Airasia's Logistic and Channel Management

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Goal and Objective of the assignment

As Airasia’s vision is to be the largest low cost airline in Asia, our proposal might be a useful tool for Airasia to achieve their vision. The goal of our proposal is to decrease the operational cost of Airasia to attain cost efficiencies and provided the public with a lowest cost so that “Now everyone can fly” with Airasia. Objective of this proposal is to develop e-Supply Chain Management to attain a much lower operation cost for Airasia in the coming year. In this proposal, we will discuss about; 1. Analyze of the factors contributing to enable e-SCM for Airasia, 2. Create an appropriate implementation plans to develop e-SCM, 3. Discuss the environmental factors that will affect the implementation, 4. Determine which department will e-SCM help the most,

5. Show the benefit of e-SCM to Airasia and stakeholders and 6. Suggestion for how to further improve the e-SCM.

Overview of the company (Airasia, 2010)

Now everyone can fly, this slogan held in every Malaysian’s mind deeply. Airasia was an Asia’s leading airline with a dream of making flying possible for everyone. The vision of Airasia is to be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares. The mission of Airasia included; • To be the best company to work for whereby employees are treated as part of a big family • Create a globally recognized ASEAN brand

• To attain the lowest cost so that everyone can fly with Airasia • Maintain the highest quality product embracing technology to reduce coast and enhance service levels There are 6 main values that Airasia focused in to attain the lowest cost. The strategies used were; ▪ Safety first

o Partnering with GE Engine Services the world’s most renowned maintenance providers and complying with the world airline operations. o GE Engine Services began servicing jet aircraft engines over 50 years ago. o Provide large or small jet engines for commercial or military aircraft as well as engines for marine and industrial applications (Breaking Travel News, 2002). ▪ Hight Aircraft Utilisation

o Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity. ▪ Low Fare, No Frills
o Providing guests with the choice of customizing services without compromising on quality and services. o Example services provided food & beverage, merchandise, excite, baggage supersize, pick a seat, premium service or corporate booking. ▪ Streamline Operations

o Making sure the process are as simple as possible. o Example online ticket booking.
▪ Lean Distribution System
o Offering a wide and innovative range of distribution channels to make booking and traveling easier. o Strategy of distribution like call centre, sales office & airport sales counter, authorized travel agents, mobile booking or online. ▪ Point to Point Network

o Applying the point-to-point network keeps operation simple and cost low Analyze Airasia’s Annual Report

According to Airasia’s Five-Year Financial Highlights from 2006 until 2009, Airasia’s revenue is increasing steadily. Unfortunately, in year 2008 is having loss around RM497 million. This is because their operating expenses (-RM3,207 million) had exceeded their revenue (RM2,955 million). From the report, year 2008 Airasia had huge amount of air craft fuel expenses (-RM1,390 million) and derivatives (-RM679 million) on operational cost compare with years 2009 –RM928 million and RM22 million. Due to the fuel expenses and derivatives, it causes Airasia making loss in year 2008 (Airasia Berhad, 2010).

From the balance sheet, we can know that net current asset of year 2008 and year 2009 was increasing from RM163 million to RM511 million. It is because of non-current assets and...
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