Vermont Airways Business Case

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Dec 8, 2013 (3 years and 11 months ago)

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AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

1





Vermont Airways Business Case



Table of Contents:


Background













2

Vermont Airways 2010 Initiative










2

Listing
key metrics for Vermont Airways









2

The following issues must be addressed

in order to be successful






4

Evaluate th
e results of the project against t
he original business objectives





4

The following business i
mprovements

were achieved by Vermont Airways





5


Assessment of Vermont Airway’s enterprise BPM maturity level






6

Improvement capacity in the context of l
arger 2010 Initiative program goals





9

Assumptions













9

Benefits to the Community and Industry









10

Conclusion

and
Recommendation










10

Reference













11










AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

2



Background:

Continuous improvement for the airport industry m
eans
assess
ing

how well airports meet the

expectations of their
customer and stakeholder
, and vigorously pursu
ing

that course of action that will reach established goals and

effect
constructive change.


The two key elements
of

this process are
standard int
ernal and industry
benchmarks

against
which to measure performance
,

and

a
means
to measure performance internally
.


Airports operate in a complicated environment and have varying degrees of control over the services that customers
expect.


The volume of me
trics or performance indicators available to airports is overwhelming and used non
-
uniformly.


Moreover, t
here are insufficient standardis
ed and generally accepted metrics in the industry to
benchmark operations and finances at airports.


Vermont Airways 2
010 Initiative:

Rising costs,

the
increasing

difficulty

of
regulatory compliance
,

the risk of non
-
compliance,

the high cost of carrying
inventory
,

inaccuracies in
demand forecasting
,

and maintenance related departure delays are but a few of the daily
hea
daches of the aviation compliance executive.

The problem is not the lack of data gathered
,

t
o the contrary
,
Vermont Airways

is

gathering much more data than
it
is effectively

using. The problem is taking the huge stream of
data
, centralize

it
, increase

it
s
quality
, decreasing multiple sources and processing it into information, knowledge and
ultimately actionable decisions.


Effective audit management drives continuous improvement by ensuring that established quality requirements for
products and processes

are being met.

It provides
the
capabilit
y

to efficiently plan, schedule and conduct audits,
it
allows audit findings to be reviewed and analyzed by a team,
it
enables initiation of follow
-
up activities such as
corrective/preventive actions when needed and

it
provides the ability to monitor the entire process.


Airline
companies that are regulated by the FAA (Federal Aviation Administration) are following quality standards such as
ISO 9000/13485/14000
1
.

R
egular audits are also essential to reduce the risk o
f
non
-
compliance
.

What
Vermont Airways

need

is

an

Integrated A
viation
Compliance S
olution
2


(IACS)
for successfully meeting the
increasing regulatory and reporting requirements from the FAA


(Federal Aviation Administration)
including ADs

(Airworthiness Di
rectives

)

while lowering the associated costs that can
unchecked become astronomical.

The
solutions serve as enablers of new levels of productivity, regulatory compliance, reduced costs and effective quality,
safety and risk management.

Listing
K
ey
M
etri
cs for Vermont Airways:

The

Program Director

(
which is me
)

together

with my team
supervised


the

automat
ion of

the entire inspection and
conformance life
-
cycle from initial receipt of ADs, recording of inspections, instant launching of corrective actio
ns and
preventive actions (CAPAs), real time reporting to FAA and audit management. Given the volume of safety directives



1

http://www.metricstream.com/solutions/faa_compliance.htm

2

http://www.metricstream.com/solutions/faa_compliance.htm

AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

3


issued annually by the FAA and the need for immediate response, documentation and reporting,
Vermont Airways
realize
d

that significant

efficiency gains and
ROI
were

possible
from
workflow
-
driven web
-
based solutions
.

Continuous Improvement (CI or Kaizen) methodology approach
was followed in

the
Vermont Airways Business Case
study

-

which is based on
six

Key Performance Indicators (KPIs)


compliance,
quality, productivity, schedule, effort
and cost.
The e
ffective implementation of this program allows
the p
rogram d
irector

of Vermont
Airways
to

track the
key metrics more effectively

in order to achieve
:



a better utili
s
ation of resources;



e
nhanced coor
dination among related projects;



improved project planning and estimation
;



proactive

identif
ication of

the risks
related to failure

to
meet

the schedule and budget targets
;



reduc
tion of

the process overhead
of measurement data collection and



C
onsolidation

and analysis at different levels in the project hierarchy.

We also decided that t
he
Integrated Aviation Compliance Solution

(IACS)

must be built on the robust and scalable
Enterprise Compliance Platform,
a
solution
whose
highlights include:



Co
ntrols to ensure timely reviews and adherence to
quality mandates



Audit management

including of the extended supply chain



Accelerated issue management and verification including

corrective actions

and
preventive actions (CAPAs)



Electronic Document M
anagem
ent
,
A
udit trails

and
R
eports
that cover inspections and maintenance



Embedded
B
est practices

from leading airlines



Executive
D
ashboards
for management oversight and visibility

Effective Corrective & Preventive Action
3
(CAPA) and remediation management of
quality, compliance and risk
related issues is essential
for continuous

improvement process. Relying on stand
-
alone point solutions or paper
-
based processes to manage CAPA and remediation processes is ineffective as they fail to address systemic problems
d
ue to a lack of broad enterprise reach and visibility. To successfully develop and implement remediation and
corrective action plans,
my team
managers
need
powerful

automation

and
collaboration tools

as the process often
spans across departments.



CAPA (Co
rrective & Preventive Action)/Remediation Management

Advanced capabilities like built
-
in remediation workflows, time tracking,
and e
-
mail

based notifications and alerts,
risk assessment methodologies, and offline functionality for conducting at remote fie
ld sites will allow Vermont
Airway’s to implement the industry best practices for efficient audit execution and ensure integration of the audit
process with the risk and compliance management system.




3

http://www.metricstream.com/solutions/faa_compliance.htm


AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

4


Integrated Aviation Compliance
Solution
,

of

which CAPA/
Remediation
Management is

one of the

software module
s
,
enables the company to streamline the development and implementation of remediation and corrective action plans
and
processes across the enterprise. The corrective action software solution provides end
-
to
-
end exception and
change management capabilities
,

to help companies capture problem data f
rom anywhere in their operation.

It will

conduct
an
investigation to determine the root cause, manage the entire preventive and corrective process,
implement chan
ges, and ensure that the issue is resolved effectively. Powerful analytic and reporting capabilit
ies

with
graphical dashboards
that

track each case from initiation to closure gives managers complete real
-
time visibility into
the remediation process.

The fo
llowing issues must be addressed in order to be successful:



Accelerate investigation, review, approval and closure cycles as cases automatically move from one stage to
the next
;



Improve communication and teamwork on quality issues across departments and f
unctional areas



involve
the personnel, by incentives
-

let them contribute by means of the Kaizen approach;




Gain enterprise
-
wide visibility into the status of remediation activities and track its process metrics
;




Lower cost of regulatory compliance wi
th electronic records and signatures as well as time stamped audit
trails
;




Systematic and workflow driven audit process across the enterprise with standardized data collection to
eliminate a
udit errors and inconsistencies;



Closed
-
loop audit cycle for reco
rding findings, developing recommendations and implementing action plans
;




Complete visibility into the audit process and metrics for better risk management and assured compliance
;




Higher efficiency of the audit staff enabling them to be focused on value
-
oriented functions such as analyzing
and recognizing trends in the audit data
;


Implementation of Continuous Improvement initiatives allows the
Vermont Airways

management to achieve the
following goals: proactively improv
e


or streamline the

quality

of
data to information by implementing an
electronic DMS therefore
reduc
e

paper based workflow approach
, increas
e

employee involvement, and finally,
increas
e

customer satisfaction by the creation of real
-
time
web
-
based solutions

e.g.
Online Booking T
icket
and
Payment S
ystem.

Evaluate the results of the project against the original business objectives:

For companies in the airline industry, FAA (Federal Aviation Administration) compliance impacts all business functions
operationally as well as strategically.

Mandates such as Continuous Analysis and Surveillance require air carriers
to
have a method of measuring effectiveness and performance of maintenance and inspection
s

as well as Internal
Evaluation Programs for continual monitoring of internal processes, p
rograms, and procedures. It requires various
departments to implement policies and procedures to meet applicable Airworthiness Directives (ADs) and FAA
regulatory requirements.

Airline companies
are

also
turning

to process management disciplines and enabl
ing
technologies to achieve operational excellence. Business Process Improvement role leaders promote process
improvement initiatives to improve the coordination of work. This process focus can be transformational, impacting
enterprise culture, organizatio
nal structure, roles and responsibilities, governance and technology infrastructure.

AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

5



The following business i
mprovements

were achieved by Vermont Airways
:

As we all know that,
Vermont Airways is cash strapped, and it will need to balance initiatives again
st savings
elsewhere, the firm already carries considerable debt. The IT System is
dated;

they are not
often
utilized as they
should be



the personnel don’t use the systems and computers to its full potential and capacity as it should
be:



Unnecessary

payi
ng of licenses per seat
, we

restructure the IT Infrastructure

by implement

wireless
technology, creating a central
visibility and

we decided make use of floating licenses of application system,
thus contribute in saving money

as well as the introducing of
open source software
.



In collaboration with HR, we
suggest the
creat
ion of

a flexible organisation within Vermont
Airways and

redeploy

the
personnel
more effectively and make use of collaboration and file sharing activities



this
approach suggests and pr
omotes empowerment. The morale between the personnel increase and based on
the performance indicators implemented by the HR business unit, incentives were introduced which boost
the productivity of Vermont Airways and it increase the efficiency as well
,

wh
ich is a natural flow out to
customer service
.



An online helpdesk
system was

established

and implemented.

The IT team
developed

an application
on open
source
technology (
glpi

and
assist
) to handle
customer
and internal
enquiries
.




On the job i
nformal trai
ning
sessions were conducted to quickly familiarize users
, all experts in their
respective fields,
with the new system.


The aim of this exercise was to encourage these very experienced
individuals to write papers on their expertise
, this

to be shared comp
any wide
on the intranet
with
authorized users
;
the ultimate vision of the application developers was to recognize this expertise as part of
the knowledge assets or capital of the airline. Contributors were told that where applicable these papers
would be

published

in peer reviewed publications, as a way of giving recognition. In a worst case scenario
wher
e the company was closed down, references to
these publications would
look good on an employee’s
résumé
. The format was

an
electronic

open source
knowle
dge base system

namely

sciret
.

The safety and
maintenance
manuals
were published
on the company intranet
and
links e
-
mailed to users, to avoid clutter
of the e
-
mail server and avoid d
uplication
of
information.

The
Intranet w
as

developed
on open source
na
mely

E107
. T
he news, policies, procedures and standards were published based on the role
,

or group
policies
.




The duplication of filling in forms w
as

reduced by the introduction of the Electronic Content Management
System
,

namely Maarch
,
which
w
as

develop
ed on open source software

to

include both the Document
Management System and Records Management
System
.

E
verything
i
s updated in real
-
time to the server and
the
requests of
clients

and responses to urgent issues are met in a timely manner.



Compliance and

Audit issues were addressed as well and we
are now FAA
compl
iant.

i)

Ground Operation Manuals
a
re updated on a daily basis by the use of version control on the
DMS.

AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

6


ii)

Paper based manuals including the cockpit operation manuals
, flight and aircraft operations
m
anuals
were scanned and stored in the records management system according to the File
Plan structure of Vermont Airlines



A Portal

was
developed on open source
namely

E107
.



A
n online Ticket Reservation
and Payment
System
were

developed

and flight

bookings
a
re
now
managed
online. The customer
has more choice and faster feedback, and can book from anywhere globally, not only
through a travel agent, reservations desk or phone, but

online on the internet.

By making better use of information and
improved visibil
ity, capacity

and data tracking, Vermont Airways
did
cut compliance costs while improving quality,
customer satisfaction,
safety and risk management


and
increased t
heir performance levels by addressing t
he following management issues
4
:



Centralized Risk M
anagement
: Integrated and flexible framework enables documenting and assessing risks,
defining controls, managing assessments and audits, identifying issues and implementing recommendations
and remediation plans.
It p
rovide
s

powerful tools for risk analys
is and monitoring such as configurable risk
calculators and risk heat maps.



Efficient Audit Management:

Conducting audits and inspections ensures that the established safety and
quality procedures are being followed.
It p
rovides capabilities to efficiently

plan, schedule and conduct
audits, allows audit findings to be reviewed and analyzed by a team, enables initiation of follow
-
up activities
such as corrective/preventive actions when needed, and provides the ability to monitor the entire process.



C
orrecti
ve
Processes:

Corrective processes address actual and potential lapses in quality, safety and
compliance, as prescribed by the FAA. In Vermont Airlines case the issue is not an unwillingness to comply,
but more a backlog and inefficiency. The business mo
del provides prioritizing the tasks by the assignment of
priority metrics.




Streamlined Corrective Actions
: Engaging teams to collaborate on development and implementation of
corrective action plans streamlines corrective and preventive actions (CAPAs).
Th
at will e
nables

the

triggering
of
CAPAs, performing root cause analysis, assigning follow up actions while effectively tracking and routing
cases from initiation to closure.



Tracking Non
-
conformances and Deviation
: Automated workflows accelerate non
-
confor
mance and
deviat
ion review and approval cycles. It will
support

recording and automatic rule
-
based routing of non
-
conformance issues for review, disposition and closure.



Real
-
Time Reporting
: Role
-
based dashboards, control diagrams, and scorecards provide v
isibility into the
ongoing compliance efforts and bring high
-
risk areas into focus.

Vermont Airways
is under pressure
to make a strategic move
. The current course of action involves firstly
handling the emergency, but in such a way that the measures take
n can also assure compliance and
survival

in the long run.


The “
internal business process work flows enhancements and changes
” is

a fresh
new
approach,
and
is healthy and sustainable
, and

lends itself to continuous development and enhancement. In

a



4

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AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

7


chang
ing, and shrinking market
,

it is a matter
of braving

the storm
, by

making as small a loss as possible,
and
a

profit if possible. Airlines that survive will be
better

positioned to take advantage of the changes,
whether

it means right
-
sizing or replacing a
ircraft. It is also hoped that the new on
-
line booking system will uncover
possible new profitable routes that will maximize the airline’s investment in its fleet and human resources.

Assessment of Vermont Airway’s enterprise BPM maturity level
:


Most airl
ine managers realize that a major business transition is taking place. Some believe the various processes by
which business strategies are developed will need to change. New value propositions are being promoted by e
-
commerce, and it is being used to give
airlines
a
competitive advantage.
Regardless of which business model airlines
adopt, to be successful, airlines need to understand how the Web and e
-
com
merce affects their business
. Airlines
need to develop an overall strategy covering: strategic managemen
t, IT infrastructure, design, content, e
-
commerce
systems,
marketing,

and customer service. Airlines also need to be creative and entrepreneurial.
The old principle

of
value for money may need to be
re
-
examined from an airline passenger’s or customer’s per
spective.



In the assessment of Vermont Airways, it was decided on
the Capability Maturity Model (CMM)
5

to address process
improvement issues.




To focus top executives on process improvement issues e.g. the

increased security issues, aircraft
maintenance
and safety, customer

who want

to be able to do online bookings and

make
payment
s

i
n
real
-
time

for the
flights

they choose
, creating of flexible organization that can make use of resource on demand to
react in a timely manner (JIT


Just in Time) and the a
utomating of manual activities to increase efficiency and
reducing costs
: address the
increased workload created by
regulation
s
, customer expectations for online
booking access, the sophistication of new airplanes and the updated maintenance procedures.




To

direct the program director to specific

areas of improvement e.g. the bottlenecks in IT departmental
functions and Infrastructure.




To

point out the flaws and missing pieces in the strategic approach of Vermont Airways e.g. data is missing or
located o
n hard drives, using paper based forms and not using electronic forms/ document circulation for
recommendation
and for

approval

as being used by a Document Management System (DMS) which raise
serious accountability issues and will create audit queries by F
AA if Vermont Airways
has to
be audited.

Every
staff member must remember that if the firm is found to be non
-
compliant it may be fined or even closed
down, and buying into this program may save their jobs.




To l
ook at process improvement as an enterprise

endeavor


automating the current manual activities

to
increase efficiency and reduce costs e.g. PDA with touch screen and stylus and loaded with InfoPath software.
Forms were designed to
be
fill
ed

in with
tick boxes

and drop

down

menu
s.
Forms can be
sign
ed on the PDA
with the stylus. The forms are in an .xml format and updated directly to the database via a server in the
maintenance area, (assuming that there is a wireless network connectivity established) eliminating paper
based forms while ensuring FAA
compliance.


Figure 1




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AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

8


Benefits of Capability Maturity Model Improvements


Source: TeraQuest


Figure 2

The Five Maturity Levels of the Capability Maturity Model




T
he CIO
appointed me

as the
program director to conduct an investigation into the main issu
es related to information
management.
I
set

up a Business Process Governance Framework


the Project Management Office as governance
mechanism. The benefits of the PMO were that it:



Ensure
s

consistency and standards to projects



Applies

best practices



Supp
lies

knowledgeable resources



Align
s

projects with business objectives



Align
s

business and IT


to create a


synergy by establishing Enterprise Architecture

In the case of Vermont
Airways,

our

process improvement team investigate
d

the business from a proces
s
perspective,
and

decided on the
p
rocess driven

approach
.



Strong emphas
i
s
was placed
on the best practices
as implemented
by leading

airlines
as
well as
performance key indicators and metrics
.

AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

9





The team fou
nd that
points needing the most attention were co
ping with the c
omplexity
6

and difficulty
in meeting information demands relating to:

1.

Increased security measures,

2.

Aircraft maintenance and security,

3.

FAA compliance issues
,

4.

Resource demands to react in a timely manner to address issues and events,

5.

Automati
ng the manual activities

6.

Reducing expense ratios

7.

Improving customer satisfaction by establishing an online web
-
based ticket booking system

I
mprovement capacity in the context of larger 2010 Initiative program goals:

The conclusions of the
project manageme
nt team
-

t
he main concerns
of Vermont Airways
were:

1.

Inability of Vermont Airlines to survive an FAA audit;

2.

And bottle necks in IT department
al

functions

and Infrastructure
:

1.

the streamlining of
software
applications and
systems

by means of:


i)

Centralizing t
he data

and information

by
implementing Services Oriented Architecture (SOA)

ii)

Better workload balancing which can be tied to process analysis

iii)

Re
-
all
ocate resources,
re
-
deploy staff where bottle
-
necks occur in process workflows
, especially

customer
service
s


iv)

Development of


internal

Intranet and Knowledgebase


web
-
based services

(Web Content Management
System)

which will be role based as specified by IT security
group

policies


the knowledgebase will be
addressing the expertise “know how” of the operati
on of the Vermont
A
irways which will include each
business units processes and standard operating procedures
, best practices

as well as policies. The
Intranet will be the internal staff communication t
ool where news and updates be broadcast
; and

forms,
te
mplates etc can be downloaded.


v)

Implementation of
Electronic Content

Management (ECM) which include Document Management
(DMS)

and Records Management

(RMS)
functionalities (assist with audit trails, document version control of the
Ground Operations Manuals

as well as the Transportation Security Administration (TSA) safety and
security issues
.



Improved process:

1
.
T
he

staff use new Web Content Management
System (
WCMS) to enter
and
apply

metadata to

content items in a database.

2. System Promotes content t
o live server automatically when approved




6

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g/aci/aci/file/PressReleases/Understanding_Airport_Business_final.pdf

AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

10


3. Staff can respond to breaking news or requests for information almost
instantly, re
-
affirming site as first stop for
e
-
citizen

information


vi)

Establish a

Portal (web services) for the customer


a secure Online A
irline Ticket Reservation System for
the customer (which function
s

in real
-
time) where bookings and payment can done
.

Assumptions:


Regardless of which business model airlines adopt, to be successful, airlines need to understand how the Web and e
-
com
merce
affects their business
. Airlines need to develop an overall strategy covering: strategic management, IT
infrastructure, design, content, e
-
commerce systems,
marketing,

and customer service. Airlines need to be creative
and entrepreneurial

and can only

be t
ruly successful if
they
provide genuine value to customers
by giving passengers
what they want.

The
aim of
this
investigation by the program manager
is to address the issue of application and development of e
-
business for
the
airlines industry and the resu
lts of this research program will address
the
needs of community,
industry and the field of study.



Benefits to the Community and Industry
:


P
assengers could book and check in through internet 24 hours, 7 days a week, at anytime, anywhere. Secondly,
airl
ines could reduce
the transactions
cost.
Intelligence collected

from Customer Centric E
-
Business (CCEB) System
Model
7
,

CCEB implementation will
help design
new business model
s
, based on the wide availability of information
and its direct distribution to en
d
-
users and passengers
.



Directly connect airlines and passengers.



Support fully digital information exchange between airlines and
passengers
, reduced cost of a customer
contact.



Suppress time and place limits.



Support interactivity and therefore can dyn
amically adapt to customer
behavior
.



To be able to satisfy customers' need, build customer confidence and retention.



Can be updated in real
-
time, therefore always up
-
to
-
date.



Enhance airlines competitive advantages over its rivals



Profitable and sustai
nable revenue growth.

Conclusion

and
Recommendation:

The program director

and his team
realize that a major business transition is taking place. Some believe the various
processes by which business strategies are developed will need to change. New value pr
opositions are being
promoted by e
-
commerce, and it is being used to give airlines
a
competitive advantage
, or at least enhance their
survival
.

We
identify the business value to Vermont Airways as a Return on Investment (ROI)

approach

by converting



7

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AIIM Business Process Management

Certificate Program

Assignment 4: Continuous Improvement

101310

11


a paper

based system to an electronic forms based
process, converting enquiries into sales, and comply

with FAA for
audit purposes.

Vermont
Airways work
s

toward
s

a state of constant improvement
and the company
understand
s

t
h
e

Total Quality
Management approach of

which the
Kaizen
steps

allows them to

continuous
ly

focus
es

resources

and
employees on
process improvements
. By understanding the current process and the future state
d

goals the
company
can create a
corporate culture of continuous improvement in order to

adapt to a changing marketplace and
meet and
exceed
customer expectations
.

Reference:

1.

FAA Compliance for Airlines.

http://www.metricstream.com/solutions/faa_compliance.htm

2.

Executiv
e's Guide to Information Technology (IT Management Book).


http://www.gartner.com/4_decision_tools/measurement/measurement_overview.html

3.

Understanding_Airport_Bus
iness_final.pdf

http://www.airports.org/aci/aci/file/PressReleases/Understanding_Airport_Business_final.pdf

4.

Can Customer
-
Centric E
-
Business System A
chieve Competitive Advantage for Airline Industry?

http://ausweb.scu.edu.au/aw03/papers/jiang_______/paper.html