Executive Summary
Gate Gourmet is the world’s leading company offering catering services to airline companies. In order to improve the efficiency of its business processes, the firm introduced a Scala system to help in integrating various processes in the supply chain. The firm also introduced e-gatematrix to help improve communication within the new system.
This has helped the firm improve its supply chain and manage the demands of the clients. In order to make this new system effective, the management will need to ensure that its employees are adequately trained on how to use the new system. The firm will also need to help its suppliers upgrade their systems to be in line with its systems.
Introduction
Achieving operational success heavily depends on the approach taken in planning and control of inputs. This is clearly demonstrated in the case study about Gate Gourmet. The firm is operating in a highly sensitive industry where changes are unpredictable.
Despite this unpredictability of the market forces, the clients’ demands quality service within the right time and at the right quantity. Sometimes the firm is always forced to change its menu a few hours before the departure of a plane, and this requires an effective processing to ensure that the expectation of the client is met.
Achieving success in such critical circumstances requires effective supply chain management, from the stage of acquisition of raw materials to the time of delivering the finished goods to the customers. It also requires an effective communication system that will enable various stakeholders involved in the production to coordinate their activities very closely. I
n this study, the researcher will be interested in critically analysing how Gate Gourmet manages to meet its tight schedules using the systems and processes in order to provide quality products to its customers at the expected time (Coyle & Coyle 2009, p. 78). The research will also look at the communication strategies that make it possible for the firm to coordinate its operations within the supply chain.
Discussion
The case study about Gate Gourmet demonstrates a tight operational structure that the firm has to deal with in order to remain operational. At this stage, it will be necessary to determine the systems which enable efficient use of raw materials and the impact that this may have on the products of this firm, based on the transformation process (Bolstorff & Rosenbaum 2012, p. 23). In order to analyse the systems, it is necessary to understand the transformation process relevant to this firm.
Figure 1: Transformation Process
As shown in the diagram above, two main systems have been identified which help in transforming the input resources into output resources at Gate Gourmet. The two systems used in this process as per the information in the case study are scala and e-gatematrix.
Scala is a comprehensive system that involves all the operational processes at Gate Gourmet in its supply chain, from the time of acquiring the raw materials to the stage where the final product is delivered to the customers. Managing this system to ensure that it functions effectively is one of the biggest challenges that the firm faces in its operations. Sometimes the firm is given a short notice on the major changes about the clients that should be served.
The management of this firm introduced scala system to help ensure that the firm gets it right all the time in processes of meeting the dynamic demands of the customers. This system lays emphasis on three major factors. The first factor is the delivery of products at the right time.
In the aviation industry, time is of critical importance and when it is not properly observed, a firm may not sustain its operations in the market (Brockett & Rezaee 2012, p. 94). The management must ensure that all the materials needed to serve the clients on board the planes are packed within the time provided.
The second factor is the right place. Food industry is very sensitive. The employees of this firm are keen on having everything at the right when processing or serving meals to the clients. Once they have been served, all the wastes and utensils must be kept at the right place.
The third factor involves the right quantities. Overproduction of food would lead to wastage, which will be a loss both to the firm and the airline company. On the other hand, underproduction would lead to dissatisfaction of the customers, something that the management is keen to eliminate.
The e-gatematrix a web enabled system is used to support the scala system by providing the firm with the right information at the right time, and enhancing communication among different stakeholders in the supply chain. The sensitivity of the operations at this firm makes it necessary to have an effective communication system that will make it possible to understand various changes in terms of the flight or the number of clients on board a given flight.
This information will not only make it possible to have the right quantity of products for the flight, but also helps the firm to know the time when their products will be needed. The system captures the scheduled data from both the clients and the suppliers of this firm (Sumner 2005, p. 60). It also helps in invoicing once a delivery is made.
In such a highly taxing environment in which Gate Gourmet operates, trade-offs is unavoidable in order to achieve sustainability. The flexibility and dependability required at this firm makes the process of production to be very costly. As Chary (2004, p. 78) notes, in order to have high quality products, it is necessary for the management to be prepared for higher costs.
High cost of operation has a direct impact on the profitability of the firm (Gorman 2011, p. 567). This means that for the sake of being highly flexible and dependable in producing quality products in time, the firm will need to trade-off high profits that would be expected if the processes were simpler. The firm will be sacrificing high profits for efficiency, reliability and quality of its products and production process.
The management of Gate Gourmet has invested a lot of resources in developing an integrated supply chain management at this firm. As Zack (2009, p. 50) observes, supply chain management is a critical aspect of management that involves managing inventory from the time they are acquired to the processing stage, and finally when they are delivered to the clients.
The integrated system used by this firm in its supply chain management has a number of positive implications. According to Ulrich (2001, p. 45), one of the main benefits of having an integrated supply chain system is the accuracy in communication that is always achieved.
This makes it possible for the firm to adapt to the changes quickly which helps in avoiding unnecessary costs due to wastage. As noted in the case study, Gate Gourmet is a global firm operating in various locations around the world. Having a standardised approach of handling tasks, and a system that makes relevant information available for all the stakeholders makes its global operations simple and standardised.
The chief executive officer will have an idea of how a customer in New York, Sidney, London, or Shanghai will be served while seated at his office in Zurich-Airport in Switzerland. Integrating the system enhances flexibility and responsiveness at the firm (Tiwana 2000, p. 67).
For instance, when the firm receives information about the reduction of the number of passengers, this information will reach all the individuals within the supply chain, including the supplies, as soon as it is received. Similarly, when there is an increase in the number of people to be served, all these stakeholders will get the information in real time. The management has fine-tuned its systems so that all the stakeholders know what to do when they receive such short notices.
This helps the firm to remain flexible and highly responsive (Thierauf & Hoctor 2006, p. 32). The integration also helps to reduce or eliminate what Suresh and Mahesh (2006, p. 67) describe as the bullwhip effect. It helps ensure that changes in the consumer demand- that is very common in the market where Gate Gourmet operates- does not affect other stages in the supply chain negatively.
As Dalkir (2011, p. 47) notes, the integration and standardisation helps improve the supply chain’s effectiveness and efficiency which in turn lowers the associated costs. It is important to note that integrating of the supply chain comes with a number of negative impacts. One of the main negative impacts of such standardised systems, according to Oz (2004), is that it limits the number of suppliers for the firm.
Gate Gourmet needs to have specific suppliers who can work under the policies specified in the system. This will means that the firm will be forced to identify the specific suppliers with the capacity to fit into this demanding system.
The fact that sensitive information about flights will be revealed to so many people, this system may be considered a threat to the security of passengers on board different planes. A terrorist can easily get this information, especially from the suppliers who do not form part of this firm, and plan heinous acts. This system also reduces secrecy and confidentiality at the firm.
The fact that information is made available to all the stakeholders in the value chain for quick response makes it easy for confidential information on the firm’s strategies to leak out. Maier (2004, p. 51) says that the integrated system will need a highly skilled workforce that will be able to maintain the database.
It is clear that the nature of the market forces demands an integrated supply chain management system. However, it has been observed that this poses fundamental problems to this firm when it comes to reaching out to the less advanced suppliers.
In order to address this problem, the researcher proposed three levels that should be observed in order to bring these suppliers on board. At the management level, Gate Gourmet should develop a partnership with these suppliers to help them operate under the integrated system. In such partnerships, all the parties involved will benefit.
At the technical level, it is recommended that the experts from Gate Gourmet should work closely with the suppliers to help them develop systems which will be compatible with this firm’s system. At human resource level, it will be necessary to organise trainings for the employees of the suppliers so that they can know how to manage their systems.
From the case, it is clear that Gate Gourmet has developed an organisation-wide information system as a way of enhancing efficiency in its production process. Its enterprise resource planning is based on the principles which require it to maintain a steady flow of information with all the stakeholders in the supply chain.
There are a number of challenges that Gate Gourmet may face in implementing this system. One of the main challenges is the fluctuations of demand which may come at the last minute, making it almost impossible to achieve ‘just-in-time’ delivery. This is so because sometimes the information comes when the meals are ready and with no time to make adjustments, and this makes it difficult to meet the demands of the clients.
Achieving the objective of delivering the right quantity products because a near impossibility in such contexts (Handzic & Zhou, 2005, p. 56). Reduced levels of customer satisfaction may jeopardise the sustainability of the firm because the clients may consider looking for alternatives in the market. Another challenge is that there may be need to re-fix the schedules in cases of flight delays.
As McNabb (2006, p. 72) notes, flight delays are always unpredictable because in most of the cases they are influenced by the forces of nature. When using this system, it will force the firm re-plan its delivery process, and this may involve a whole new process of delivery because the meals that were ready will be discarded.
When implementing the ERP system that Gate Gourmet has developed, a number of problems are expected to arise. It is necessary to find the ways of managing such problems as soon as they are detected in order to eliminate their negative impacts. One of the main problems that have already been detected is the issue of system integration.
The main system that was developed to manage all the processes at this firm was the Scala. However, the management realised that this system could not support some operations, and this forced the firm to develop e-gatematrix in order to enhance communication.
This problem should be addressed by redesigning the Scala so that it can support data without the need for additional software. This will reduce the costs and time needed to manage the system. The second problem is in managing the complexity of the system. The management is finding it very challenging to its global operations using the Scala system because most of the employees do not clearly understand the concepts involved in this system.
To address this problem, the management will need to organise training programs for the employees so that they can have a better understanding of this new system. According to Leon (2008, p. 57), many organisations have realised that it is of great benefit to invest in the employees.
In this case, the investment will be in the form of training on how they can use the new system effectively. This process may also involve managing resistance to change. During the training process, the employees will be taught to appreciate change whenever it is necessary.
The research by Sugumaran (2002, p. 88) reveals that many organisations have been unable to implement change strategies because of the reluctance of the employees. To avoid such problems, it will be necessary to train the employees of this firm on the need for and how to embrace change.
The information given in the case study clearly demonstrates that the organisation’s human tacit and implicit knowledge will be needed in the management of the new system. According to Gottschalk (2007, p. 133), tacit knowledge cannot be easily transferred to other people.
On the other hand, implicit knowledge- though not written down- is procedural in nature and can easily be understood by the members of an organisation. At Gate Gourmet, tacit and implicit knowledge will be very valuable in the inventory management using the new system.
The new system was introduced because of the challenges that the management faced in its supply chain. However, it has come out that using this system poses a number of challenges to the employees of this firm, and this means that both tacit and implicit knowledge will be very important at this stage (Thierauf 1999, p. 78).
It is necessary to have specific examples where tacit and implicit knowledge will be necessary in the process of managing the inventory. According to Becerra and Sabherwal (2010, p. 45), using of some complex communication technologies in the current market does not only require experience, but also some form of talent.
For instance, managing the database of this new system will require people with the experience and special skills in communication technology. At this point, tacit knowledge will be very important. Tacit knowledge will also be important in developing strategic plans on how to relate to the suppliers using the new system.
A team of experts will be needed to draw a plan on how the Gate Gourmet will bring in new suppliers into the new system so that the scope of supplies for the firm is expanded. Implicit knowledge will be very valuable in defining the procedures that should be taken in the production process.
The employees should know all the procedures such as the amount of products expected from the suppliers, how to plan for the inventory once it is received from the suppliers, and the issues about storage. The employees will also need to know when it is appropriate to deliver the products to the clients once they are ready. When using implicit knowledge, the employees will know what is expected at various stages in the supply chain. This knowledge can be given out in terms of instructions.
Conclusion and Recommendations
Gate Gourmet is operating in a highly competitive environment. The firm offers catering services to the world’s leading airline companies across the world. This industry comes with a number of challenges that has affected the supply chain of this firm.
As shown in the study above, one of the main challenges that Gate Gourmet is currently facing in its operation is the unpredictable demand for its products. The client may make an order for 240 passengers expected to be onboard 12-24 hours before the time of departure. Because of the unpredictable nature of the aviation industry, such an order can be cancelled in the eleventh hour.
In other cases, the client may demand a reduction or an increase of the quantity of the products needed within an hour to the time when the flight is expected to take off. Meeting such taxing demands has forced Gate Gourmet to introduce Scala and e-gatematrix to improve efficiency and effectiveness of its supply chain.
These new systems make it possible for the firm to share such sudden changes in demand to all the members of the supply chain so that immediate measures can be taken to address the issue. Although this has helped the firm to improve its efficiency, the following recommendations would further promote the operations of this firm in the challenging market.
- The management should introduce training programs for its employees so that they can understand how to use the new system.
- Gate Gourmet should help its suppliers develop systems which are compatible with its own system so as to expand the scope of supplies.
- The firm should help its suppliers understand the new communication concepts by involving their employees in trainings.
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