mirandasolis Transportation Management
The transportation industry is closely linked to the cycles of the economy. If the economy is on top, the transportation companies prosper and, on the contrary if the economy hits the bottom, many companies fail. The reason for it is that the demand for transportation services is created by the customer demand for goods and services. Therefore, a slump in the economy has a crucial influence on the transportation industry, in particular airline companies. For instance, because of the downturn, customers choose cheaper transport means, other than air express. Thus, the airlines companies have faced the problem of increase in general expenses and decrease in income due to high fuel costs and reductions in flying.
In order to recover and remain as profitable as possible, the airline companies have to minimize their transportation assets. Hereby, there is a strong relationship between the capacity planning and cost efficiency. According to Gudmundsson, “extraordinary events and economic cyclicality are certainties, which industry businesses need to plan for more effectively in order to secure industry profitability”. Additionally, effective strategies should be focused on reaching a high level of flexibility. Hereby, flexibility is one of the most important performance measures in the operations management that describes a level of the organizational capability to adapt, resist, or handle the problem.
For the airline companies, reducing the number of employees is a common tactic to increase the efficiency and remain competitive during the economic recession. For example, in 2009, American Airlines struggled with the decreasing income by cutting 921 flight attendant positions. Similarly, Delta Air Lines announced the job cuts of the capacity system by 10 percent. However, implementing staff cuts is not always a good solution of the problem. As a flight attendant working for Delta Air Lines, I can note that downsizing leads to the decrease of employee morale, disruption of social and learning networks, and the downfall of the company’s skills capacity.
There are alternatives to employees that can decrease the general expenses of the company and increase its competitiveness. For example, flexible transportation companies should implement operations strategies to use available carriers and services in the most efficient way possible to ensure cheap and timely transportation of passengers. The core task of the airline industry is creating transportation strategies oriented on the variations in the customer demand.
Let us discuss the steps that should be implemented while developing such a strategy. Firstly, all the transportation assets of the company both internal and external should be carefully assessed. The approaches for assessing transportation flexibility are based on the changes in the demand volume. Secondly, the company’s existing capacities should be maximized in order to avoid future transportation expenses. Hereby, the new information technologies can assist the transportation companies in creating capabilities for predicting the capacity shifts by careful monitoring future trends. Thirdly, a real time visibility of demand volumes should be shared across the company. If the real-time demand is visible across the system, any difficulties can be observed and controlled by the organization as early as possible before they lead to the critical decrease in profits.
To draw the conclusions, the impact of economic cycles on the transportation business largely depends on the level of the company’s ability to respond timely to any changes. To be effective, the operations planning, executing, and assessing processes should be based on the detailed plan, carefully developed and adjusted in real-time. Developing longer-term strategies instead of managing issues on a short-term basis can leverage capacity shifts.
Miranda is the author of this paper. Also, she is a writer at
https://essaysworld.net/grade-calculator.
November 12, 2020
