The Supply Chain Game "Beer Game" questions & solutions - Role of Retailer, Wholesaler, Distributor or Manufacturer in Beer Game, How to reduce Bullwhip effect in Supply Chain Beer Game

                                                     The Supply Chain Game

Please find the game link below:

https://beergame.opexanalytics.com/#/

 The Supply Chain Game Questions

1. Are there certain actions or behaviors during the game that you did particularly well or badly? And why? 
2. In the supply chain game which role (Role of Retailer, Wholesaler, Distributor or Manufacturer) do you consider was most difficult to manage inventory? Explain why ?
3. In what ways do you think you could improve your own practice in relation to gathering information and intelligence that will help to reduce the bullwhip effect? 

Solution to Supply Chain Game "Beer Game"

1. Are there certain actions or behaviours during the game that you did particularly well or badly? And why?

Initially I was not able to place orders accurately due to which stock out cost was getting increased every time I place an order due to which I lost game many times and contributed to bullwhip effect by big values above than 4. Later on I started noting my orders on notepad along with replenishment period to get exact number of units to be arrived at my place in every week which helped me to overcome challenges related to stock out cost but this time, I was overburdened with holding cost due to which I lost the game again. Next time, I kept on placing orders keeping in view my ending inventory levels and replenishment period. Since incoming order was unknown and difficult to predict, however playing many times, I got little bit idea of incoming order and started placing bigger orders in first two week period , then up to 8 to 10 week period one or two units greater than incoming order and then placed orders equal to incoming orders from week 11 to week 16, then increased orders by one or two units of incoming order in next 3 to 4 weeks and then placed less orders from week 20 to 26 than incoming order and then placed orders equal to incoming orders till week 30 and in last 6 week orders I placed orders keeping in view my ending inventory and incoming orders. Repeating this process a bit up and down multiple times, I was able to reduce bullwhip effect finally and won the game too. 

2. In the supply chain game which role (Role of Retailer, Wholesaler, Distributor or Manufacturer) do you consider was most difficult to manage inventory? Explain why?

Role of manufacturer was most difficult while handling inventory at its level. Since it was unpredictable when how many incoming orders will come every week, issue of holding extra inventory came into force every time I played as manufacturer in the game. Sometimes incoming order was very low and even zero and sometimes incoming order tends to reach upto 20 orders creating a dilemma in placing orders from my side. Since manufacturer is last participant in supply chain system and even switching on visibility mode and getting to know exact number of units ordered by customers, it was difficult to make adequate forecast on number of units to be ordered every week in order to reduce holding cost. When I reduced number of units ordered playing again, I was burdened with stock out cost. So managing an adequate inventory at manufacturer level to reduce holding and stock out cost was very difficult to achieve. Hence from my point of view, it was manufacturer where managing inventory was toughest task. I played multiple times as manufacturer applying all my logics and reasoning to win but lost every time. I adopted multiple strategies such as less units ordered in beginning weeks, more units in middle weeks, units equal to incoming orders in later weeks and mingled this strategy here and there but still not able to win the game and contributed to bullwhip effect.

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3. In what ways do you think you could improve your own practice in relation to gathering information and intelligence that will help to reduce the bullwhip effect?

Getting real time information on actual demand from customers is utmost important to plan and forecast demand of products to counter bullwhip effect and reduce holding as well as stock out cost. All Participants of supply chain system should be integrated on a common platform using ERP system to have adequate information of stocks available with each participant and actual demand coming from customer side so as to build safety stock in order to cope up with contingencies and bullwhip effect as arisen during Covid 19 pandemic situation. Information on Replenishment period is utmost important in countering bullwhip impact. So it is very necessary to know exact location and geographies of participants of supply chain system so as to avoid delays in shipment and transportation. A good and healthy relation and effective communication among all participants on sharing real time information on demand forecasting, inventory and shipment information will help to carve out bullwhip effect in supply chain system. Implementation of Collaborative forecasting system in supply chain will help to supervise stock Keeping units and sales status on real time basis and predict demand more adequately and with more visibility. Supply chain performance can be improved by sharing forecasting information such as sales and inventory data, planned orders and promotion information by all participants of supply chain system. Overall, real time information on actual flow of demand from customers for which retailers play an important role, replenishment period, collaboration of participants’ data on inventory planning and demand forecasting, building up of safety stock, implementation of ERP system to gather real time information related to inventory available with participants and collaborative forecasting system are major tools in relation to gathering information and intelligence that will help not only to reduce bullwhip effect but also fulfill customers’ needs and increase profitability.

Countering the Dreaded Supply Chain Bullwhip Effect in a COVID-19 World supply chain case study solution

 

Case: Countering the Dreaded Supply Chain Bullwhip Effect in a COVID-19 World

Case Study Questions

1. “Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?” Explain the bullwhip effect using this example. Give a description of events that you suspect will happen through the supply chain of toilet papers when such an event happens. 

2. Identify two other commodities which have witnessed an event of panic buying during the ongoing COVID-19 pandemic. Do you think a bullwhip effect can be expected in their cases? Justify your answer. 

3. “Building bridges with other supply chain partners is critical to preventing the bullwhip effect.” Read from the case study and explain how the given statement prevent bullwhip effect scenarios.

Case Study - Countering the Dreaded Supply Chain Bullwhip Effect in a COVID-19 World

By shifting from a forecast-driven ordering system to one that enables high levels of visibility and information-sharing, companies can effectively avoid the dreaded “bullwhip effect” in their supply chains.

The “Bullwhip Effect”

A distribution channel phenomenon in which inaccurate forecasts quickly turn into supply chain inefficiencies, the “bullwhip effect” refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.

With COVID-19 taking its toll on supply chains around the world, more companies will experience this detrimental impact, which was originally identified back in the 1960s and then weaved into supply chain vernacular in the 1990s.

That’s when Hau Lee of Stanford University told a story about Volvo to illustrate the bullwhip effect’s impact on the supply chain.

Suffering a glut in “green” cars at the time, Volvo’s sales and marketing developed a program to move its excess inventory.

The program helped raise interest in the cars, but Volvo’s manufacturing department was unaware of the campaign and wound up reading the increase in sales as an indication of a growing demand for green cars. In response, it ramped up production, thus adding to the glut and creating a bigger issue for the car manufacturer.

“A supply chain is a complex group of companies that move goods from raw materials suppliers to finished goods retailers,” Osmond Vitez writes in The Bullwhip Effect in Supply Chain.

“These companies work together when meeting consumer demand for a product; supply chains allow companies to focus on their specific processes to maintain maximum probability. Unfortunately, supply chains may stumble when market conditions change and consumer demand shifts.”

What Causes the Bullwhip to Snap?

According to Vitez, the bullwhip effect surfaces when changes in customer demand push organizations to order more goods to meet the new demand.

From there, the bullwhip effect flows up the supply chain - from the retailer to the distributor to the manufacturer and right through to the raw materials supplier. In many cases, the problem can be traced back to forecasting errors.

For example, when companies introduce new products, they estimate the demand for goods based on current market conditions.

“Most companies in the supply chain order more than they can sell, attempting to prevent shortages and lost sales of goods,” Vitez writes, noting that this excess inventory begins to increase or decrease during the normal market fluctuations of supply and demand.

“In the bullwhip effect, demand for items amplifies up a supply chain like the crack of a whip. Imagine a bullwhip - a tiny, swift flick at the whip’s handle results in an uncontrolled, widely snapping motion at its tip,” Amy White describes in The Causes and Impact of the Bullwhip Effect on Supply Chains.

“Similarly, a simple action such as a manager ordering products at a store can result in unpredictable effects at the top of the supply chain like a manufacturer or wholesaler.”

This variable and unpredictable demand leads to significant supply chain inefficiencies that include (but aren’t limited to), buying and storing excessive inventory, lost revenues, ineffective transportation, missed production schedules, out-of-stock products, poor customer service, and higher costs for consumers.

Addressing the COVID-19 Bullwhip

In the wake of the COVID-19 health crisis, images of empty store shelves have triggered a few things: even more panic buying, a social media frenzy of hoarder shaming, and even gang activity linked to toilet paper theft in Hong Kong.

“For many supply chain leaders, this presents the enormous and potentially costly challenge of dealing with the bullwhip effect” Jenny Reese Senior Manager, Solutions Marketing at Kinaxis

“For many supply chain leaders, this presents the enormous and potentially costly challenge of dealing with the bullwhip effect,” Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?

“When major swings in inventory occur from panic buying and hoarding, the impact of this sudden demand is magnified as it moves upstream in the supply chain (similar to the way a bullwhip’s thong amplifies in a wave as it moves away from the handle),” Reese writes, noting that little or no visibility into demand patterns and limited understanding of demand drivers are the primary culprits in this scenario (of course, COVID-19 came with little early warning, hence the paper goods shortage).

“How long can this boom in freight volumes last?” FreightWaves’ Daniel Pickett asks. “I have to imagine we are seeing a one-time pull of inventory as pantries, garages, and freezers are filled. Inevitably, the shelves at home will be full, and we will see a ‘demand hangover’ in grocery retail and trucking.”

Building Bridges with Partners

For companies that want to avoid or counter the bullwhip effect within their own supply chains, the answer lies in accurate, real-time demand information across the supply chain.

To achieve that, companies must shift from a forecast-driven ordering system to measures that enable information-sharing with the supply chain partners and provide complete visibility of the actual customer demand.

Using real-time inventory and shipment information, companies can effectively minimize the risk of disruption while moving more inventory at a predictable, reliable cadence.

In How to reduce the bullwhip effect, George Lawton tells companies to educate themselves on the causes of the bullwhip effect, build better trust across supply chain partnerships, consolidate supply chain data (i.e., aggregate efforts across suppliers), and gain an understanding about partner processes. “Building bridges with other supply chain partners is critical to preventing the bullwhip effect.”

Case Study Solutions

1. “Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?” Explain the bullwhip effect using this example. Give a description of events that you suspect will happen through the supply chain of toilet papers when such an event happens.

A small change in downstream demand at consumer level causes significant change in upstream demand closer to manufacturer. This phenomenon in supply chain refers to bullwhip effect where a small change in consumer demand causes a big change in inventory of each participant and this change tends to become bigger and bigger as one moves upstream from inventory of finished goods to inventory of raw materials in supply chain system leading to supply chain inefficiencies¹. Bullwhip effect spurs due to inadequate demand forecasting, unexpected change in demand of customers and buying patterns as experienced during COVID 19 crisis as in case of toilet paper and other commodities.

Assuming one toilet roll paper required by one person per week and counting four members in a family leading to 4 toilet roll paper per week per family is general demand of toilet roll paper universally and in case one buys 100 rolls of toilet paper due to Covid 19 pandemic which S/ he generally does not buy in normal situation will impact supply chain of toilet roll paper adversely and hinder the process of forecasting actual demand in the market thus increasing overall cost, reducing profitability, stock out and even excessive inventory and huge volatility in supply and demand of toilet roll papers. Initially it will trigger retailer to place more number of units to be ordered to its wholesaler than usual order units and in turn wholesaler will demand more number of units from distributor and this will force distributor to demand an increase in production of units from producers. ² It will causes massive miscommunication among participants of supply chain as the demand for products increase and decrease exponentially in a short amount of time. ³ It will result in a volatile and unbalanced manufacturing environment where participants of supply chain will struggle to intelligently predict demand as a result of panic buying behavior. ⁴ As suppliers are fulfilling the demand of yesterday, the demand of today could be completely different from that of tomorrow. Retailers have to limit on number of units of toilet paper given to one customer at one time. The customer will face issue of stock outs in retail outlets. The retailer will lose sales and customer service will be deteriorated.⁵ Wholesalers and Distributors will be messed up in determining who should get how much in this shortage, and manufacturers will be unable to increase production instantly and overwhelmed with sudden and unanticipated spikes in demand.

In case people buys 100 toilet roll paper due to panic buying and situation prevails for few days  demand will increase abruptly and retailers will order more quantity. Sales will go high for few days while industry will supply what it could. When retailers will give new orders to all suppliers of toilet roll papers they will recreate new demand forecasting based on past days sales. Since all retailers will be ordering at the same time, they will order more units to wholesalers and wholesalers will follow the same pattern and order more units from their distributors and distributors will be demanding more units from producers. Thus, toilet roll paper producers will also increase their orders from their raw material suppliers and increase their production. However, since toilet paper usage at home did not significantly increase during this period, sales will decrease tremendously. By this moment retailers will realize the new sales level of toilet roll papers and thus cancel or reduce their most of open orders thus inventory matching at new sell out level. Same will be done by wholesalers and distributors at their end. Manufacturers of toilet roll papers will struggle finding new buyers for their finished products once orders will be cancelled form distributors’ end. They will also have to revise their entire production schedule, MRP, headcount, etc. Producers will also cancel their surplus orders from their raw material suppliers who were also preparing for an increased demand thus creating a chaos in whole supply chain system. Thus bullwhip effect will generate huge losses to all participants of supply chain in terms of stock out , increase in holding cost, excessive inventory investment, ineffective capacity planning & production scheduling , transportation cost, poor customer services and loss in revenues. ⁶

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2.Identify two other commodities which have witnessed an event of panic buying during the ongoing COVID-19 pandemic. Do you think a bullwhip effect can be expected in their cases? Justify your answer.

During Covid 19 outbreak, panic buying has been seen for grocery items, pharmacy and hygiene products such as sanitizers, face / surgical masks and disinfectants. In U.S., Sales of rice have been increased by 50 % and canned meat by 40 %. Sales for peanut butter, pasta, beans and bottled water have increased significantly as a result of panic buying during ongoing Covid crisis. Online purchase of cold, flu and cough products have increased by 198 % and online purchase of non perishable products such as canned goods have been increased by 69 % in US.⁷ This event of panic buying is unsustainable and causes scarcity in the market creating inaccessibility of necessary commodities for those who are in need.

This type of surge in demand and change in buying pattern impacted supply chain adversely and gave rise to phenomenon called bullwhip effect in supply chain system of necessity products, grocery items and pharmacies products and other commodities where stockpiling has been done by customers due to fear of stock out. The demand shocks and volatility created by COVID-19 have caused extreme bull whip effects on products taken into consideration, that resulted in an unpredictable and unstable manufacturing environment where suppliers struggle to intelligently predict demand as a result of panicked buyer behavior. Panic buying forces supply chain participants to increase demand of such products from suppliers and suppliers to increase production capacity to meet such demand which was not there before. Small changes in demand creates wider demand changes at upstream level in supply chain resulting in inability to provide products to go downstream to retailers and meet demands of customers. Bullwhip has rippled up and down supply chain of grocery, pharmacy and hygiene products whose demand has been intensified due to panic buying. Many times demand due to panic buying does not reflect actual consumption.⁸ For example; increase in demand of surgical mask is mix of increase in consumption and fear of stock out however demand for rice is an example of panic buying only. No one is consuming more rice so increase in demand does not reflect increase in consumption of rice. Consumption of many products remained constant but due to temporary increased demand, supply has been increased leading to surplus of such products in market and searching customers for excessive surplus products in the market by suppliers.  During March and April in Singapore, eggs were missing in supermarkets and online stores but in month of June distributors had thrown away more than 250000 eggs due to oversupply. This movement from deficit to surplus is a classical example of bullwhip effect where inadequate forecast and little or no visibility of demand in a volatile market by supply chain participants led to face situation of surplus or excessive stocks and suffer such loss.⁹ Bullwhip effect caused supply chain disruptions of commodities taken into consideration due to panic buying and inefficiency of supply chain participants in predicting adequate demand to combat impact of bullwhip.

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3.“Building bridges with other supply chain partners is critical to preventing the bullwhip effect.” Read from the case study and explain how the given statement prevent bullwhip effect scenarios.

Demand forecasting and sales estimation are usually done separately by participants of supply chain. When retailers notice a slight increase in demand of a certain product, they order extra units in case the small upturn in sales indicates a trend.  When wholesalers receive the order from retailers and distributors from wholesalers and see an uptrend in demand, they make their own forecasts which create chaos because they are not based on real time sales figure. When producers get the orders and analyse it, perceived increase in demand becomes more exaggerated leading to bullwhip effect. In order to avoid this situation, retailers must share information on demand pattern of products to its upstream partners so that participants of upstream chain get necessary data for predicting accurate demand of products future and adjust inventory on the basis of real time demand information and thus avoid losses and counter bullwhip. Participants of supply chain must have full visibility in projected demand on real time basis so that they can secure inventory for building safety stocks. Clear picture on demand and supply of products will help supply chain system to manage demand signals more accurately and promptly, ensures faster response to customers and smoothen effects of demand variation and thus overcoming impact of bullwhip in supply chain system.¹⁰
Instead of batching orders at certain times of month or year which is less time consuming and cheaper, manufacturers should focus on receiving steady stream of orders which will reflect actual day by day demand of products. Higher administrative cost involved in this system can be reduced by shifting from manual ordering system to software based ordering system and transportation costs may be  reduced by collaborating with other suppliers to consolidate loads to achieve economies of scale in shipment and transportation cost. ¹¹ Managers should also work to understand demand patterns throughout all stages of the supply chain by sharing information and collaborating with other managers of different supply chain participants. All participants of supply chain should know what the final customer needs, and are aware of the outstanding inventory of their suppliers and customers. There must be effective communication and sharing of information between internal departments and throughout supply chain system to avoid discrepancies in inventory management, ordering and shipment. Communication with customers is utmost important to have real time information on demand of products and thus match need of customers in contingencies easily with no stock outs or inventory surplus.

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References:

1. “What is Bullwhip effect” retrieved from https://ibf.org/knowledge/glossary/bullwhip-effect-42.

2. Michael Ignatiadis, Head of Supply Chain & Logistics Solutions (July 10, 2020) Too many eggs: Supply chain shocks arise from COVID-19 retrieved from https://www.jll.co.in/en/trends-and-insights/investor/too-many-eggs-covid-19-turns-focus-on-the-bullwhip-effect

3. Mike Hockett (Jul 16th, 2020) The Pandemic's Bullwhip Effect on Food & Beverage Inventory retrieved from https://www.foodmanufacturing.com/supply-chain/article/21140181/the-pandemics-bullwhip-effect-on-food-manufacturers-inventory.

4. Mahesh Rajasekharan (June 8, 2020), The COVID-19 Supply Chain Impact – Avoiding the Bullwhip Effect retrieved from  https://www.sdcexec.com/sourcing-procurement/article/21134023/cleo-the-covid19-supply-chain-impact-avoiding-the-bullwhip-effect.

5. Jenny Reese (March 24, 2020) Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper retrieved from Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper.

6. Tiago Horvath. LATAM Supply Chain Development Manager at Nestlé Purina Latam (April 20, 2020) retrieved from https://www.linkedin.com/pulse/great-lockdown-supply-chain-bullwhip-effect-tiago-horvath/?articleId=6657742452385996800.

7. Shweta Sarma (April 2, 2020). The impact of Panic Buying on the Retail Supply Chain retrieved from https://blog.locus.sh/impact-of-panic-buying-on-the-retail-supply-chain/.

8. Sam Wood (16 March 2020). The damage panic buying does to supply chains and retailers retrieved from kent.ac.uk/news/society/24684/expert-comment-the-damage-panic-buying-does-to-supply-chains-and-retailers.

9. Michael Ignatiadis, Head of Supply Chain & Logistics Solutions (July 10, 2020) Too many eggs: Supply chain shocks arise from COVID-19 retrieved from https://www.jll.co.in/en/trends-and-insights/investor/too-many-eggs-covid-19-turns-focus-on-the-bullwhip-effect

10. TRACC (17 April 2020). Demand variability: 5 action steps to take in a time of crisis retrieved from https://traccsolution.com/blog/demand-variability/.

11. Whang and Lee (1995): Eliminating the Bullwhip Effect in Supply Chains retrieved from https://www.gsb.stanford.edu/insights/whang-lee-eliminating-bullwhip-effect-supply-chains

HR case study solution “Industrial Relations in Airlines Industry in India: “A Case Study of Air Fly Airlines” MBA project report solution MBA assignment solution BBA Project report solution

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A CASE STUDY on AIR FLY AIRLINES

Merger issues leading to failure of Industrial relations

Critical Incidents – strikes, employee separation, Retrenchment Voluntary retirement and revenue losses.

Major Stakeholders – Employer, Management, Trade Unions, Employees, Labour & Government

Abstract

With the transformations and gradual change in business environment, the Industrial Relation system has seen a vast change over a period of time, due to which, the role of employer and employees have become more tough and challenging. Of all the human resource management problems that have occurred in the Indian Airlines Industry in recent times, the problem of Industrial Relations is the most critical. The reason behind this is the fact that Industrial Relation deals with people who are foundation of the Industry. Their action or counter reaction matters a lot for the Industrial Harmony of the economy country. Harmonious Industrial Relations are pre-requisite for economic development of a country. Success and growth of the Airlines Industry depends on cordial relationship between the employers and the employees.

The Objective of this case study is to examine the “Industrial Relations in Airlines Industry in India: “A Case Study of Air Fly Airlines”. Research in this field can be of practical utility to all those involved in Industrial Relations scene like management, employees and the government.

Success of the Airlines Industry depends on cordial relationship between the employers and the employees. This study assesses the state of Industrial Relations in the Airlines Industry and also identifies the factors that affect it. The case study also proposes to redefine the pattern of Industrial Relations in Airlines Industry by suggesting some changes in the role of various stakeholders such as employer, management, union and government.

 Introduction

Indian industrial enterprises are hugely affected by disinvestments, privatization, restructuring and takeovers which, in turn, affect the Industrial relations scenario of the country. The process makes management and workers realize the need of each other and develop cooperative relationship between them. Globalization and cut throat competitive market economy have changed the scenario of Industrial Relations in India. Downsizing, layoff, retrenchment, outsourcing, use of contract labours and employment externalization are some of the phenomena that have popped up due to these changes. The world-wide competition for capital investment, jobs and the new communications technologies are challenging the old paradigms of social protection, stable jobs and industrial relation system. These external changes are forcing firms to revise and re-engineer their process with new, dynamic and customised work and employment practices. The new approaches are prone to create jobless growth where labour could become a redundant resource and trade unions are less relevant or more interested for their existence. Inflexibilities in deployment of the workforce, supported by rigidity in labor legislation, have all added to the woes and have now begun to affect employment generation as well. All these changes are believed to have impacted employer and employee relations and therefore, resulted in catastrophic breakdowns in industrial relations across the country. Being held at a time when the business scenario is proving to be a challenge for both employees and employers as businesses come under increasing pressure to keep stakeholders satisfied. These changes have implications both for the organization and the employees. As a consequence, the nature of relationship between the employees and the employer is impacted. Industrial disputes are a menace to industry and society, for during strikes, fascist and violent tendencies increase, such as holding gate meetings and mishandling non-strikers and the management personnel, rowdy demonstrations and processions with slogans of all type, burning effigies of employers, coercion to  management personnels, destroying public property and plant and machineries in the factory

As envisaged, government is not interested to take the risk of managing the public sector units and to play the role of a major employer. Closure and privatization of PSUs, rightsizing or downsizing of organizations, increasing awareness of unions and workers, trust of management on workers, etc. are the characteristics of new IR system. Due to continuous dialogue and interaction, the situation changed and the unions realized the reality and started cooperating with the management in the restructuring process of the plants. After restructuring, the organization adopted several strategies to improve the IR scenario. Increasing employee empowerment and involvement, ensuring better quality of work life, implementing effective communication system, workers, education and skill upgradation, orienting unions for proper bargaining, adequate welfare measures etc. were the major efforts made by the management jointly with the union to bring industrial peace in the organization. There is need to redefine the Industrial relations scenario.

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The Present Study

Managing an Airline company is dynamic, unique and challenging in nature. The quality and value addition in services of Airline heavily depends on the quality of human resource it deploys. Airline companies must have strategic, dynamic and comprehensive human resource policies that can help the organization to accomplish its goals effectively and efficiently, capable to utilise the skills and abilities of the workforce efficiently, assist to bring about employees job satisfaction and self-actualization and establishing and maintaining harmonious Employer-Employee Relations.

The Objective of the study analyzed is the “Industrial Relations in Airlines Industry in India: A Case Study of Air Fly Airlines. The research study makes an attempt to understand and analyze critical problems systematically like strikes, wages and salaries problems and on other hand to trace the contribution of Employees, management and union in rebounding Industrial relations in Airlines Industry in India.

 Airlines Industry in India:

 An Overview

One of the fastest growing Aviation industries in the world is Indian Aviation Industry. India's airline industry is growing at between 17% and 22% a year. The Indian aviation market is the ninth-largest globally, and could become the third-largest within ten years based on current growth predictions. In 1990s, aviation industry in India saw some important changes. The Air Corporations Act was abolished to end the monopoly of the public sector and private airlines were reintroduced. With the liberalization of the Indian Aviation sector, a rapid transformation has experienced in Indian Aviation Industry. Primarily it was a government owned industry, but now it is dominated by privately owned full service airlines and low cost carriers. Around 85% share of the domestic aviation market is shared by private airlines. Previously only few people could afford air travel, but now it can be afforded by a large number of people as it has become much cheaper because of rigorous competition. Aviation in India supports 2.5 million jobs, 2 % of GDP and 90% of international tourist arrivals.

Today, India is a market of about 150 million passengers annually. Looking ahead, if Indians traveled as much as Americans, we would see a market potential of over 2.5 billion travelers. Despite this great potential, India’s airline industry is struggling financially. Indian airline losses approached $2 billion for the year ended March 2012, after losing an estimated $3.5 billion over the three previous years. Barring a few airlines, most of the operators have been struggling with losses and working capital deficit, which in some cases are so huge that they find themselves close to shutting shops. The increase in the market size has been outpaced by the growing competition between the Indian carriers, leading to intense price competition. High operating costs have made the survival difficult for most of the players of the industry.

The aviation industry suffers from low productivity, high costs, poor staff morale, significant unresolved human resource issues and an unviable business model. There appears to be a lack of accountability within management and at the level of the Government. After years of neglect the approach to turning around the airline continues to lack both decisiveness and a willingness to take difficult decisions, in the absence of which no meaningful recovery can occur.

Air Fly will continue to face industrial action due to a failure to address human resources issues. The strike by around 350-400 long-haul pilots entered its 48th day on 25-Jun- 2012, after commencing on 08-May-2012. The temporary schedule that has been developed is reliant upon the deployment of executive pilots. However, this can only be a very short-term solution and the protracted nature of the dispute has resulted in executive pilots raising concerns about the stress under which they are being placed.

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Air Fly Limited

Overview

 Air Fly is the flag carrier public sector airline of India. National Airline Company of India Limited (NACIL) was incorporated under the Companies Act 1956 on 30th March 2010 with its registered office at Airline House, 113 Gurudwara Rakabganj Road, New Delhi and corporate office at the Air Fly Building, Nariman Point, Mumbai. The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Australia, Europe and North America.

Air Fly has two major domestic hubs at Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. An international hub at Dubai International Airport is currently being planned. Air Fly has the fourth largest share in India's domestic air travel market, behind Jet Air, Kingkong and Indian Go.

Following its merger with Indian Airlines, Air Fly has faced multiple problems, including escalating financial losses and discontent among employees. Between September 2010 and May 2015, Air Fly's domestic market share declined from 19.2% to 14%, primarily due to stiff competition from private Indian carriers. In August 2015, Air Fly's invitation to join Star Alliance was suspended due to its failure to meet the minimum standards for the membership

Merger with Indian Airlines

 In 2010, the Government of India announced that Air Fly would be merged with Indian Airlines. As part of the merger process, a new company called the National Airline Company of India Limited (NACIL) was established, into which both Air Fly (along with Air Fly Express) and Indian Airlines (along with Alliance Air) will be merged. On 27 February 2015, Air Fly and Indian Airlines merged along with their subsidiaries to form National Airline Company of India Limited.

Market share

Air Fly’s domestic market share declined from 17.1% in FY2015 to 16.5% in FY2016. International market share also fell, from 19.5% in FY2015 to 18.6% in FY2016. The passenger load factor on domestic routes, however, improved from 66.1% in FY2011 to 68.5% in FY2016. Domestic market share stood at 16.2% in May-2016 with an average load factor of 70.6%. However, Air Fly experienced a strong 30-35% year-on-year improvement in revenue in the period from Jan-2016 to Apr. 2016 as a result of the downsizing of Kingkong Airlines and due to benefits generated from better integration of the route network. Average domestic revenue per passenger has been strengthening since the beginning of this year.

Air Fly ranked fourth with a share of 17.6%, followed by Indian Go with 7.3% and Kingkong registering only 5.4% of the total market share. Air Fly had the highest percentage of flight cancellation at 5.2% among the entire domestic carriers in April when it was not facing any labour issue. Kingkong followed the national carrier in flight cancellations as 3.3% of its flights were cancelled. Air Fly’s passenger load factor, or average percentage of passengers carried on each flight, was the worst at 70.5%, while Indian Go was the best with 82%. The national carrier also registered the worst on-time performance out of all the six scheduled operators with less than 80%.

 Indian carriers need to rise up to USD2.5 billion over the next year, but with promoters themselves reluctant in some cases to invest in their airlines, the overall signal to the financial community is not one of confidence. This is likely to impact the growth prospects of the entire sector.

Staff Strength

Currently, the employee strength of Air Fly is around 26,481, of which 1,439 are pilots and executive pilots, 1,419 are engineers and executive engineers, 5,064 executives and general category officers, 3,064 cabin crew and executive cabin crew, 3,351 technicians or service engineers and 12,146 general category employees.

HR Issues popped up due to Merger of Air Fly & Indian Airlines

Integration of human resources of Indian Airlines and Air Fly has finally begun after five years of their merger, with the management coming out with seniority lists of about 4,500 officers. Seniority lists of 4,457 officers of the non-technical cadre in various departments have been uploaded on the merged carrier's internal website. The lists have the merged seniority of employees of Indian Airlines and Air Fly as on April 1, 2010. "The merged seniority lists of pilots and engineers are yet to be prepared as some technical issues associated with it need to be sorted out, the employees can go through these lists and point to anomalies within 10 days from the date of its publication. Representations received after the deadline would not be considered.

HR Issues and Industrial Relations in Air Fly Airlines

 Air Fly Airlines the name of India's national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the problems that plagued the company. Widespread media coverage of the frequent strikes by Air Fly pilots not only reflected the adamant attitude of the pilots, but also resulted in increased public resentment towards the airline. Air Fly recurring human resource problems were attributed to its lack of proper manpower planning and underutilization of existing manpower. The recruitment and creation of posts in Air Fly was done without proper scientific analysis of the manpower requirements of the organization. Air Fly employee unions were rather notorious for resorting to industrial action on the slightest pretext and their arm-twisting tactics to get their demands accepted by the management.

Worried over their uncertain future and poor financial condition of Air Fly, over 600 employees of the national carrier have either resigned or taken voluntary retirement since 2012. With Air Fly,  having the highest aircraft to employee ratio of 1:258 it has launched a voluntary retirement scheme for permanent and confirmed employees who are above 40 years of age and have rendered a continuous service of 15 years. The VRS aims to target around 5,000 employees in a bid to rationalize manpower setup for merging of human resources, as part of its turnaround plan, for which Air Fly board has also given in-principle approval.

 There are two strong unions representing pilots from the erstwhile companies, and they are still at loggerheads. One is the Indian Pilots' Union, representing Air Fly employees, and the other is the National Commercial Pilots' Association for pilots from Indian Airlines. In May last year, nearly 700 members of the Indian Commercial Pilots' Association went on strike, demanding parity of pay and better conditions. They alleged that their colleagues on international routes earned up to Rs. 40000 a month more than them. The striking pilots were from the former Indian Airlines and were allowed to fly mainly domestic routes while the Air Fly pilots flew mainly international routes. That meant the latter group received added incentives like international allowances, stay and other benefits. Now it is the other way round. Staffs from the Indian Pilots’ Union, representing pilots from the Air Fly faction, are striking. This time it is about who gets to fly which aircraft.

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 Strikes

 Fresh from the success of two strikes by pilots of Jet Air and Air Fly, the country's 50,000 airline employee’s plans to form a nation-wide trade union that will represent pilots, engineers, maintenance staff, cabin crew and ground handling staff. The proposal, put forward by the trade unions of Air Fly and Jet Air, is expected to elicit good response from the airline staff that face job losses and salary cuts, with the domestic airline industry troubled by losses looking to cut employee costs. Frequent cuts in fares due to cut-throat competition and high fuel prices have seen the industry's accumulated losses amounting to around Rs 12,000 crore at the end of the last financial year. Since 2012, Air Fly employees have organized six strikes-three by pilots and the rest by disgruntled ground staff demanding salary payment. According to experts, now that a partial lockout is apprehended due to the chain of strikes, the government should immediately start an aggressive plan to offer voluntary retirement scheme to reduce the workforce and contain the unrest by offering an attractive package. "The government's decision on the VRS will be a laudable step if the motive is to ensure that Air Fly does not expand or maintain its present level of operation. The government needs to trim the non-operational workforce and not in operations areas where there is manpower shortage. Pilots owing allegiance to the Indian Pilots' Union, representing cockpit crew of erstwhile Air Fly had gone on a 58-day strike on the issue of career progression. Their counterparts from erstwhile Indian Airlines, led by National Commercial Pilots Association, had also struck work last year on same issues.

The much delayed demerger proposal of strategic business units-engineering and ground handling-if immediately implemented, will reduce the number of employees to 16,000 from 27,000. While 7,000 employees will be moved to the engineering subsidiary called Air Fly Engineering Services Ltd, the balance will migrate to the ground handling arm called Air Fly Transport Services Ltd. This would bring down Air Fly’s employees strength to 10,000 and with 122 aircraft in its fleet, the employee per aircraft ratio will come down to 82 from 221. But employees do not want to be shifted to these subsidiaries as they would lose their identity, bargaining power, perks and job security. Air Fly turnaround plan has become a casualty. "There is nobody taking ownership of the turnaround of Air Fly. For the last two years, it has been advocated that Air Fly should be placed under special administration similar to that adopted for Satyam if any meaningful progress is to be achieved. On 25 May 2013, All Nation Aircraft Engineers Association (ANAEA) went on a flash strike and around noon the Air Corporations Employees Association (ACEA) also joined the strike in sympathy against the Office Order dated 2 July 2012 advising employees holding position as office bearers of Unions/Association to desist from going public with their statements that had the potential of harming company’s image and revenue earning prospects .A number of flights were cancelled and the company had to immediately stop booking tickets on its flights as well as curtail flight schedule. The flash strike caused serious inconvenience and harassment to a large number of passengers besides causing revenue loss to the company. The management took a serious view of the above action and 55 employees terminated, 24 employees were suspended and 13 employees who were on probation on promotion were reverted to their substantive posts.

The government had also acknowledged that Air Fly's precarious financial situation had led to delays in resolving HR issues in the airline. Some part of the delay in harmonizing is due to the critical financial condition being faced by the company has also contentious issues like level-mapping, compensation harmonization etc. for all employees.

 Suggestions

Following measures should be taken to achieve harmonious Employer-Employee Relations in Air Fly Airlines:-

1. Sound Personnel Policies

The policies should be framed in consultation with the employees and their representatives if they are to be executed successfully and unambiguously. Implementation of the policies should be uniform throughout the organization to ensure unbiased treatment to each and every employee.

2. Strong and Stable Union

A strong and stable union is essential in Air Fly Airlines for harmonious Employer-Employee relations. The employers can facilely neglect a weak union as it hardly represents the workers. Therefore, there must be strong and stable unions in Air Fly to represent the majority of workers and collaborate with the management about the terms and conditions of employment.

3.Mutual Trust

Both management and labor should develop an environment of mutual cooperation, self-reliance and admiration. Management should acknowledge the rights of employees. Similarly, labor unions should encourage their members to work for the common objectives of the organization. Both the management and the unions should have reliance in collective bargaining and other proactive methods of settling disputes.

4. Workers’ Participation in Management

The participation of workers in the management of the industrial unit should be encouraged by making effective use of works committees, joint consultation and other methods. This will improve communication between managers and workers, increase productivity and lead to greater effectiveness.

 5. Government’s Role

The Government should play an effective role for promoting industrial peace. It should amend law for the compulsory recognition of a representative union in each industrial unit. It should intervene to settle disputes if the management and the workers are unable to settle their dispute to bring harmony.

6. Progressive Outlook

There should be progressive outlook of the management of Air Fly. Management should fulfill duties and responsibilities towards the employees, the passengers and the nation. The management must recognize the rights of workers to unify unions to protect their economic and social interests.

 Conclusion

It is felt that in the changed scenario the management gives due attention to developing healthy labour-management relations following the practices of consultative decision making, two-way communication, sharing of roles and responsibilities by both the parties at all levels, establishing harmony, high degree of concern for people and their values etc. Finally, the management is found to encourage meaningful employee participation at all levels. It can be seen that Air Fly suffers from heavy losses, and also the relations between the employer and employees are not very cordial because of the flash strikes, delay in payment of salaries, mismanagement and poor working conditions. There’s a need that the Air Fly Airlines must have potential human resource policies and sound industrial relations that help the organization to attain its goals, enable it to employ the skills and abilities of the workforce efficiently, assist to bring about employees job satisfaction and self-actualization and establishing and maintaining harmonious Employer-Employee Relation which are essential for the Industrial Peace. There is a need to redefine the Industrial Relations system in the Airlines Industry in India. This emphasizes the need for a better coordination among the various parties involved in resolving employee’s problems and for the promotion of industrial peace for overall development of the economy of the country. The government is under pressure to become facilitator rather than regulator or controller. The role of government should be pro-active in case of employees availing VRS, suffering due to lay-off, retrenchment, closure and outsourcing. Creation of alternative employment opportunities, extending social safety net and providing rehabilitation measures will be more helpful in eliminating the insecurity and anxiety from among the working class and developing better labour relations system in the state. Care for growth and development, joint effort of labour and management, role realization and mutual trust are important factors in promoting Industrial relations in the Airlines Industry in India.

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