CIQGM732 - Strategic Supply Chain And Logistics Management - Sara Smith Case Study & Report Writing - Management Assignment Help

Assignment Task -                 
 

LEARNING OUTCOMES

1. Understand the relationship between supply chain management and organizational business objectives.
2. Be able to use information technology to optimize supplier relationships in an organization.
3. Understand the role of logistics and procurement in supply chain management.
4. Be able to plan a strategy to improve an organization’s supply chain.
5. Understanding the Role of Inventory Management and the use of its various Strategies and Techniques.
6. Physical Distribution and its Contribution to Supply Chain Strategie

The Case  

Introduction

Sara Smith has recently been assigned the position of Vice President of procurement of a reputable Middle Eastern airline called Flysafe based in Dubai.   The organization was established in 1973 where it operated only 5 aircraft and two routes within the region. In those days, the competition was limited and so, they were able to make significant profits despite some operational challenges. Looking forty plus years ahead, the organization has grown significantly with over 2000 employees and an aircraft fleet size of 300 which are nearing their life cycle The market has now changed with several non-middle eastern airlines running the route with low budget airfare options. 

Consumers are choosy and have targeted low-cost type / now frills airline carriers. The reporting and data transfer lines are not linked between flying hours of rotating spares, supplier schedules, and the shipment of spare parts for the operations. The organization has also lost favor with many of their strategic suppliers, Super Turbines and North Star Aircraft limited, mainly for engine repairs and technical support, landing gear spares and other power plant supplies.

Many of the orders are rushed and shipped via air freight to accommodate AOG (Aircraft on Ground) status and even for routine requests. No manager has ever weighed in on the air freight cost vs. ocean and in every occasion, FCA incoterms are used with a local based freight forwarder.  Recently, North Star has complained that these arrangements cannot continue, claiming that shipping of parts out of their warehouse is not their expertise and neither is it their core business.  This has led to delays in major overhauls, coupled with limited supplier concessions by both vendors. 

food to the aircraft on time. This has amounted to over 200,000 USD in penalty charges by airlines since FGC’s inception.  Management is now thinking of dissolving this new arrangement and canceling the contract with Food for the Skies, the named third party operator. But some board members remain optimistic and now thinks that the new Procurement VP can devise a distribution plan to save the subsidiary and also revamp the current outsourcing contract.  

The current IT platform no longer meet the needs of the operations as it was initially setup to have each department module function independently. This has affected the supply chain’s performance since they had recommended that a new system be purchased to allow for a more integrated chain of activities and that the suppliers be integrated into the network as well. These realities, unfortunately, have been compounded by some major procurement-related shortcomings that have weakened the entire company, seemingly, now very close to the point of closure. 

Procurement turnaround  

Sara Smith has been given a three-month mandate to turn around the organization, reversing much of its losses, often caused by poor sourcing decisions and a lack of understanding of the way procurement and supply chain works within the airline industry. 

A report done by an external auditing body, hired by the board, concluded that there were several weaknesses which contributed to significant operational & financial losses every year and if not addressed quickly, is likely to lead to a collapse of the operations and an insolvent situation, just as the board forecasted. The board requires that any further and future recommendations presented shall be supported by some secondary research, which would eventually justify all recommendations to be discussed here. Sara is also encouraged to use examples of the successes and challenges of other firms as she proceeds to address the issues at hand. A summary of some key procurement issues is as follows. Some may not have been mentioned above:

1. Outsourced catering contracts that have contributed to operational delays and poor quality.   

2. Slow turnaround of rotating spares. 

3. Poor supplier relationships

4. Operational challenges associated with defective OEM spares with a global sourcing partner.

Addressing the financial impact. 

As the new VP Sara was briefed about several financial and cost-related issues that have plagued the enterprise. The Director - Finance, Annie Windsor presented some financial data (See figure 1.1 below), arguing that a supplier, which happens to be the third party provider Food for the Skies, should not have been selected in the past based on the results shown. This was based on an internal audit conducted by her department. The Internal audit has revealed several inventory management challenges for the new VP of procurement as well. 

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