Logistics Management – Flynas

Logistics Management – Flynas

Executive Summary

Flynas Airline Company is a company that has been in operation for just over a decade now, but it is showing signs of growing fast and becoming a big airline soon. The company has slightly over 30 fleets flying to 35 destinations both locally and internationally. The company’s business growth strategy is being a “low-cost carrier’ compared to the competitors. Due to its low-cost approach, the company has attracted many passengers from far and wide hence growing tremendously in the short period it has been in operation. Our assignment writing services will allow you to attend to more important tasks as our experts handle your task.

Logistics performance priorities are the goals that an organization needs to attain to streamline and bring efficacy and competitiveness to the company. Some of the firm’s logistical performance priorities, like Flynas, are minimizing costs and maximizing profits, improving communication within the firm, providing quality customer service, improving supplier relationships, and more. This discussion has focused on how Flynas can minimize the costs and maximize the profits. Some of the ways of attaining this are engaging the suppliers to supply the supplies at the minimum price, improving communication, and evaluating the employees’ salary levels.

Several tools can be used to attain logistics performance priorities. Some of these tools are demand forecasting tools that help understand future demand and, hence, prudent decision-making. The second tool is the supplier management tool, which allows detailed information about the supply chain and improves the relationship between the company and the suppliers. Another tool that Flaynas can use is the use of lean inventory tool, which instructs the company to only order what is needed. This saves the costs of storage and warehouse management of the inventory. This way, the company will be able to cut down the costs and expand its profit margin.

Introduction And Background

Flynas Corporation is a Saudi Arabian airline company headquartered in Riyadh. It operates from King Abdul-Aziz, King Khalid, and King Fahd international airports. It is a subsidiary of National Air Services, which owns 63%, and the rest is owned by Kingdom Holdings (Arabianbusiness.com, 2020). This company commenced its operations in 2007, and since then, the airline has grown steadily to become one of the most dependable carriers in this Middle East country. Currently, Flynas has about 32 aircraft, and in its strategic growth plan, it has ordered 80 more aircraft from the manufacturers to be delivered by 2026. Initially, this airline company was known as Nasair, but later on, in 2013, it changed its name from Nasair to Flynas (Arabianbusiness.com, 2020).  This airline company started by ordering 20 aircraft of the Airbus A320 model from Airbus Company and began to expand its fleet gradually.

Currently, Flynas flies to 35 destinations to increase to more destinations shortly. The company mostly operates on the Middle East, Asia, and Europe routes. It recently launched its operations in West Africa, hoping to increase its presence in Africa. Flynas has been in operation for just 13 years and has already expanded to serve 35 destinations with its 32 aircraft (Arabianbusiness.com, 2020). This implies that it is one of the fastest-growing airlines, and when it keeps its growth trajectory, it will soon become one of the world’s largest carriers. Like other carriers, Flynas has been hit by the current Covid 19 pandemic (Flynas.com, 2021). When the virus was announced and many countries where it flies to close their borders, the company grounded a large percentage of the fleet, affecting its growth trends. However, it is hard to return all of its fleets to the air as the routes gradually open.

Flynas Airlines offers both business class and economy class seats. It leverages its prestigious Airbus aircraft models, which have high sitting capacity and comfort, to attract more customers. Thus, the company manages to make profits from its high-capacity aircraft, carrying many passengers in one single flight (Flynas.com, 2021). Flynas’s primary competitive strategy is to brand itself as a low-cost carrier in Saudi Arabia. Indeed, it is accurate, and this airline charges a relatively low air ticket price compared to its competitors. It chose to go with this strategy because most passengers are price-sensitive when looking for a carrier to book an air ticket. Thus, over time, Flynas has branded itself as a low-cost carrier in Saudi Arabia and even in the Middle East, a name that is making it receive many passengers (Flynas.com, 2021). The main market segment this airline has targeted is the business people and tourists. These two market segments consist of regular travelers who have developed a loyalty to the company for its low-priced air tickets.

Problem Description

One logistical challenge facing Flynas Airlines is minimizing costs and maximizing revenue as it pursues its low-cost strategy and remains competitive. The aviation industry is one of the most challenging and expensive business ventures prospective business organizations can think of (Whang, 2017).  Setting up an airline company can be so cumbersome and costly. The company needs to purchase aircraft that are already expensive, hire pilots and other specialized staff, incur different costs in meeting the regulations and many other expenses.

To recover the costs and start making profits, an airline company must charge reasonable prices on the tickets. Moreover, the airline should operate on routes that have a high traffic of passengers to attain full board (OECD, 2016). Therefore, for a company operating on a low-cost carrier” strategy like Flynas, it becomes even more challenging to balance the costs and the revenue to make a profit. This implies that it must operate efficiently to minimize expenses and cut unnecessary expenditures to boost its profit margins so that this company can maintain its strategy.

Some of the objectives or actions that should be pursued by Flynas Airlines in the quest to minimize costs of operations and maximize profits are first engaging the suppliers of the supplies and negotiating with them so that the company can get better prices for the supplies. There are so many supplies required in airline operations, including fuel, passengers’ food and drinks, crew uniforms, aircraft spare parts, office supplies, and more (OECD, 2016).  Engaging the right suppliers that would be supplying the products at a minimum price on the market would be one wise move in minimizing costs.

The second objective or action that can help in reducing costs is evaluating the salary levels of all employees relative to the value every employee brings to the company’s profitability. In other words, employees such as pilots and engineers should be paid per trip for the pilots’ cases and per the scope of the work done in maintenance for the engineers’ case (Lee, Hong, & Hwang, 2016). Pilots who have made Anaya trips should not be paid. This will not only reduce unnecessary expenses but also instill hard work among employees. In addition to this point, the company should never give regular bonuses unless they are linked to improved productivity (Whang, 2017). Rewards should be awarded reasonably, not overall.

The third action that should be taken is streamlining the communication network to ensure effective communication among the staff. Effective communication helps cut unnecessary costs. Individuals should not be making decisions without consulting to reach a consensus (Lee, Hong, & Hwang, 2016). For example, the procurement managers should consult the operation and logistical managers on the prices of the supplies, the costs of transport and more so that supplies are purchased at a minimal price and transported using less costly means (OECD, 2016).  Lack of consultation would lead to the reverse, and this will bring unnecessary and available expenses.

Supply Chain Management Concepts/Tools

Several supply chain tools can be used to achieve cost minimization and profit maximization. One of these tools includes, first, the demand forecasting tool. Flynas Airline management should often use demand forecasting tools such as analytics. This is a supply chain management software capable of processing voluminous data to provide insight, which helps create a forecast for future demand (Cubility.com.au, 2019). The managers would look at the trends and be able to know prospective customers’ needs. After learning the demand, it would be easier to plan well in advance. Future demand information gives essential information in making production planning decisions, supplier relationships and labor management (OECD, 2016). This helps in cutting down the unnecessary costs that would have come with a lack of this information.

The company should also use the supplier management tool. Supplier management tools are a must for this company when it comes to procurement. This tool has assistive features for cost of supplies issues and helps the company get a better understanding of how to improve supplier relationships (Cubility.com.au, 2019). It also shows the historical details of the partnership with suppliers and how it affects the supply chain. Thus, having this tool will enable the company to see how any chosen supplier contributes to the business model. This helps significantly cut costs and boost profits.

Another tool that Flynas needs to have is the lean inventory tool. This concept embraces the just-in-time production model where a company should create only what is required based on the current and projected customer demand. The just-in-time production model reduces massive inefficiencies that waste time and effort (Cubility.com.au, 2019). For instance, Flynas should not be allowing its planes to fly half-empty or less than they are less than 90% full. It should find a way of combining half-booked flights to make one flight full to save on fuel costs and other expenses (OECD, 2016). This way, the company will be able to minimize the operation costs and boost profitability.

References

Arabianbusiness.com. (2020). Flynas: Company Info. Retrieved from https://www.arabianbusiness.com/companies/flynas-70977.html

Cubility.com.au (2019).13 Essential Supply Chain Management Tools. Retrieved from https://www.cubility.com.au/13-essential-supply-chain-management-tools

Flynas.com. (2021). About Flynas. Retrieved from https://www.flynas.com/en/about-us/about-flynas

OECD. (2016). Logistics Development Strategies and Performance Measurement. Retrieved from https://www.itf-oecd.org/sites/default/files/docs/logistics-strategy-performance-management.pdf

Lee, D., Hong, P & Hwang, D. Critical factors that affect logistics performance: a comparison of China, Japan and Korea. International Journal of Shipping and Transport Logistics 9(1):107 DOI: 10.1504/IJSTL.2017.10000946

Whang, D. (2017). Critical factors that affect logistics performance: a comparison of China, Japan and Korea. Int. J. Shipping and Transport Logistics, Vol. 9, No. 1, 2017

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The purpose of this assignment is to identify and apply Logistics and Supply Chain Management concepts/tools to suggest logistics performance priorities. For this purpose, you should search and review these companies through secondary available information. Think about how you can apply the concepts/tools that you learned in this course.

Suggest logistics performance priorities for any ONE of the following; explain why you have come to your conclusions:

• A low-fare Airline, FLYNAS (Service)

OR

• A fast food chain Such as Dominos (Product)

The Answer must follow the outline points below:

1. Executive summary (1Mark, word count range 300-500)

– Summarize what is logistics performance priorities, what Logistics and Supply Chain Management concepts/tools applied to achieve the company’s objective.

2. Background information (1Mark, word count range 300-500)

– Briefly introduce the company background (e.g., name, products, business size, location, internal/external interesting facts, etc).

3. Problem Description (1Marks, word count range 300-500)

– Describe the objectives clearly and specifically.

– The objective may involve either logistics decision-making or process improvement.

4. Results by using the application of logistics and SCM concepts/tools applied (1Mark)

– Describe what specific logistics and Supply Chain Management concepts/tools can be applied to achieve the objective. This section should make it clear that you understand the concepts/tools you are about to use.

5. References (1 Marks)

Note: The answer should be for each point in the range of 300 to 500 word counts.

Each point carries 1 Mark.

Use APA style of referencing.