Aim of the Study

Kleymann and Seristo (2017) discussed that procurement management is a process to purchase of goods as well as services from the external suppliers. It is provided of completed procurement processes and procedures, that is explained how to purchase from the suppliers. The selected industry for this paper is airline industry and selected organization is British Airways. Into the airline industry, the procurement management shows a key part to attain complex level of effectiveness throughout improved procurement strategies. It is key source of investments into the selected group as well as demands for improved management. Garg (2016) stated that procurement starts with identifying needs and ends with provision requirements into right quantities at particular time with right amount of quality. The airline industry saves throughout stronger purchasing for decades and with decline of unit revenues, the procurement management steps to next levels (Chang et al. 2015). Within the airline industry, capital is considered as major cost driver and therefore a better procurement strategy is required to increase flexibility and lower the fixed cost. The low cost carrier are gained of savings strategies while there is flexible to demands to increase of customer base.

The aim of this particular paper is to analyse of sourcing methods besides supplier base along with recommend of strategic source framework which can principal to procurement superiority in addition value growth.

British Airways is full service global airline that is presenting of lower fares with widespread global way to their customer base. The selected organization is largest airline within UK based on their size of fleet. The airline is based in Waterside near the main hub of the London Heathrow Airport. The company is spent of £5.2 billion of the purchasing goods as well as services from the suppliers (Britishairways 2017). The industry is procured of goods as well as services throughout strategic sourcing process with use of benchmarking to ensure to gain of higher customer value at purchasing point as well as supplier contract.

This section is established of theoretical framework as well as provided of an overview on the empirical studies related to strategies outsourcing and supplier base. It is also provided of strategic source outline which can principal to procurement quality in addition value. The study is started with the sourcing issues and methods which are followed by the British Airways. The theoretical perspectives of this study is relied on the analytical models as well as empirical approaches (Iatrou and Oretti 2016). The aim is to provide an overview regarded to the sourcing strategies and supplier base.   

Background of the Company

Due to continued globalization as well as decrease into the transactional cost, there is an increase of importance of the sourcing functions. The main aspect of sourcing is integration of buying strategic decisions of the organization as it is promoted of trust as well as decreased into the transactional cost. Wassmer and Madhok (2017) stated that there is potential for the cost takeout, therefore sourcing is being focused on the cost avoidance. As capital is major cost driver for the airline industry, therefore there should be requirement of procurement strategy besides use of correct levers increase into suppleness while lowering of the fixed costs. There are various factors which leads to sourcing strategies are as follows:

Timing: Demand began to fall in the year 2000 and there is acceleration after the terrorist attacks in 2001 in US. Gaudenzi and Bucciol (2016) analyzed that there are lower cost airlines saw opportunities and there is renew as well as increase into the fleets, in some of the cases there is also lower charge by buying used aircrafts since the legacy airlines. It is showing of leverage potential of political as well as economic climate. The companies can able to strengthen market positions by an increase to understand how the external forces can affect the industry.

Simplification of specifications as well as increase of volume: British Airways acquire of fuel effectual fleet, simplifications can able to carry value engineering, increase into operative efficiency as well as flexibility into the sourcing process. Scheffler, Schiele and Horn (2016) explained that maintenance is increased of savings, as spare part stock administration is being shortened, volumes are resulted into better rates besides the airlines are being repaired and improved into fleet reliability.

Outsourcing services: He and Balmer (2017) stated that it leads to save into the cost related to administrative, improves of flexibility into labour, gains of importance into specialized labour like IT, maintenance as well as repair. The services such as passenger handling are allocated to the exterior agencies, when work are not substitute to the technology.

Marketing: Shaw (2016) argued that it is a part where the savings are increased by means of subcontracting of costs to the partner airports. The airlines are marginal airports for bids in contradiction of others, negotiation on the landing fees in addition assigning of marketing costs to the selected partners.

Partnerships: By selecting of an alliance, the lower cost players are able to maintain of flexibility advantage as well as stay concerned on expense control, airport services, IT marketing and other expense related with the alliance participation. The lower cost carrier has limited partnerships (Ellis 2016).

Literature Review and Analysis

 The sourcing methods which are used as follows:

Global sourcing: Into the British Airways, global sourcing method is used which consisted of two main points such as: production units serve of market and how raw materials are supplied for the production as well as research and development, manufacturing departments. Burghouwt (2016) stated that this sourcing strategy is related to the foreign suppliers requires of higher purchasing based on the wholesalers as well as suppliers. Global outsourcing leads to lower price, higher standard products as well as higher quality. Wassmer, Li and Madhok (2017) argued that there is also increase of global competition among the company, global sourcing of the airline components as well as raw materials and the finished products are increased.

Just-in-time: Park et al. (2018) analyzed that most of the companies are adopted of just-in-time approach for making improvement over cost as well as quality. It makes a closer relationship among the raw material suppliers as well as companies. The UK airways are taking concepts of the lean manufacturing for making improvement over inventory as well as creating of effective workflows. The airline is hired of consultants those help to create of supply chain framework to manage of airline services.

Apart from the sourcing, there is a huge supplier base into the airline industry. The procurement department is recorded in addition measured of risks across the supplier. British Airways is one of such organization that is undergoes of strategic changes into the procurement management department. Williams (2017) discussed that the changes are implemented in effort to enhance of different business operations to promote of client satisfaction as well as realize of objectives. British Airways has inbound logistics operations that are complex and it is involved with timely delivery of fleets and catering of the products. In order to provide a better supplier base, the company is ensured about freshness of their foods. Therefore, the company is achieved of competitive advantage throughout establishment of on-going relationships with the supplier. Kamau and Stanley (2015) demonstrated that the supplier operations of business is involved with preparing of good services to sell to the customers. As UK’s largest airline industry, British Airways is flied to more than 400 destinations. The business scope operations is quite extensive. The company has competitive advantage towards offering of better customer services by providing of quick check-in-services and online booking services to the customers.

Lawton (2017) concluded that into the outbound logistics, the company is sending of ready products to the customers for purpose of consumption. It is related to manufacturing companies, as it is applicable towards providing of airline services. British Airways is flied to 80 countries and it is gaining of supplier base by effective handling of baggage to the destination along with advanced informational as well as communicational system. Pearson et al. (2015) analyzed that the company is also provided of post sales services which is consisted of product installation, handling of complaints regards to the products, services. In the year 2015, the airline industry is introduced of 136 scanners at the check-in desk, therefore the airline is also committed towards the financial investments in a proper as well as systematic way to enhance of various aspects of service provision.

Examine Sourcing Methods and Supplier Base

Kim and Mauborgne (2014) investigated that at end of the year 1999, British Airways is spending of £4 billion a year with the suppliers. The company is required to inspect its procurement purposes in order to accomplish of savings goal with £1.4 billion by the year 2006. British Airways is used of technology to tackle of it has directs spend, improvement over direct procurement and accounts for £1 billion in spend. Gao, Yu and Cannella (2017) analyzed that the company is changed of impressive results just savings such as there is reduction within UK preferred with the supplier base of 14,000 to 2,500. The company is doing 80 percentage of its purchasing services through electronic mode. Ko (2016) concluded that procurement is about processing of the orders as well as strategic sourcing which helps to get of best quality products at better prices.

Pearson and Merkert (2014) stated that a strategic source framework creates of sustainable cos advantages for the businesses. Into the airline industry, the strategic source framework leads to procurement excellence as well as value growth. It leads to increase into product diversity, shortening of the product life cycles, fluctuate into the materials, commodities prices as well as growth into regulatory pressures.

Using the strategic management theory, it carries out strategic management analysis of British Airways, evaluation of business strategies, its performance, future capabilities along with success and failure rates. Pacheco and Dean (2015) found that by strategic management, British Airways success is resulted into consistent maintenance of their lower cost, operational effective positions and developed of strategic understanding to defend of niche into the air travel market. The services which British Airways are provided to the customers is being differentiated form the services provided by other airlines. Therefore, the price of fares are not determined by considering of service type factors (Whyte and Lohmann 2015). The budget airlines keep of turnover margins by moving the cost to grow the business. Therefore, the airline is continued to choose of strategic choices to improve the offered product, enhance of better service delivery to the customers and reduce of cost to cope up with the competitive challenges.

Using Resource based theory, it pulls consideration towards the strategic value of their workforces besides issues into the workplace learning. It provides a soft opinion of the human resource management. Brueckner and Luo (2014) posited that sustainable competitive advantage is not being realised throughout study of the external marketplace situation. It also stipulates the fundamental sources as well as drivers to competitive advantage of the market and performance is associated with resources as well as its capabilities, information and knowledge that are controlled by the firm. Vellas (2016) highlighted need for fit among outside market in which the company is operated besides inner capabilities in perspective of internal environment of the airline industry.

Using contingency theory, it is stated that the management and decisions are based on other things to become effective for the organization. Morrison and Gillen (2017) discussed that the management approach is contingent on the organizational situations on the organizational situations and unprecedented occurrence are tend to interfere. Pearson and Merkert (2014) asserted that the contingency theory is represented of organizational decision making perspective as well as organizational structure. Into the contingency theory, the organizational success into planned choices decisions are taken into considerations for the factors related to the strategic choices decisions included of strategic competitiveness, organization related challenges, organizational structure as well as leadership dynamics among the continence’s which reflects the organizational situations.

Using organizational behaviour theory, it helps to adopt of effective process which allows the organization to keep with changing into the industry trends. The organizational behaviour is discussed with importance of organizational functions to make improvement over productivity as well as performance of company in changing environments (Wassmer and Madhok 2017). In order to make success into the airline industry, it creates of competitive benefit over the competitors, it is compulsory for the organization to grow of positive corporate culture along with actual leadership process for employees to effect of behaviours towards the job as well as company into confident ways. Gaudenzi and Bucciol (2016) discussed that motivation is required among the employees to gain of success and profitability among the organizational functions. Maslow’s hierarchy of need motivation theory stated that five needs of the individuals are fulfilled as it is related to satisfaction in addition to motivational level. British Airways served the physiological requirements of their employees by providing them a stable employment than sustained. The company is boosted of self-esteem as well as confidence of their employees by letting them to participate into the operational decisions Pearson et al. 2015). By self-actualization, the company educated that key to increase of presentation levels is creating of intelligence of real meaning for the workers. The company also provides of safety needs by proving them with adequate medical as well as retirement benefits. They also ensured about safety of their job and also financial security. Finally, creating of better company culture for the employees lead to provide and meet with belongings needs.

The internal environment analysis of British Airways has unique qualities from its competitors, and most prevalent is execution of targeted customer’s services. The company is marketed towards the individuals which view the airline as nothing more than the transportations such as customers are seek of quick and reliable services without hassle. This particular company is created of market for the businessmen as well as women and frequent flyers. Wassmer and Madhok (2017) discussed that apart from all this, British Airways is provided of another qualities such as unique emphasis on the work culture worker attitudes. With an innovative hiring style, the company is managed to attain and train of unskilled as well as energized workers that envy into entire industry. The workers are taken as primary drivers towards customer retention as well as efficiency of customer services which drive of profitability of the firm. The company is streamlined of the business models to value of its cost efficiency and seek to reduce luxury costs. Whyte and Lohmann (2015) analyzed that standardized parts as well as reduction of training for maintain of crew is resulted into improved into bottom line. The target market of British Airways is consisted of young, middle and short distance travellers. The technology into flight is begin to offer of shorter flights over longer distances and entire industry cost of the flight is decreased as main source over the competitive advantages.

  He and Balmer (2017) concluded that British Airways is forefront of the innovation offered of senior discounts as well as ticketless travelling. It is strengthened by incredible culture along with lower cost services. By support over community as well as provide of equal opportunities’, the company is continued to build of stronger work culture along with reputation. The company is created of value created due to hiring strategy which made a great place to work (Iatrou and Oretti 2016). The employees are also exposed of training to solve of possible problems. There is higher importance of organizational culture which is complex to the international airlines. Sluggish market, competition, profit margins, personnel turnover as well as unusual operational demands are several but it is encountered characteristics of the airline industry. Scheffler, Schiele and Horn (2016) stated that organizational learning is required within the organization to achieve of success as well as profitability within the industry. Therefore, the company is required to maintain of competitive advantage as well as better organizational culture so that it can achieve of customer satisfaction. The company is also provided of post sales services which is consisted of product installation, handling of complaints regards to the products, as well as services (Zhang and Wang 2016). Therefore, the selected organization is provided of higher competitive advantage into the industry. It is enhanced of better service delivery to the customers besides reduced of cost.

Conclusion

It is concluded that there are bring down cost carriers saw openings and there is re-establish and increment into the fleets, in a portion of the cases there is likewise lower cost by purchasing utilized air ships from the inheritance aircrafts. It is appearing of use capability of political and monetary atmosphere. This particular study is provided with an opportunity to study the budget airline industry as well as theories which are explained of the competition, structure of management, and internal as well as external environment of airline industry. The organizations can ready to fortify market positions by an expansion to see how the outer powers can influence the business. Inside the carrier business, capital is considered as real cost driver and in this manner a superior acquisition technique is required to build adaptability and lower the settled cost. British Airways is one of such association that is experiences of key changes into the acquirement administration office. The progressions are executed in push to improve of various business tasks to advance of customer fulfilment and also acknowledge of destinations. The company has inbound coordination activities that are unpredictable and it is included with opportune conveyance of fleets and catering of the items. Therefore, procurement is about processing of the orders as well as strategic sourcing which helps to get of best quality products at better prices which helps to examine of supplier base and propose of strategic source framework which can lead to procurement excellence and value growth. Finally, it is provided of strategies which are required for the airline industry to maintain a competitive advantage into the industry.

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