Evaluating Qantas' Supply Chain Management Essay For Sustainability.

Qantas Overview

Question:

Discuss About The Evaluates Supply Chain Management Of Qantas?

Sustainability is regarded as the only strategy to attain success in future. Awareness related to sustainability has increased in the last two decades. Business is now focused on attaining social, economic and environmental sustainability in order to create long-term benefits (Dancu, 2013). Sustainability in business requires leadership commitment, employee engagement, attaining effective production and resource management strategy and a supportive organizational culture. However, presently sustainability in the supply chain has also become quite important as it extends the firm's internal resources to external ones. Sustainability in supply chain increases its capability and ability to assess, utilize and assimilate external resources to facilitate the business process (Lee et al., 2016).    

This report would critically evaluate the supply chain management of Qantas to identify its sustainable approach towards development.     

Qantas is the Australia's largest domestic and international airline founded in the year 1920. The organization has a strong brand reputation in terms of excellence, safety, operational reliability, and maintenance and customer service. Qantas is the brand of Qantas Group that provides services related to the transportation of the customers. The portfolio of the subsidiary business of this Groups ranges from Qantas Freight Enterprises to Qantas Frequent Flyer. The organization employs nearly 30,000 people in the world. In the year 2015, Qantas earned revenue of A$ 25.8 billion with the operating income of A$975 million. There are especially six types of fleets offered by this company to cater the needs of different customers (Qantas.com, 2017). 

Qantas has always focused on attaining sustainability in their business. The business has made strong progress in reducing the environmental impact on the business. The organization has included the global sustainability indices and accolade globally that highlighted it as a sustainable company. Qantas pursue to become an industry leader in terms of environmental sustainability.  The organization has attained fuel efficiency by reducing the consumption of fuel by 1.5% each year. The organization has aimed to attain carbon neutral growth from 2020 and reduce emission by 50% within 2020 (Qantas , 2012). 

Qantas has attained sustainability in terms of its operation. It has pioneered in fuel-efficient flight navigation technology. However, very little has been discussed about its efficiency in supply chain management and hence it is for this reason Qantas has been selected for this report. The rationale for selecting this organization is to assess the supply chain management (SCM) of this organization so that its approach to sustainability can be evaluated. The supply chain of this organization includes different policies and procedures to make the procurement and delivery process effective for the business by satisfying the customers. 

Sustainability at Qantas

Supply Chain Management (SCM) is associated with the learning and innovating capacity of the organization. Effective management of supply chain requires environment, social and collaborative capability on the part of the business. SCM require co-development and collaborative practices that help in transferring operational as well as organizational knowledge to the supply chain partners (Ralston et al., 2015).  Qantas has worked to improve its logistic strategy to become socially responsible. Many of the logistics and systems of Qantas are in-house and this includes the catering and systems. The most important item, which was to be sourced by Qantas, is the fuel. The instability in the price of fuel makes it essential for the company to focus on proper procurement strategy.  

The supply chain of Qantas began with the procurement of the fuel. The procurement strategy of Qantas is focused on maximizing the value of the shareholders. The procurement of Qantas is attained through a disciplined, systematic and ongoing process to achieve reliable and ethical supply of the goods and services that are purchased externally. Qantas Group purchases different quantities of goods and services that may range from stationary to aircraft (Qantas.com, 2017). 60% of the revenue of the company is spent on the suppliers while procuring them. To carry out the procurement ethically, Qantas has developed Procurement Policy that aims to:

• Acquire goods and services that meet the specifications and are delivered within time at globally competitive prices
• Obtaining value for money at total cost basis
• Focus on consistent procurement processes
• Reduction of operational, legal, financial and sustainable risks

Qantas has focused on Supplier Relationship Management to obtain a win-win outcome (Qantas.com, 2017).

The procurement process of the fuel for Qantas has been illustrated  below:

                                                          Figure 1: Procurement of Fuel

                                                          Source: (Qantas.com, 2017)

Green Procurement policy through biofuel feasibility has reduced the environmental impact. Development of biofuel feedstock has helped to absorb the carbon dioxide that resulted from the production and distribution chain.

Inbound and outbound supply chain deals with obtaining the raw material from the suppliers and then processing and augmenting them in output to provide the final service to the customers (Sainathuni et al., 2014).  The inbound logistic of Qantas include the Route Selection, Passenger Service System, Yield Management System, Facilities Planning. The outbound logistic includes Barrage system, flight connection and hotel reservation system.

                                                             Figure 2: Inbound and Outbound Supply Chain

                                                                      Source: (Ran, 2008)

Qantas has improved its inbound supply chain by developing its own website that helps the customers to connect with them. Qantas has provided the customers with the freedom to select their meals, route and book cars in the destination city.The modes of payment are made easier by allowing the customers to make payment through different online procedures.

Supply Chain Management at Qantas

For the IT support in the Passenger Service System, Qantas outsource to Amadeus. Amadeus is an IT company that offers PSS support to different Airlines in Australia. Recently, Qantas has made collaboration with Travel Intelligence Solution in order to reduce the disruption of the operation occurring external events like bad weather or air traffic congestion. With the help of this tool, the quick decision for cancelling and delaying flights can be made (Karryon.com.au, 2015). 

Yield Management System has helped Qantas to reduce seat vacancies. The yield managers utilise statistical data for forecasting booking in future. Qantas include an IT team that uses seat pricing system obtained specialist suppliers called PROS to expand the price range that also helped in increasing the profitability of the company (Smith, 2015). For yield management, Qantas put stress on the notion of overbooking, price initiative, discount allocations and traffic management.

Amadeus Software system is used for flight and the crew scheduling that makes use mathematical calculation for allocating the shift hours to the crew. Qantas purchases its own aircraft for creating long-term benefits.

Q Catering and Snap Fresh are the catering group of Qantas. They are the leading manufacturer of the meal and meal components. Q catering has national procurement, purchasing and forecasting system. The specialist in the catering group has a strong understanding of the market trends, seasonal produce and make a commitment to cost control. To ensure the best possible delivery of food to the customers, Q Catering has invested in fleet and operation to include refrigerated vehicles and a dedicated transport team (Qantas.com.au, 2017).    

The value chain of Qantas includes Frequent Flyer Program, Jetset Travel Would, components of the outbound supply chain, Qantas engineering, QantasLINK and customers. To deliver the best possible service to the customers, Qantas loyalty points to the customers that can be summed up to obtain a free flight. Qantas Frequent Flyer is the most well-known loyalty program that 7.2 million members.

Qantas Engineering is part of Qantas Group. It possesses international reputation for operational excellence that employs around 5500 people in Australia and in different parts of the country. The engineering facilities of Qantas have their bases in Melbourne, Sydney, Brisbane and Avalon. They have enabled Qantas to attain efficiency in quality engineering, supply chain and maintenance thereby creating competitive advantage in the market (Qantas.com, 2017).     

Qantas has presently focused on developing Supply Chain Improvement Program that has helped in improving the service delivery to the customers through the four new initiatives (Qantas Freight, 2014):

• Development of electronic air waybill system to reduce the use of paper
• Improvement of quality management through business analytics
• Mobile site and smart apps to improve customer relationship and experience
• Customer self-serve kiosks

Procurement Policies

The Supply Chain Management Approach of Qantas has focused on cost-effective production through reduced inventory, increasing the speed of transaction and enhancing the satisfaction of the customers. SCM has been the successful operational strategy for Qantas for global sourcing and logistics. 

Sustainable supply chain mainly integrates the financially as well as environmentally viable practices in all over supply chain life cycle that means from the creation of the product design to the consumption and disposal of the product. A sustainable supply chain management not only reduces the all over carbon footprint but it also helps the organisation to optimise their operation for achieving cost efficiency. Qantas has an effective inbound and outbound logistic system and they have numbers of suppliers from which they are receiving goods such as food related products, fuel and other related services with cost efficiency. Qantas has an effective planning as well as forecasting system that helps in managing materials as well as reducing the wastages. For increasing sustainability in the supply chain practices, Qantas can take several steps in moving towards the supply chain.

However, Qantas is well aware regarding environmental issues but they are not currently aware regarding the sustainable practices followed by their suppliers for which they are facing issues because they are not maintaining the environment-friendly product. For planning the labour requirements as well as production, the national enterprise resource planning linking with the catering services so that they are an outside organisation based upon which catering and planning system is dependent. Therefore, for increasing sustainability in the supply chain, it is important for Qantas for increasing their understanding regarding the environment related performances of the suppliers. Qantas must observe whether the product or services received from their suppliers are creating low environmental impact or not. For the reduction of the environmental impact, it is mandatory for the Qantas to discuss their expectation with their suppliers so that they can understand the environment sustainability related policy of Qantas and take action regarding this. In this case, the vision of Qantas must be discussed with the entire shareholders that mean from suppliers to the customers so that a good and sustainable supply chain can be implemented in the organisation (Sustainable-scf.org, 2017). After determining the target suppliers for the businesses, it is important for Qantas to set some benchmarking strategy so that they can apply an effective and sustainable supply chain management strategy.

 In this step, Qantas must state an effective waste management strategy to their suppliers and along with that they must describe their fuel requirement to their suppliers so that their supplier can supply bio fuel to Qantas (Greenbiz.com, 2017).The main reason behind the selection of bio fuel for operating their flight is decreasing the environmental impact regarding their operations. However, catering services of Qantas demanded that they supply good quality product in a cost effective way but there may be some situation when the food prepared by the Q Catering can be excess that can create the possibility of food wastage (Qantas.com.au, 2017).Therefore, Qantas should encourage their vendors to follow green waste management strategy or effective refrigerate system so that the amount of food waste can be reduced. For the achievement of sustainability, Qantas should follow the benchmarking strategy based upon the environmental sustainable strategy followed by the suppliers that mean utilisation of the bio fuel and good waste management strategy. However, only the utilisation of bio fuel cannot increase fuel efficiency that means it cannot decrease harsh environmental impact (Qantas.com, 2017). Along with that, it is also important to encourage the suppliers who supply aeroplane part to create energy efficient engine so that bad impact on the environment can be reduced. If Qantas will be successful to achieve this result then they will be able to reduce the emission of the carbon-di-oxide that will help to reduce total green house gas emission. The suppliers must be encouraged to develop the technology so that the noise level can be decreased because sounds of aircraft create noise pollution. Following a good strategy to manage waste decreases the costs of food that not only satisfies the customers but also the organisation by increasing the flow of customers. Therefore, Qantas should encourage their suppliers to follow just in time approach to decrease the food wastes.

Inbound and Outbound Logistics

After the development of the baseline for the supplier performances, it is mandatory for the Qantas to develop an effective capacity building and training program. This step is highly important because it helps in driving the behavioural related changes and improves the sustainability in the supply chain (Qantas , 2012).For the implementation of sustainability, Qantas should transfer the knowledge to suppliers so that effective supply chain can be leveraged. For transferring the knowledge, Qantas should arrange an effective training strategy so that they can provide a clear overview regarding the sustainable practices of the organisation. After the provision of good training program and development of an understanding related to good performance regarding baseline of suppliers, Qantas should measure the performance of their suppliers in a different time. For measuring the performance of suppliers, it is mandatory to conduct an effective market audit. After implementation of the market audit program implemented by the Qantas, it is mandatory to develop as well as execute different corrective actions with the help of developing a clear communication of results. After the conduction of audit, if it has been observed that the supplier shows the greatest level of result in maintaining environmental sustainability then Qantas must accept them, otherwise, they should terminate those suppliers in case of non-compliance. During the improvement of the performances of suppliers, it is mandatory to provide a reward to some suppliers who show their greatest level of concerns in driving the sustainability related performances. Encouraging the suppliers to maintain transparency in their operations and providing more awards for the maintenance of the sustainability can increase improvement in sustainability.

There are so many organisations that think challenges regarding supply chain cannot be resolved by any individual effort and for this purposes collaboration in all over the industry is mandatory. These collaborations in all over the industry are important because it helps in preventing the fatigue regarding audit and it also helps in avoiding redundancy regarding training.

Conclusion

From the above discussion, it can be clearly stated that it is highly important for any airline industry to maintain environmental sustainability because every aeroplane emits a huge amount of green house gases that cause harm to the environment. Despite following a good and clean catering service, transparency in accepting fuel from suppliers, any airline based company can face issues to meet the environmental sustainability because of the operation of airline organisation creates a huge amount of green house gases. For this purposes, following a good and sustainable approach by Qantas is important because it decreases the bad impact on the environment and helps to maintain operation in a cost effective way. With the help of application of sustainable operation, Qantas can create a good brand image of their organisation that can increase the number of customers in their organisation. Therefore, profitability can increase in their organisation.

Value Chain of Qantas

In most of the cases, organisation initiates sustainability without any kind of in-detailed analysis. Therefore, lack of thorough analysis before implementing the sustainability can create issues for the organisation. Therefore, for the improvement of the sustainable strategy to maintain their operation, Qantas must assess future performance of the sustainable strategy. For understanding the impact of the sustainable strategy for the organisation, it is imperative to initiate a feedback loop so that the impact of sustainable approach on the stakeholders can be understood. This recommendation is highly helpful to create a high-performance sustainable strategy.

It is seen that most of the sustainability related approaches destroyed after a shorter time. The reason behind that is applied sustainable approach has a very lesser association with corporate strategy of the company. For resolving these issues, Qantas should measure the success of sustainable approach and they should implement the sustainable approach of their organisation by considering the corporate strategy of the organisation. According to the corporate strategy of Qantas, they must simplify their sustainable approach and implement it in their organisation so that the sustainable strategy can be successful and create best results in terms of profitability. After deciding the sustainable approach, it is mandatory to communicate the approach with their stakeholders so that they can provide their highest possible effort to achieve environmental sustainability.

Rather than taking services from the suppliers, it is more effective to apply the vertical integration strategy because it provides a greater level of sustainability. Therefore, in order to encourage the suppliers to implement the environmentally sustainable strategy in their end product, it is important for the Qantas to create a good partnership with the vendors or suppliers. For the improvement of process and achievement of a better level of services, it is imperative to create a good partnership with the vendors. This is because, when the suppliers will observe that they are participating in generating more profit for them with the help of environmentally sustainable approaches, then they will be more motivated towards the application of the implementation of sustainability. However, before creating a partnership, Qantas must judge the financial condition of their suppliers so that they can achieve competitive advantage.

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