“Managing Operations for Customer Satisfaction and Enhanced Profitability”
Individual Research Report
“Managing Operations for Customer Satisfaction and Enhanced Profitability”
Introduction
The role of operations management is the production of goods and services and to ensure efficiency and effectiveness in the operation process, that means use as little resource as needed and meet the customer requirements. Moreover, it is converts inputs (in the forms of materials, labour and energy) into outputs (in the form of goods and services) and aims to increase the content of value-added activities in any given process in an organization. (Meredith and Scott 2007)
In this report, will be discussed the role of operations management in the airline industry with the main idea of how to reach customer satisfaction and at the same time enhanced profitability without getting both into conflict.
The airline industry is a competitive market and the entrance of a new breed of low cost airlines beginning at the turn of the century has accelerated the demand that full service carriers control costs. The economic crisis has brought a collapse in demand; in consequence, companies have been obliged to make significant economics adjustments, as reduce capacity and frequency. According to IATA, “this dramatic fall in demand can lead to a rise in unit costs that are not related to fuel, and which cannot be cut proportionally”. Furthermore, adding the fluctuation in the oil prices, managers need to consider lowing costs in order to fulfill any increase in those prices that might affect companies’ profit. (Estrategia 2009)
In the airline industry, it is always a need to reach high levels of customer satisfaction and enhanced profitability. In this time of economic crisis, that need should become a priority to airlines in order to increase revenues; starting from the point that if you reach customer satisfaction that will lead to enhanced profitability from an operations management perspective. Managers need to understand that chains of cause and
“Managing Operations for Customer Satisfaction and Enhanced Profitability”
Introduction
The role of operations management is the production of goods and services and to ensure efficiency and effectiveness in the operation process, that means use as little resource as needed and meet the customer requirements. Moreover, it is converts inputs (in the forms of materials, labour and energy) into outputs (in the form of goods and services) and aims to increase the content of value-added activities in any given process in an organization. (Meredith and Scott 2007)
In this report, will be discussed the role of operations management in the airline industry with the main idea of how to reach customer satisfaction and at the same time enhanced profitability without getting both into conflict.
The airline industry is a competitive market and the entrance of a new breed of low cost airlines beginning at the turn of the century has accelerated the demand that full service carriers control costs. The economic crisis has brought a collapse in demand; in consequence, companies have been obliged to make significant economics adjustments, as reduce capacity and frequency. According to IATA, “this dramatic fall in demand can lead to a rise in unit costs that are not related to fuel, and which cannot be cut proportionally”. Furthermore, adding the fluctuation in the oil prices, managers need to consider lowing costs in order to fulfill any increase in those prices that might affect companies’ profit. (Estrategia 2009)
In the airline industry, it is always a need to reach high levels of customer satisfaction and enhanced profitability. In this time of economic crisis, that need should become a priority to airlines in order to increase revenues; starting from the point that if you reach customer satisfaction that will lead to enhanced profitability from an operations management perspective. Managers need to understand that chains of cause and
References: Estrategia Universia Knowledge Wharton [online] (cited 19 April 2010) Available from Heizer, J, Render, B. (2008). Principles of Operations Management, (7th Edition), Pearson international Edition. ISBN-13: 978-0-13-500709-9. Hill, T. (2005). Operations Management, (2nd Edition), Palgrave MacMillan. ISBN: 1-4039-3466-5. Holloway, S. (2008). Straight and Level: Practical Airline Economics, (3rd Edition), Ashgate. ISBN: 978-0-7546-7256-2. Investopedia [online] (cited 18 April 2010) Available from James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser Jr., Leonard A. Schlesinger (2008) “Putting the Service-Profit Chain to Work”, Harvard Business Review Article. Johnston, R., Clark, G. (2008) Service Operations Management: Improving Service Delivery, (3rd Edition), FT Prentice Hall. ISBN: 978-14058-4732-2. Meredith, J., Scott S. (2007) Operations Management for MBAs, (3rd Edition), Hoboken, New Jersey: Wiley. ISBN-13: 978-0-471-35142-9.