1 MSCI 573 Operations and Supply Chain Excellence Coursework 2: Performance improvement in service operations Introduction In this module, we have discussed the Theory of Constraints (TOC) as an influential operations improvement approach. Although TOC and its specific tools/techniques were originally introduced in manufacturing settings, the most recent innovations may have occurred in applying them to the service sector, or to the service processes of manufacturing companies (broadly referred to as ‘service settings’). To further this understanding, this coursework assignment focuses on how TOC may help to drive performance improvement in service settings. This is an individual piece of coursework and it counts for 60% of the overall grade for this module. The coursework requires you to analyse how TOC can be applied and drive performance improvement in the aviation /air transport services industry. You will need to draw on relevant secondary sources and literature to underpin your analysis (see details below). You are also asked to devise a suitable performance measurement system that would help to monitor and manage performance improvement in this particular setting. Your tasks and questions Apply TOC principles and tools /techniques to analyse some of the operational challenges facing airports and the aviation industry more broadly, and to suggest performance improvements accordingly. As a first task, you are advised to search for and review relevant academic literature on the application of TOC to service industries e.g. why and how TOC is being implemented, specific case studies of application, and results achieved. Reviewing 5-6 academic sources (e.g. journal articles and/or books) would be sufficient. You are advised to scan literature in well-established OM journals such as Journal of Operations Management and International Journal of Operations & Production Management, in addition to searching the Library’s database(s). As a second task, you are advised to analyse sources of relevant secondary data such as the ones provided below. Focus on the pre-COVID-19 era, when demand for air travel was high and airports were busy places. Many industry experts and analysts expect that the demand will fully recover to pre-COVID levels once the pandemic is successfully tackled. Appendix 1 (see below) outlines some of the main challenges that the European aviation industry and airports (including UK airports) were facing before the COVID-19 pandemic emerged. EUROCONTROL is the European Organisation for the Safety of Air Navigation and it has published a manual on Airport Collaborative Decision Making (CDM). This outlines the main actors involved in air transport service delivery and the process of flight /aircraft turnaround (a copy of the manual is uploaded on Moodle, see “Coursework” section). The website of EUROCONTROL has further useful information regarding airports operations and performance. 2 The website of the UK Civil Aviation Authority provides useful information and statistics on airports performance in various areas. The website of the International Air Transport Association (IATA) contains useful information and numerous reports in several relevant areas such infrastructure issues, airports slots, and airport capacity planning. Based on the above data sources and literature review insights, analyse how TOC would apply to the air transport services, and how it would help improve performance in this context. More specifically, you should: 1. Identify up to two important problems facing airports and /or the aviation industry that could be tackled through application of TOC. You should justify your selection of these problems drawing on the data sources above, and briefly explain why TOC would be appropriate for addressing them. Alternatively, you may wish to focus on just one problem and conduct a deeper analysis. [25% of total marks] 2. Analyse how TOC would be implemented in practical terms to address the problems you identified above. Your analysis should be specific and refer to key principles and tools and techniques of TOC. You should discuss how these principles/tools/techniques would be implemented (e.g. in a specific airport or by a specific airline) to improve performance. Your arguments should be backed up by reliable evidence, so you will need to refer to valid sources of secondary data as per above, or to your literature review results (e.g. case studies of TOC implementation). [50% of total marks] 3. In line with your analysis above, devise also a performance measurement system that could be used to monitor and manage performance on a continuous basis. You should clearly define ‘performance’ in terms of 2-3 specific and measurable key performance indicators (KPIs), and discuss how these indicators would be influenced by the TOC-driven operations changes you suggest above. [25% of total marks] Submission requirements The coursework should not exceed 2,000 words in length. Any submissions that exceed this upper
limit by more than 10% will be (slightly) penalised. Please make use of tables, figures and appendices as appropriate. All tables and figures and appendices should be numbered using the Arabic system (e.g. Figure 1, Table 1). Use the Harvard system of referencing for citations in the text as well as for producing a list of references at the end of your manuscript. 3 You should submit your coursework online via the relevant Moodle link. The submission deadline is Monday 22 March 2021, and no later than 10.00 hours (UK time). Please contact me if you have any queries or require any clarifications. Good luck! Kostas Selviaridis February 2021 Appendix 1: Key challenges facing the European aviation industry and airports The design and management of air transport service delivery systems has attracted increasing attention following deregulation of airline and airport markets, outsourcing of support services, and the emergence of global service providers serving multiple airline and airport customers. These developments have increased operating complexity and interdependency among multiple organisations (such as airport operators, airlines, ground handling operators, air traffic management service providers) involved in service delivery. These organisations, which are co-located in airports, need to coordinate their operations to attain high levels of service quality and passenger satisfaction e.g. in terms of flights punctuality and schedule reliability, safety and security, travel comfort and minimum environmental impact. Airports are important and the aviation industry makes a significant contribution to economic development and national and regional growth. Following industry deregulation in the 1990s, air traffic has increased dramatically. For instance, according to the EU Commission 800 million passengers used European airports in 2010. Before the recent COVID-19 outbreak, demand for air transport services was continuously on the rise for multiple reasons including globalisation trends, changing life styles, introduction of new routes and improved connectivity, reduced air fares and widened supply choice (e.g. by the entrance of low-cost airlines in the market). Industry experts and analysts expect that the demand will recover to pre-COVID levels in the next couple of years, as vaccination programmes internationally succeed in stemming the impact of the virus. The high demand for air transport services and the fact that investment in infrastructure hasn’t kept in pace with demand means that capacity of air transportation service systems has been stretched. Capacity issues concern both ground (or ‘landside’) operations and related infrastructure (e.g. runaways, airport facilities, airport space availability, staff availability) as well as airspace and air traffic management aspects (e.g. airlines slots for using runaways and airport terminals). Capacity challenges have a direct impact on service quality in the sense that airport congestion can result in long waiting times in different airport processes (e.g. security controls, passport controls, baggage handling services, aircraft handling and preparation) and flight delays. As these processes are inter-dependent, they need to be closely coordinated to prevent bottlenecks and improve the flow of passengers. 4 Punctuality of airlines’ services and reliability of flight schedules depend not only on congestion in airports (demand: capacity ratio) but also the efficiency of airline operations and the performance of ground handling operations. Indeed, recent statistics suggest that 70% of flight delays are caused by disruption and delays to ground handling operations at airports and the remaining mainly due to air traffic management issues1. Existing evidence suggests that punctuality in services is greatly influenced by the effectiveness of the aircraft turn around process at airports. In brief, the key stages of the aircraft turn around process include airplane approach at airport of destination and landing, taxi-in (time it takes to reach final parking position from the moment of landing), passenger disembarking/boarding and preparation for next departure, taxi-out (time it takes to assume take-off position at the runaway after leaving parking position), and take-off2. To ensure on-time landing and take-off, then, coordination is required among the multiple service providers and organisations involved in this process. Reliability of flight schedules, however, should not compromise safety and security. External factors may also affect performance in cases of extreme weather conditions, incidents that affect access to airports (e.g. road or rail network disruptions), and delays in transit /connection flights of passengers. END OF COURSEWORK 1 European Commission press release: ‘Europe’s Airports 2030: Challenges Ahead’ (1 December 2011) 2 For details see the EUROCONTROL manual on Airport Collaborative Decision Making (CDM), 2012.