Supply chain: A case of Etihad Airways

Author: Iloka Benneth Chiemelie
Published: 26th April 2018

Introduction

Supply chain management is an integral aspect of every business process. This is because it cover the raw materials used to manufacture goods and services and the delivery processes necessary to ensure that these goods and services reach the final consumers. Overall, supply chain include the suppliers, distributors and customers. The customers tell the company what they want, which the company orders raw material for such production from the suppliers. Once the product has bene manufactured, the distributors help the company to make them available to consumers, who then return the feedback about the product to the company through the distributors. Thus, integrating these stakeholders is very critical for the success of any given firm.

In Etihad Airways, there is a separate department for such activities known as Procurement and Supply Management (P&SM).In this department, staffs are tasked with ordering raw materials (which can include a full Boeing Jet, spare parts, cooking utensils, foods and drinks for in-flight entertainment and a host of other orders). Additionally, the department is charged with conducting researches on consumers to understand their needs, and effecting their orders based on what the consumers want. Finally, the department also process inbound logistics to make sure that all the materials ordered are in line with established standards (and also to attach ach maintenance tea to specific tasks in relation to the order made). Thus, supply chain management is an important aspect of Etihad Airway’s business based on the understanding that it determine the quality of goods and services offered by the company.

External factors that affect business processes at Etihad Airways

There are numerous external factors that influence business processes and Etihad is not gifted out of these factors. Some of these factors are as discussed below based on porter’s generic forces.

Rivalry – the airline industry is very competitive (both locally and internationally), and Etihad is forced to compete with these companies in order to establish a sustainable business process. This is a big issue for the company because it has a direct impact on their sustainability (both financially and non-financially). For instance, the competition can reduce the number of people that use their airline, reducing their overall sales and performance in the process.

Supplier – they are also a huge factor to the success of the company based on the understanding that the quality and price of material supplied does directly determine the quality and price of goods and services offered by the company. For instance, if they supplier supply goods at an affordable price and with high quality, the airline will be able to offer affordable products and services that have high quality. Essentially, their performance will be improved in the process.

Consumers – consumers also have direct impact on the performance of the company. This is because they are the only medium through which production is complete. If consumers don’t buy the company’s products and services, there is no way the company will be able to make profit. Thus, the higher they purchase from the company, the better the company will perform and vice versa.

Substitute products – outside of airlines, people can make use of other transport medium (such as train, buses and private cars). They all have direct impact on the company’s performance as the company will not be able to leverage the opportunity of these consumers making use of airlines – demands their services – and enhancing their financial performance in the process.