$24/$Operation$\%20$Management$/$CSTUDY$\_$Jan$24\_$SCMH$\_$OMN$801\_$Final$\_20240129115331.$pdf

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FORMATIVE ASSESSMENT $1$

$[100$ MARKS$]$

Read the case study below and answer the questions that follow ALASKA AIRLINES QUALITY DRIVE

Alaska Airlines, with nearly $100$ destinations, including regular service to Alaska, Hawaii, Canada, and Mexico, is the seventhlargest U$.$S$.$ carrier. Alaska Airlines has won the J$.$ D$.$ Power and Associates Award for highest customer satisfaction in the industry for $8$ years in a row while being the number one on$-$time airline for $5$ years in a row. Management's unwavering commitment to quality has driven much of the firm's success and generated an extremely loyal customer base. Executive VP Ben Minicucci exclaims, $"$We have rewritten our DNA." Building an organization that can achieve quality is a demanding task, and the management at Alaska Airlines accepted the challenge. This is a highly participative quality culture, reinforced by leadership training, constant process improvement, comprehensive metrics, and frequent review of those metrics. The usual training of flight crews and pilots is supplemented with classroom training in areas such as Six Sigma. Over $200$ managers have obtained Six Sigma Green Belt certification.

Alaska collects more than $100$ quality and performance metrics every day. For example, the accompanying picture tells the crew that it has $6$ minutes to close the door and back away from the gate to meet the "time to pushback" target. Operations personnel review each airport hub's performance scorecard daily and the overall operations scorecard weekly. As Director of System Operations Control, Wayne Newton proclaims, $"$If it is not measured, it is not managed," The focus is on identifying problem areas or trends, determining causes, and working on preventive measures. Within the operations function there are numerous detailed input metrics for station operations $($such as the percentage of time that hoses are free of twists, the ground power cord is stowed, and no vehicles are parked in prohibited zones$).$ Management operates under the assumption that if all the detailed input metrics are acceptable, the major key performance indicators, such as Alaska's on$-$time performance and $20-$minute luggage guarantee, will automatically score well.

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For the scorecard the major evaluation categories include process compliance, staffing $($degree that crew members are available when needed$),$ MAP rate $($minimum acceptable performance for mishandled bags$),$ delays, time to carousel, safety compliance, and quality compliance. The quality compliance category alone tracks $64$ detailed input metrics using approximately $30,000$ monthly observations. Each of the major categories on the scorecard has an importance weight, and the provider is assigned a weighted average score at the end of each month. The contract with the supplier provides for up to a $3\mathrm{.}7\%$ bonus for outstanding performance and as much as a $5\mathrm{.}0\%$ penalty for poor performance. The provider's line workers receive a portion of the bonus when top scores are achieved.

As a company known for outstanding customer service, service recovery efforts represent a necessary area of emphasis. When things go wrong, employees mobilize to first communicate with, and in many cases compensate, affected customers. $"$It doesn't matter if it's not our fault," says Minicucci. Front$-$line workers are empowered with a "toolkit" of options to offer to inconvenienced customers, including the ability to provide up to $5,000$ frequent flyer miles and$/$or vouchers for meals, hotels, luggage, and tickets. When an Alaska flight had to make an emergency landing in Eugene, Oregon, due to a malfunctioning oven, passengers were immediately texted with information about what happened and why, and they were told that a replacement plane would be arriving within $1$ hour. Within that hour, an apology letter along with a $$450$ ticket voucher were already in the mail to each passenger's home. No customer complaints subsequently appeared on Twitter or Facebook. It's no wonder why Alaska's customers return again and again.

Source: Heizer and Render $(2023)$

H$/$Operation$\%20$Management$/$CSTUDY$\_$Jan$24\_$SCMH$\_$OMN$801\_$Final$\_20240129115331.$pdf

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QUESTION $1\mathrm{.}1$

$(20$ Marks$)$

As highlighted by Wayne Newton, if it is not measured, it is not managed. In addition to those already provided, examine the quality metrics that Alaska airlines should be tracking to determine the performance of their operations.

QUESTION $1\mathrm{.}2$

$(20$ Marks$)$

In light of the case study provided, justify why might it cost Alaska Airlines less to do things right the first time. Provide relevant framewor