Principles of Operations Management

Case 1: Rolls-Royce

Rolls-Royce plc, a UK-based aircraft engine manufacturer, shifted its focus from being a product/technology firm to providing aftermarket services. Rolls-Royce was the first to introduce power-by-hour assistance in the aircraft industry. Customers paid a set maintenance cost for each hour an aircraft was in flight, specifically for the duration when the aero engine was operational. The company provided various service packages tailored to different customers. Rolls-Royce’s post-purchase services aided clients in minimizing maintenance expenses and operational interruptions. The organization was able to enhance its aero engine designs and establish positive relationships with clients as a result of their contributions. The corporation also acquired a consistent long-term revenue flow from the maintenance contracts. Analysts believed that the company’s service orientation significantly enhanced its position in the unpredictable aerospace business. In 2017, Rolls-Royce’s service revenues of GBP4.2 billion made up 53% of its total revenues. Rolls-Royce experienced financial success from its aftermarket services but encountered issues in 2016 when key clients like as All Nippon Airways (ANA) reported that turbine blades in Rolls-Royce engines were corroding at a faster rate than anticipated. Virgin Atlantic, British Airways, Norwegian Air, and Air New Zealand also experienced issues with the Trent 1000 engines. Consequently, the airlines decided to immobilize the aircraft and cancel numerous flights to conduct necessary repairs on the afflicted planes. Aside from incurring significant costs for the airlines, it also drew attention from authorities. Analysts thought that fixing approximately 380 engines globally would not be a quick solution for Rolls-Royce. Rolls-Royce announced that the engine repair would amount to GBP370 million in 2018 and GBP270 million in 2019. The corporation needed to address its engine issues and secure a significant percentage of its future revenue from aftermarket services.

Rolls-Royce is keen to avoid further problems with the engine and in March dropped out of the race to power Boeing’s planned mid-market aircraft. We do not anticipate it will cause any significant operator engine maintenance burden, a spokeswoman said. We are developing a design solution which will remove the need to inspect these parts. Rolls-Royce set out to fix all affected Trent 1000 engines in record time. Not all Trent engines required attention, but those that did required a rapid response from the British company. Rolls-Royce invested in new tools, equipment and people, and expanded capacity at its facilities in order to deal with the problem. Rolls-Royce doing the engine modifications, trained airline engineers to undertake their own inspections, allowing airlines more flexibility over their maintenance requirements. Questions: (40 marks)

1. How would you describe Rolls-Royces competitive strategy? Does its operations management support that strategy? (20 marks)

2. How could Rolls-Royce implement a strategy that prioritizes operational toughness and rigid dependability ? (20 marks)

Case 2: Service Industry

Choose one example of service industry that you know in Oman. It can be bank, telecommunication company, customer service, hospital, travel agency, etc.

Conduct an observation and literature studies about the process and provide a report to answer questions below:

1. What is the current state of your chosen industry process? Create a process mapping to explain the process in details explanation! (20 marks)

2. Based on their current process, what problems exist based on your observation? Provide a brief explanation on why you think that is a problem! (15 marks)

3. What improvements can be derived from the identified problems in your chosen industry to improve their performance? Please provide new process mapping or calculate the productivity to shows the improvement!