Logistics: Cathay Pacific Airways Limited
The case study examines the supply chain management challenges faced by Cathay Pacific Airways in its quest to optimise its approach to spare part supply chain management. The supply chain problem at Cathay Pacific Limited is compounded by the complexity that characterise the aviation spare parts industry structure. First, the aviation market is progressively becoming unpredictable due to different forces such as change in customer behaviour. Subsequently, airlines should efficiently respond to the market changes in order to remain competitive. Secondly, the suppliers market is dominated by numerous suppliers and strict regulations by different authorities. Huang (185) asserts that a supply chain that is comprised of different suppliers is relatively difficult to manage because an organisation has to integrate a multi-criteria decision making approach. The need to optimise the company’s supply chain is spurred by the changes in the buyer. Dolgui, Soldek and Zaikin (44) support the view that establishing an effective supply chain structure requires an organisation’s management team to integrate a multidimensional approach by focusing on different components of the supply chain.
Despite being a well-established player in the global aviation industry, the case study highlights the diversity that characterises spare parts supply chain management as a key fundamental limitation facing Cathay Pacific Airways. In its spare parts supply chain management, Cathay Pacific Airways faces the task of managing over 2,300 suppliers, and 380,000 line items in order to successfully address the spare parts demands of its fleet comprising of 117 planes. Managing this fleet is quite challenging because it is comprised of different models. The supply chain management problem might also be increased by the company’s need to grow its fleet size in order to meet the market demand (Yen 4).
Optimising the company’s approach to spare parts supply chain management will contribute to improvement in the company’s competitive advantage. To optimise its spare parts supply chain management, it is imperative that Cathay Pacific Airways considers incorporating a number of best practices. First, the firm should integrate emerging technological innovations in order to establish a strong collaboration with the different stakeholders in the supply chain. Some of the technologies that the firm should consider include integration of Web 2.0 tools, cloud computing technologies and on-demand software (Graham, Manikas & Follinas 43). Adopting new technologies will contribute to improvement in the effectiveness and efficiency with which the firm manages its supply chain. The tools will enhance interaction with the different stakeholders such as the manufacturers and retailers. Moreover, these technologies will enable the firm to effectively forecast future demand by relying on big data obtained from different sources. Thus, the firm will succeed in establishing a knowledge repository.
One of the fundamental challenges identified in the case study relates to how the organisation manages a wide range of suppliers. To overcome this problem, the management team should consider outsourcing some of the non-critical functions. Examples of such functions include integration of in-flight entertainment systems. This approach will play an essential role in minimising the supply chain management cost (Kovacs 538). However, it is imperative that the organisation has to ensure that an effective approach is adopted in making the outsourcing decision.
On the basis of the alternatives suggested, employing new technological approaches constitutes the most effective approach that Cathay Pacific Airways should consider. New technology will enable the firm to streamline its supply chain management processes hence improving its efficiency in responding to market changes.
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