airbus supply approach" (Ehret and Cooke, 2010, p. 300), it does provide some value and bene ts including reducing costs and
improving responsiveness. The company's technological capabilities are central to its lean strategies, and hence this does allow Airbus to maintain its strong
technological focus throughout its operations processes.

2) An identi cation and evaluation of the major strengths and weaknesses of the Operations Function in the organisation

In order to identify and evaluate the major strengths and weaknesses of the operations function in the organisation, this section will use Slack's ve
performance objectives of quality, dependability, speed, exibility and cost (Slack et al, 2009). These objectives will be analysed individually, and considered in
more depth as a coherent whole in section 3.

In terms of quality, Airbus is helped by the fact that it has a highly diversi ed product portfolio when compared to its peers. In particular, the company
manufactures various di erent commercial, military and freight aircraft, which gives it access to a wide variety of data on order quali ers and order winners for
the entire market (Datamonitor, 2011). This in turn allows it to apply knowledge from its commercial aircraft segment to freight and military and vice versa. This
diversity is assisted by the company's extensive product development expertise and marketing skill, which allows it to develop and market new products and
technologies well. Speci cally, the company has directed signi cant volumes of research attention towards ensuring environmental e ciency for its current and
future aircraft, recognising that environmental e ciency is a key order quali er in the current economic and social climate in the airline industry (Datamonitor,
2011).

At the same time, the company's quality has recently su ered due to the disparate nature of the manufacturing process inherent in such a diverse company
with production locations in so many countries. In particular, Sosa et al (2007, p. 133) notes that communication has su ered, as product - component teams
have failed to communicate due to the signi cant geographic and cultural distances in between them. This issue has also spilled over into dependability, speed
and cost, with Airbus su ering major delays and cost overruns during the development of the A380 super jumbo, due to unforeseen design incompatibilities.
Speci cally, operations teams were working with incompatible design equipment and inconsistent Computer Aided Design tools, and thus components did not
t correctly when the entire product was assembled (Sosa et al, 2007, p. 133). This was a severe blow to the company's reputation as a high quality and
dependable manufacturer.
Airbus' dependability has also recently su ered in the aftermath of the loss of Air France ight AF 447 which crashed when ying from Brazil to Europe.
According to Martins (2012, p. 222), the probes that allow the pilot to control the speed of the aircraft malfunctioned, and hence "the design of the plane would
have exercised a not inconsiderable role in the occurrence of a disaster". Ultimately, these design issues led to "a series of important operating errors in a zone
of turbulence, making the plane uncontrollable, leading to a rapid depressurization device" (Martins, 2012, p. 222). In other words, the plane had fundamental
design and operation aws that contributed to a crash in which all passengers and crew on the plane lost their lives. This lack of safety can be seen as breaching
important order quali er criteria, and thus may make it harder for Airbus to sell its planes in future if they obtain a reputation for being unsafe.

As noted in the rst section, the speed of Airbus operations is relatively good, considering that the company is operating such large scale job processes. In
particular, the ability to use robotics to support operations (Woodru , 2007, p. 20) and the use of concurrent engineering (Haas and Sinha (2004, p. 1) to
improve e ciency have helped maximise the speed of production. However, this has been delayed by the quality and dependability issues highlighted above,
which have meant that Airbus has often been forced to make additional costly e orts to ensure that production remains on schedule. This is because speed of
production is an important order quali er in the airline production industry, with customers depending on aeroplanes being ready on time in order to run these
aircraft on their routes, and the lengthy production cycle meaning it is di cult to go to another manufacturer if production is delayed. For example, in the case
of the A350, the aircraft was "introduced in several batches with changes a ecting components and parts throughout the aircraft" in order to ensure a timely
launch (Flottau, 2012, p. 22). This increased costs for Airbus and its suppliers, which indicates quite how important speed is.

Flexibility in production is not a particularly major order winner or order quali er criteria in the airliner manufacturing industry. This is because most planes take
a long time to manufacture and con gure, and hence any airline changing its order is likely to create delays for itself. However, Airbus does o er signi cant
levels of exibility thanks to its diversi ed product portfolio, and ability to apply di erent con gurations to di erent airliners depending on the speci c situation
(Datamonitor, 2011). This does not necessarily help the company o er exibility to existing customers, but does help it to attract new customers by making it
more likely that Airbus can design and manufacture a plane of the required size and speci cations to meet the customer needs.

Finally, cost is an important order quali er in any industry, and airliner manufacture is no di erent. In particular, Bickers (2000, p. 46) notes that in the aftermath
of the Asian nancial crisis Airbus found it very di cult to get any orders from Asia, in spite of the rapidly growing airline industries in these countries. This is
because airliners are very expensive and require signi cant capital to purchase, and hence any cost savings are likely to prove to be a vital order winner
amongst customers, particularly given the current poor global economy. With this in mind, Airbus has recently entered into a signi cant and rigorous cost
cutting plan. According to Matlack (2007, p. 2), the company has sold o several older and less e cient manufacturing plants to reduce its overheads. At the
same time, Airbus has expanded its manufacturing facilities in China and other low cost production nations, in order to reduce costs by bene tting from lower
cost skilled labour in these countries. Currently, Chinese companies only make up around 5% of Airbus' airframe manufacturing operations, but this is likely to
increase in future as the company expands its operations in China (Datamonitor, 2011).

3) Your view of the extent to which the operations function supports the broader Business Strategy of the organisation

Airbus' strategy has evolved signi cantly over the past decade. In the late 1990s, the company was relatively small, with the market being dominated by Boeing,
the US airliner manufacturer, with McDonnell Douglas also having produced many of the world's aircraft. According to Olienjk and Carbaugh (1999, p. 60), in the
late 1990s "only about one in six commercial jetliners currently in operation was produced by Airbus". Airbus' initial strategy was thus to try and obtain market
share by aggressively targeting the most numerous short haul routes with small and cheap aircraft that would suit the demands of the rapidly growing low cost
carriers of the time (Olienjk and Carbaugh, 1999, p. 60). This helps explain the company's diverse product portfolio, which was developed to maximise market
exposure.

More recently, Airbus has found itself on a more even footing with Boeing, with both companies accepted as being the two dominant forces in airline
manufacture, with an almost uncontested global oligopoly (Strategic Direction, 2006, p. 8). As a result of this, Airbus' strategy has shifted away from focusing on
seizing market share, and more on obtaining pro table market dominance, whilst also focusing on competing with Boeing more directly in the same markets.
For example, Airbus recently developed the A350 and A380, which are two of its largest and most advanced planes, and both designed to compete directly with
Boeing's 747, 777 and 787 on major long haul routes (Strategic Direction, 2006, p. 8). These routes tend to be more pro table for the airline companies, making
them more willing to pay more for more advanced and e cient airliners, hence boosting the pro t margins of the airliner manufacturers.

This shift in strategy helps explain a signi cant amount of Airbus' operations strategy in recent years. Speci cally, the company's product range has expanded
further as Airbus has looked to behave like an oligopolist, and compete in all market segments to help discourage new entrants and minimise the growth of
competition. This also explains the company's loss of dependability, as being a major manufacturer with a strong market share has insulated it from the impact
of market feedback on its operations strategy. Finally, Airbus has shown a willingness to sacri ce cost competitiveness for speed of production in order to meet
the demands of new customers who want top class planes that are ready on time, and are willing to pay more for the privilege.

At the same time, the company's operations have shown several signi cant weaknesses that do not support its current strategy. In particular, the focus on
speed and quality ahead of cost has meant that Airbus has struggled to expand into emerging markets where price pressures are keener and where nancial
crises hit harder. This has increased the importance of cost reduction in order to remain competitive and head o new potential competition (Bedier et al, 2008,
p. 114). In addition, Airbus has become too comfortable as a market leader, and thus has begun to experience issues of quality and dependability which
threaten its ability to grow and dominate the market ahead of Boeing, as well as encouraging new entrants and competition.

4) Your recommendations for improving the operations function, whilst leaving the broader business policy unchanged

The primary recommendation for improving the operations function is to focus on addressing the quality and dependability issues identi ed. In particular,
greater attention needs to be paid on improving levels of interoperability between design, production and component teams to ensure all components and
parts are compatible and t for purpose. All teams should be required to work on the same software and using the same tools and measurement bases to
ensure that everything works together and does not cause any delays for the customers, or any safety issues such as those which a ected Air France AF 447.
This is a crucial issue which needs to be addressed asap, or it will leave the company at risk of further reputational damage, as well as potentially at risk of
lawsuits if other planes are argued to be unsafe. The company should immediately create an internal team that can examine the working processes across all
the production and manufacturing teams in the entire company, across all countries. This team can then assess which products, techniques, tools and
measurement bases are most e cient and e ective, and make recommendations around rolling these out across the entire company to boost compatibility
and e ciency.

The other main recommendation for improving the operations function, whilst leaving the broader business policy unchanged is to make more of an e ort to
develop and implement operations strategies that will be able to balance cost and speed. The company should not be left facing a position where it has to rush
production and incur high crash costs in order to meet a customer deadline or avoid delays. Instead, Airbus needs to implement a strategy that will avoid these
delays, and hence avoid the costs and inconvenience associated with them. With this in mind, the recommendation is that Airbus assemble another internal
team that can assess the various operations management strategies available, such as lean operations, total quality management and six sigma, and determine
the extent to which they can resolve the cost and speed issues that Airbus has recently encountered. Once these recommendations have been made, the
company can then decide which strategies to implement in order to address the issues encountered. This will thus help to avoid any future losses or delays due
to a lack of e cient operations, and hence ensure that Airbus is no longer left in a situation where it must choose between making a nancial loss or missing a
customer deadline.

Conclusion
This analysis has demonstrated that Airbus has developed and implemented a highly speci c operations strategy that is designed to deal with the issues that
can be encountered when developing, building and producing large and complex aircraft. Speci cally, the company's fundamental operations process is a job
process, which is a necessity due to the large scale of production and the impracticality of trying to run batches or mass production lines. However, this process
is supplemented by various technologies and systems which help introduce aspects of mass production and batch production, such as robotics and concurrent
engineering, in order to improve e ciency and e ectiveness. This is further combined with more modern concepts such as lean operations, allowing Airbus to
achieve the high levels of customisation and focus that result from a job process, whilst also bene tting from the e ciencies o ered by other types of process.

The net result of this is an operation process which allows for a high degree of exibility and focus on quality. This focus is highly appropriate for Airbus, as the
company is currently competing in an oligopoly with Boeing, and looking to dominate the market in order to secure its position and discourage additional
competition. As such, it needs the exibility to cover all market niches. However, this focus has resulted in a lack of cost competitiveness, and the market
dominance has harmed the quality and dependability outcomes. As such, this report makes two recommendations. Firstly, the company needs to focus on
addressing the quality and dependability issues identi ed by improving levels of interoperability between design, production and component teams. Secondly,
Airbus needs to develop and implement operations strategies that will be able to balance cost and speed, allowing it to serve all of the market in a more
e ective manner without having to crash production in order to meet deadlines or avoid delays. Following these two recommendations should help ensure
Airbus is able to continue to compete and dominate the market in the future.

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