Corporate Award Project CIPS Final Assessment

Project Focus:

The project is a fundamental element of your Corporate Award Programme and has three dimensions:

 The organisation reflected in the business benefits to be derived from a successful outcome

 The individual reflected in the personal growth and challenge represented in the scope of the work

 The academic rigour, depth of research and quality of analysis underpinning the project option appraisal and conclusions reflected in the award of professional accreditation Organisation

 Does the project represent a significant business opportunity for the organisation?

 What are its specific desired outcomes and benefits in terms of cash and/or business process?

 Is there scope for spread of best practice as a project outcome?

 Is the scope of the project mainly in control of the individual completing the programme?

 Are there any obvious flaws or cross functional conflicts in the scope or its implementation?

 Is it realistic in terms of timescale and ambition?  Does it further the impact or credibility of the procurement function within the business as a whole?

 Does it dovetail with the wider strategy of the business and reflect the needs of all stakeholders?

Individual

 Does the project represent a significant challenge to the individual given breadth of current experience and job function?

 Does the project represent fresh experience rather than simply reporting the current role profile and functionality?

 Does the project offer a genuine opportunity for the individual to develop fresh thinking and influence outcomes?

 The programme participant should have a significant influence on the project outcome

 Are success measures clearly defined and is ownership taken by the participant?

Solution:

Executive Summary

The primary aim of this project was to explore the different supply chain options for Aviation Fuel at Australian Airports for optimizing the overall benefits for Etihad Airlines.  An achievement of this aim lead to the attainment of the following goals;

  • Establishing appropriate working relationships with the new and critical stakeholders in Etihad Airlines group
  • Delivery of increased value evidenced through tangible savings and improved service quality to Etihad Airlines
  • Shaping the overall direction of the procurement partnership with the airlines in Etihad Aviation Group
  • Improving the level of reputation of the procurement in Etihad Airline Group

The focus of fuel supply has been informed by the fact that fuel represents a critical aspect of the airline’s operations. This is the highest area of spend in the company hence characterized by high risk and business impact. In Australia, there has been a shortage of fuel therefore limiting the success of Etihad airline and their partner airlines operations. In the analysis, the tools used included the Porters 5 Forces for complexity, supplier positioning, supplier preferencing and analysis of the shareholders. From the analysis, it has been observed that fuel supply in Australia,………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

1.0 Introduction

1.1 Project title (Key Terms)

Aviation fuel represents a significant level of expenditure for different airlines. In this case, it represents a substantial element of the management of any airline.  This is evidenced from ICF International (2018) report that pointed out that the fuel price represents a total of 93% of the overall cost to airlines (see figure 1 below)

Figure 1: Airline Total Fuel Cost Breakdown

Source: (ICF International, 2018)

Further, more than 60% of the overall airline cost base is passed to the suppliers. Admittedly, a successful reduction of these costs is a challenging endeavor (Yayla-Kullu & Tansitpong, 2013). This is informed by the fact that the majority of the suppliers are oligopolies for instance there exist two caterers in majority of the airports, two aircraft manufacturers, and two main choices of the host-system providers. Additionally, majority of the accrued costs are not negotiable such as the fixed tariffs for the airports and the air-traffic-control charges. The phenomenon is complex by virtue of the contracts being long-term.  Nevertheless, modern airlines have endeavored in setting elaborate structures that would lead to the development of strategic partnerships with their suppliers as a strategy of driving down the costs and optimization of the products and service levels. Taking into account the above analysis, the title of the current study is exploring different supply chain options for aviation fuel at Australian airports to optimize the benefits for Etihad. In this case, as part of exploring the various supply chain options for the Aviation Fuel, aspects of purchasing and supply chain management.  As noted by McKinsey & Company (2017) a supply chain option with a potential of optimizing the benefits to Etihad must be aligned with the overall airline strategy, engaging skilled teams of professionals in procurement, adopting an innovative approach to category management and supply-chain design and structures encouraging progressive business-procurement partnerships.

1.2 Project Scope

As aforementioned, this study intends to explore the different purchasing and supply chain management opportunities in Australia that can be used in the delivery of the best value to Etihad Airways. In this case, the location of the study would be in Australia with the company of focus being the Etihad Airways. Through a focus on this scope, the dynamics of Australian fuel market, other Airlines such as Qantas and Virgin Australia, and strategic suppliers would be evaluated.  The best option available for Etihad Airways would be explored on the basis of the extent in which the fuel acquisition price is competitive, streamlining and efficient contracting and facilitating the sourcing of fuel at short notice in alternate and ad-hoc locations globally.

1.3 External Environment and topic

The external environment pertaining to the subject of focus is the Australian Jet Fuel Supply. Currently, Australia imports more than 40% of their jet fuel needs. This is a phenomenon that is projected to grow as a result of the consistent decline in the domestic production and significant growth in the requirements of the jet fuels. As noted by O’Connell (2011), a supply of the jet fuel in Australia’s major international airports is a complex and costly business.  The complexity arises from the significant barriers to venture into the fuel industry supply chain in a timely and sequenced manner. Also, in Australia, the supply chains are significantly owned and controlled by the companies providing jet fuel to airlines either individually or through strategic joint venture arrangements as shown in figure 2 below.

Figure 2: Australia Aviation Fuel Supply Chain

2.0 Background

2.1 About Etihad Airways

Etihad Airways (EY) initiated its operations in 2003 and involved in the transportation of more than 18.5 million passengers in 2016 (Etihad Airways, 2018). From its Headquarter in Abu Dhabi, Etihad Airways is engaged in flying in more than 116 passenger, and cargo destinations staggered in Middle East, Africa, Asia, Australia and America. The progress…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………Please contact our team to receive the entire document

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