Airline Value Chain

Phase 1 IP

MGM340

Value Chain

Brian Turner

January 14, 2012

Introduction

With in this paper I will be covering several different topics that pertain to the value chain and the outsourcing of particular operations. I will cover different types of businesses, an airline and a manufacturer of cross-country buses, and determine what the elements of their value chains are also which elements should and should not be outsourced. Finally I will cover several different manufacturing operations and determine whether outsourcing of that operation would make financial sense.

Airline Value Chain

Below is a model of an airline value chain. The main elements of the value chain are infrastructure, human resource management, technological development, exemplary activities, inbound logistics, operations, outbound logistics, marketing and sales and service.

For the airline industry outsourcing has been key for efficiency and sustainability. It is important for airlines to outsource to other parties to increase efficiency and cost reduction. Aircraft clean up and baggage handling are two elements that are modifiable for outsourcing in the airline industry. Since these two jobs require some knowledge and training on how to perform the task, which will create a higher cost for the airline, the company can save money by outsourcing. Aircraft maintenance is another element in the airline operations that can be outsourced to other parties. Aircraft maintenance requires a high level of knowledge and skill to perform each task involving the care and maintenance of an aircraft. It is very expensive for the airline to do them as well. By outsourcing to a vendor to perform these tasks the airline are cutting costs and saving money.

Aircraft maintenance and cleanup is the most amendable to outsourcing. This is a regular routine in the airline that requires a significant resources and expertise. This is usually costly to the airline, thus the need for outsourcing. On the other hand, in-flight sale of goods and services among other catering task is the most least amendable element for outsourcing. Despite its high frequency in the airline operations, the costs and value of the task in the overall performance of the airline is insignificant. (articlebase.com, 2011)

Cross-Country Bus Manufacturing Value Chain

For a cross-country bus manufacture there are several elements in the value chain that are amendable for outsourcing that will help the company increase efficiency, profitability and sustainability while also reducing cost. One element that is important to outsource would be the element of supplies of materials. By outsourcing all elements involving supplies of materials the manufacture will in turn increase production