Sunderland University – Cavendish College MBA Dissertation Operational Risk Management in Aviation: The implementation of a new baggage logistics technology at Heathrow Airport Terminal 5
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Sunderland University – Cavendish College
MBA Dissertation
Operational Risk Management in Aviation: The implementation of a new baggage logistics
technology at Heathrow Airport Terminal 5
Danilo Gomes de MatosSunderland ID: 089068287Date: 15/05/2009
STATEMENT OF AUTHENTICITY/DECLARATION
This research has been finished with the help of others who contributed with their
opinions, views, corrections and criticisms. The work is original and I am responsible
to the full extent.
Signed:
_________________________________ May 2009
Danilo Gomes de Matos
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Sunderland University - Cavendish College
Danilo Gomes de Matos
The Dissertation Committee for the above candidate for the MBA Degree, recommend acceptance of this dissertation.
Supervisor______________________________________________
This dissertation is accepted by Cavendish College
3
DEDICATION
To my Parents: Jose Alberto de Matos and Tania Regina Gomes de Matos for all the support and care throughout my life.
To my girlfriend Elisa Brioschi for the love, understanding and encouragement she gave me to get this academic achievement.
To my sisters: Vanessa Matos Loge and Aline Gomes de Matos for always being on my side.
To my supervisor John Jones and my professors Bruce Sheppy and Pavlos Stavrakakis.
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Table of Contents
Executive Summary...................................................................................................10
Chapter 1 - Introduction.............................................................................................11
1.1 - Introduction......................................................................................................11
1.2 - Background Problem.......................................................................................12
1.3 - Objectives........................................................................................................13
1.4 - Chapter Summary............................................................................................13
Chapter 2 - Literature Review...................................................................................14
2.1 - Introduction......................................................................................................14
2.2 - Risk Management............................................................................................14
2.3 - Different Types of Risk...................................................................................16
2.4 - The common risks faced by companies...........................................................17
2.5 - Operational Risk..............................................................................................17
2.5.1 - Controlling the risks..................................................................................18
2.5.2 - Strategies for managing the risks..............................................................19
2.5.3 - Actions required........................................................................................20
2.5.4 The Decision Process in Operations...........................................................20
2.6 Baggage Handling..............................................................................................21
2.7 - Operations Management..................................................................................21
2.7.1 - The Activities of operations Management................................................22
2.7.2 - The direct responsibilities of operations management.............................22
2.7.3 - The indirect responsibilities of operations management..........................23
2.7.4 - The broad responsibilities of operations management.............................23
2.8 - The scope of project risk management............................................................24
2.9 - The project life cycle.......................................................................................24
2.10 - Chapter Summary..........................................................................................26
Chapter 3 - Research Methodology...........................................................................27
3.1 - Introduction......................................................................................................27
3.2 - Research Questions..........................................................................................27
3.3 - Research Design..............................................................................................27
3.4 - Type of Research.............................................................................................28
3.5 - Research Instruments.......................................................................................28
3.6 - Data Collection................................................................................................28
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3.7 - Target Population.............................................................................................29
3.8 - Sampling..........................................................................................................29
3.9 - Administration of Questionnaires and Interviews...........................................30
3.10 - Data Analysis.................................................................................................31
3.11 - Elimination of Bias........................................................................................32
3.12 - Study Limitations...........................................................................................33
3.13 - Chapter Summary..........................................................................................33
Chapter 4 - Data Presentation....................................................................................34
4.1 - Introduction......................................................................................................34
4.2 - Findings from the questionnaire......................................................................34
4.3 - Finding from the interviews.............................................................................38
4.3.1 - Question 3.................................................................................................39
4.3.2 - Question 4.................................................................................................41
4.3.3 - Question 5.................................................................................................42
4.3.4 - Question 6.................................................................................................43
4.3.5 - Question 7.................................................................................................43
4.3.6 - Question 8.................................................................................................44
Chapter 5 - Analyses of findings...............................................................................46
5.1 - Questionnaire...................................................................................................46
5.2 – Interview.........................................................................................................48
Chapter 6 - Conclusions and Recommendations.......................................................55
6.1 Conclusion..........................................................................................................55
6.2 Recommendations..............................................................................................56
6.2.1 Heathrow Airport Terminal 5......................................................................56
6.2.2 Aviation sector............................................................................................57
Chapter 7 - Personal Development Plan (PDP).........................................................58
7.1 - S.W.O.T. Analyses..........................................................................................58
7.2 - Action Plan......................................................................................................59
Bibliography..............................................................................................................61
Appendices.................................................................................................................65
Appendix 1 - Risk factors identified: premises, product, purchasing........................65
Appendix 2 - Risk factor identified: people, procedures, protection.........................66
Appendix 3 - Risk factors identified: processes/performance...................................67
Appendix 4 - Risk factors identified on planning and policy....................................68
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Appendix 5 - Questionnaire.......................................................................................69
Appendix 6 - Questions interview.............................................................................71
Appendix 7 - Letter of recommendation....................................................................72
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List of tables
Table 1 – Eight stages in the project life cycle...........................................................25
Table 2 - Interview Schedule......................................................................................31
Table 3 – Differences noticed by passengers.............................................................37
Table 4 – Activities most and least important (handling baggage)............................37
Table 5 – Improvements at Terminal 5.......................................................................38
Table 6 - Future investments in terminal 1, 3 and 4 at Heathrow ..............................41
Table 7 - Observations during interview.....................................................................45
Table 8 - Action plan...................................................................................................60
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List of Figures
Figure 1 – Gender.........................................................................................................34
Figure 2 - Group of age................................................................................................35
Figure 3 - Problems with baggage................................................................................35
Figure 4 - Common problems with baggage................................................................36
Figure 5 - Customer perception....................................................................................36
Figure 6 - Customer perception - security....................................................................38
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Executive Summary
The executive summary for the research done can be seen as follow.
The chapter one had showed the introduction of the study with the background
problems that was happening. The aims of the research were indicated as well.
Chapter two showed the literature review that the study had researched. It included
theories about risk management, operational management, and different types of risk,
how to control those risks through strategies and actions required, and the new
baggage system that is being used at Heathrow Airport Terminal 5.
Chapter three showed the research methodology. The research question and design
were described in this chapter. The type of research, the data collection, the target
population, the sampling, the data analysis and the elimination of bias were written in
detail in this chapter.
Chapter four showed the data presentation from the questionnaire that was done with
passengers at the arrival and departure point at Heathrow Airport Terminal 5 and also
the data presentation from the interviews that were done with people who worked for
the airport and the company (BA – British Airways and BAA – British Airports
Authority).
Chapter five had analysed the findings from the questionnaires and the interviews. It
was linked to the theory about the topic and changes that they had introduced.
Chapter six gave a conclusion about the research that had been undertaken and also
recommendations for both, BA and BAA.
A personal development plan was conducted on chapter seven. It included an
S.W.O.T analysis and also an action plan for the author of this study.
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Chapter 1 - Introduction
1.1 - Introduction
The study investigated the activities that were initiated when Heathrow Airport
Terminal 5 introduced a new baggage system, specifically the operation management
which deal with both, human and system failures. The study was based on the
background of the sector that showed different problems with the operations of
dealing with baggage.
The study compared all the processes given about the theory of risk management with
what is being done at operational level in the baggage system at Heathrow Airport
Terminal 5.
Loader (2007) defines operational risk as ‘the risk associated with human error,
systems failures and inadequate procedures and controls during the processing of
business related transactions and the loss of reputation by a failure to implement the
processing correctly’. He also suggests that operational risk can be broken down into
further sub-sections like operations risk, technology risk, reporting risk, malicious
risk, legal risk, regulatory risk and so on.
According to Fischer (2003), the principles of risk management are needed even more
today than ever before. In the past, many organizations either ignored the risks
altogether or simply lived through the unfortunate consequences caused by them.
According to IATA (2008), the number of passengers is increasing worldwide at an
annual rate +5%. It means the quantity of baggage have also increased a lot. It results
in new challenges the companies are facing: Traffic rising and baggage volumes
higher than never before, stricter security regulations, cost pressures increasing year-
by-year, etc. Because of these factors, baggage becomes a critical point before, during
and after the flights. For this reason the baggage identification must be accurate,
reliable and economical. The companies have introduced new solutions and
innovations such as the use of RFID (Radio Frequency Identification) in the UHF
range for contact less reading and writing of bag tags.
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British Airports Authority (BAA) introduced a new high-tech baggage system at
Heathrow Airport Terminal 5, to be more effective and also to be more dynamic to
deal with baggage.
Heathrow Terminal 5 is using a system developed by Vanderlande Industries, an
expert international company in material handling systems based in the Netherlands,
and the world’s second provider of baggage handling systems. The system can be
resumed to transport bags from a baggage entry point (e.g. a check-in desk) to a pre-
determined output point in a timely manner (e.g. loading into a container ready to get
onboard the aircraft).
1.2 - Background Problem
According to the Journal of Theoretical and Applied Electronic Commerce Research
(2008) the airplanes ship nearly two billion bags per year and the cost that mishandled
bags that aviation industry has to pay is about U$3.7 billion per year, which does not
include delayed flight costs due to baggage problems, refund to the passenger gate
parking costs due to baggage delayed flights, etc. Krzymuski (2007) adds that it could
increase costs in more U$4 billion per year.
The baggage problems (long baggage claim time, delayed, damage, lost baggage, etc)
are ranked as the second more important on the customer complaints list (U.S.
Department of Transportation, 2006). It has a high impact in customer satisfaction and
loyalty level. Many customers decide to change the company after an incident with
his/her baggage.
The 2005 SITA statistics show that 30 million bags were mishandled. For every 1000
passengers, 17 were delayed, 2.7 were damaged or pilfered, and 0.75 were lost or
stolen. European hubs mishandled 15 to 20 bags per 1000 passengers compared with
6 in the USA. The contributory factors worldwide were 61% transfer bag mishandled,
15% failed to load, 8% ticketing error/security, 5% weather/space/weight restriction,
4% loading error, 3% tagging error and 3% mishandled on arrival.
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According to BBC News (2008), almost 300 flights in and out of Heathrow Airport
were cancelled during the first five days after open Terminal 5, which caused a chaos.
The problems seem to be due a combination of factors, which include the operational
management and the new high-tech system.
According to Boynton (2008), one of the problems in Terminal 5 was that the
boarding gates were not connected directly to aircrafts. The operations were not
satisfactory due that Terminal 5 which has 20 security lanes (Terminal 4 has just 8
security lanes) was not using all the lanes that they could, which can be one of the
facts to help the disaster of 27th of March.
1.3 - Objectives
The aims of the study can be seen as follows:
- Identify the main risks when a new baggage system is introduced;
- Identify the effective operational process of a new baggage system;
- Check if the customers experienced any benefits from improvements at
Heathrow Airport Terminal 5.
- Analyse how the risk management theory can be applied in baggage handling
automation process in airports.
1.4 - Chapter Summary
This chapter has given the introduction to what the study is all about, definition of risk
management, background to the problem and objectives. From the information in this
chapter, we can see that risk management has a crucial role to play in operations. But
unfortunately if the people are not trained properly for the functions given, several
problems can occur. The result of this study is an action plan that may be used to
identify areas and procedures that need to be changed and/or improved. The
objectives of the study are therefore, to identify the processes which is considered the
main operational risks and how to effectively deal with those keys factors. The next
chapter seeks to review what previous authors and experts have said and noted.
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Chapter 2 - Literature Review
2.1 - Introduction
This chapter aims to review what previous authors and experts have said and noted.
One of the most important reasons for undertaking this particular study is the
contribution to the specific area in aviation. As the study is based on recent facts,
there are not many reports and publications published and for this reason the literature
reviewed was sourced largely from secondary literature sources such as books,
newspaper, articles and journals.
2.2 - Risk Management
Operational risk is defined as ‘the risk associated with human error, systems failures
and inadequate procedures and controls during the processing of business related
transactions and the loss of reputation by a failure to implement the processing
correctly’ (Loader, 2007). According to Kazda and Caves (2007), the baggage
handling process still has a considerable human content, leading to many health and
safety concerns. Operational risk can be broken down into further sub-sections like
operations risk, technology risk, reporting risk, malicious risk, legal risk, regulatory
risk and so on (Loader, 2007).
The reputation of an airport can be damaged because of the human error e.g.
mishandling that can occur, leading to a certain number of lost or mislaid bags. In
Heathrow Airport Terminal 5, a high tech baggage system is being used and
according to BAA (2008), the new baggage system is extremely sophisticated and has
been designed for performance and reliability.
According to Fischer (2003), principles of risk management are needed even more
today than ever before. In the past, many organizations either ignored the risks
altogether or simply lived through the consequences caused by them. In many cases,
these organizations did not have anyone dedicated to look at or out for potential risks
that could adversely impact the company. Companies without focus on risk
management went bankrupt and some companies closed permanently their business
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doors. Therefore, a closer look at the topic of risk management is essential
(Robertson, 2005).
Technology risk is both power and danger. It gives advantages that can be exploited
and problems that can be devastating. It drives operations but can equally be a
constraint and it can be costly if not managed correctly (Loader, 2007). Baggage
handling is becoming a critical activity. The airlines are trying to shorten the turn
round time between individual flights and at the same time, the average load factors
are increasing (Kazda and Caves 2007).
Of all the things that affect operations performance, technologies is the biggest friend
and at the same time a potential nightmare. Only the managers who embrace
technology and have the vision to develop it will be prepared for the changes and
challenges that operations face in the coming years. Technology drives businesses,
operations managers drive technology. Making it happen is the challenge for
managers in both operations and technology. Technology is, not surprisingly, varied
(Loader 2007). At Heathrow Airport Terminal 5, the baggage system consists of two
complementary systems, a main baggage handling system overlaid with a fast track
system. The fast-track system enables bags to bypass the main sorter to convey time-
critical transfer or late bags to individual aircraft stands (Doherty, 2008)
According to Doherty (2008), the technology can become a threat is the baggage
system failure at Denver. Denver Airport in Colorado, USA, was originally scheduled
to open in October 1993 with a single system for all three concourses. This became
February 1995, opening with separate system for each concourse, with varying
degrees of automation. According to Loader (2007) the management should have a
focus on terms such as “how many times is it actually a systems problem?” instead of
“is it a system problem?”. The baggage system’s US$ 186 million original
construction costs grew by US$ 1 million per day during months of modifications and
repairs. In August 2005 it became public knowledge that United Airlines was going to
abandon the system (Doherty, 2008).
System failures can range between problems with programs, for example system
affected by viruses or bugs or incorrect codes to complete system failures when no
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trades can be input or processes can be run. IT problems are aggravated by either new
systems that experience teething problems or old systems that have problems copying
with the volumes and complexity of the business. IT problems are worsened if a
financial institution has many different systems and applications bolting to one
another (Loader 2007).
2.3 - Different Types of Risk
According to Robertson (2005), there are two types of risk, the potential risk and the
realistic risk. The potential risk may or may not occur, but an emergence plan must be
done to stop or reduce the impact, there are examples such as the stock market crisis
recently, employees leaving the department, poor executive level decisions and so on.
Those risks can come from internal or external forces as shown before on examples.
The realistic risks are based on known threats. These threats are common for a
specific industry or all industries, examples for realistic risks can be the loss of
profits, legislative decisions, overseas regulations, computer virus and so on. Different
from potential risk, most of the realistic risks come from external forces and it can be
a challenge to manage.
There is another type of risk management which is the option based risk management
that consists in a framework, and it is accompanying theoretical perspective and
methodology, to real world sequential information technology (IT) investment
problems. These problems involve alternative investment structures that bear different
risk profiles for the firm, and also may improve the payoffs of the associated projects
and the organization’s performance (Benaroch, Jeffery, Kauffman and Shah 2007).
According to Benaroch et al (2007), the option based risk management combines
traditional with implicit or embedded real options that are available with no specific
investment required provided the decision maker recognizes them. This combination
helps the decision maker to both explicitly surface all of the strategic choices and
accurately value those choices, including ones that require prior enabling investments.
According to Gould (2008) there is another type of risk which is the enterprise risk
management, which consists that any situation could bring some impact positive or
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some impact negative, but the positive ones can be seen as opportunities. Enterprise
risk management addresses the risks and opportunities facing an organization by
classifying objectives into four categories which are: strategic – that focus on
supporting an organization’s mission, operations – that use in an effective and
efficient manner the organization’s resources, reporting – that focus on reliability of
reporting and compliance which consists in laws and regulations.
2.4 - The common risks faced by companies
According to Triana (2006), some areas that a risk commonly appears can be weather,
legislation, economic, company employees and technology.
These common risks that companies face, two areas can be applied for the purpose of
the study. First area is the employee due that people are always unpredictable and that
in itself is a huge risk for companies. A hiring, training and retaining quality
employee is a challenge for companies and causes the biggest expense and a bad
reputation for the company. For Heathrow Airport Terminal 5, it is a constantly risk to
be managed. An employee’s lack of productivity or un-expectant departure can
greatly impact project work and plans for implementing new products and services.
The baggage system at Heathrow Airport Terminal 5 had been developed for 400.000
hours, in three different countries (Netherlands, Germany and United States)
(Doherty, 2008).
The second area is the technology. The use of new technology can be very expensive
and if it does not work properly it can take an organization down on both sides, loss of
profitability and consumer retention. If an organization does not keep up with new
technology it could be left behind and become uncompetitive. (Triana, 2006)
2.5 - Operational Risk
According to Jeynes (2002), there are ten elements of operation that represent those
main risk areas which are: Premises, product, purchasing, people, procedures,
protection, processes, performance, planning and policy. In operational risk
management in aviation, the following areas can be considered as a dangerous threat:
17
People – the workers in the organisation, skills needed, training needed motivation
and commitment, employment contracts. It affects directly the process of installing or
constructing anything. A wrong person on the wrong function can cost money and
time for the company.
Procedures – production procedures, record keeping and reporting systems,
monitoring and review, use of standards, emergency procedures. If the wrong
procedure is taken, the entire project could fail. The wrong decision making can cause
a failure in long or short term.
Performance – targets set, monitoring, measurement tools, consistency, validity of
data. The operational management level has to keep the performance at an acceptable
standard level, once that the performance can delay the processes.
Planning – management skills, external factors and level of control. Keep the
schedule on time is a tough role, managers must have the right skills to manage the
time scale (Jeynes, 2002) (see appendices 1, 2, 3 and 4 for detail of risk factors).
Each element represents its own type of risk which can impact positively and
negatively. No one can eliminate all the risks in all areas, but minimizing the risks is
the key factor. It is a risky business setting up, operating and developing a successful
operation and it becomes more difficult if the operation is huge, such as at Heathrow
Airport Terminal 5 (Jeynes, 2002).
It is vital that all risks to the business should be considered strategically at the most
senior level, not just financial risks, and an approach that can be used consistently
throughout is a valuable tool for management (Chapman and Ward, 2002)
2.5.1 - Controlling the risks
According to Jeynes (2002), the process of controlling risks has some steps. All risks
identified must be collated to reduce overlap and repetition and also a list of primary
risk factors must be done. After the risk factors had been identified, they must be
listed in order according to the threat, from the high level to low level of threat. A
decision to consider urgency of action or not is required, considering the actions that
can be taken quickly to alleviate the potential harm
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Jeynes (2002) also adds that long-term action is needed with an acceptable time scale,
considering the cost implications and the potential results of planned actions.
2.5.2 - Strategies for managing the risks
According to Benaroch et al (2007), a comprehensive analysis of risks to the business
is a vital step in confirming assumptions and gaining a full picture of the potential
extent of harm possible if actions are not taken. However, at Heathrow Airport
Terminal 5 it does not demonstrate that risks are being managed effectively. The 10
Ps are intended to provide a range of prompts to ensure overall coverage of business
activities without stressing the importance of one area over another. While some
elements are considered to be ‘operational’ rather than ‘strategic’, they are just as
important in the context of managing risks to the business.
Every business realizes that any decision will need to take some level of risk.
Therefore, any approach to risk management should include competitive advantages.
When reviewing the competitive advantage, it may be best to create a grid in order to
compare and contrast the different categories of risk (Kaufman, 2006)
The priority rating for risk factors needing attention has formed the basis of
identifying future actions. It does not necessarily represent a set of targets or
objectives for the business overall. Depending on the size and structure of the
organisation, the range of activities required in order to reduce or eliminate the risks
could well be substantial. Planning activities need to take into account other factors in
order to be effective and reach the targets set. These include questions such as actions
required, resources required, workforce, training, timescale and so on (Chapman and
Ward, 2003).
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2.5.3 - Actions required
According to Chapman and Ward (2003), the actions required could range from
technical analysis of potential risks, replacing of existing equipment, training for
specified group of workers, recruit internal staff or making contract with external
sources in order to up-grade skills or knowledge base and expertise and establishing
more effective, wide-spread information that include all relevant group of workers.
The business that does not take the right action required can be affected directly on
the business activities, facilities, staffs, and so on. Everyone must be involved in
discussions, informed about outcomes and decisions made and also give the relevant
feedback (Gordon, Loeb and Sohail, 2003).
2.5.4 The Decision Process in Operations
According to Heizer and Render (2006), what makes the difference between a good
and a bad decision is that the good decision uses analytic decision making which is
based on logic and also considers all available data and possible alternatives which
follows six steps: the first one is clearly define the problem and the factors that
influence it. The second is to develop specific and measurable objectives. The third is
to develop a model that is, a relationship between objectives and variables (which are
measurable quantities). The fourth is to evaluate each alternative solution based on its
merits and drawbacks. The fifth is to select alternative and the sixth is to implement
the decision and set a timetable for completion.
Regardless of the complexity of a decision or the sophistication of the technique used
to analyze it, all decision makers are faced with alternatives and “states of natures”.
The alternative is a course of action or strategy that may be chosen by a decision
maker. The state of nature is an occurrence or a situation over which the decision
maker has little or no control. (Heizer and Render 2006).
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2.6 Baggage Handling
The way of baggage handling can be described as follow. The passenger check-in and
leave the baggage at this point. The bag is bar coded and laser read the code and store
in a data base. The data are used for the baggage routing within the baggage sorting
system. These data are also compared with the data from the database on passengers.
This provides positive identification, called baggage reconciliation, to ensure that
passengers have boarded the same aircraft into which their baggage has been loaded.
If any passenger does not board the aircraft it is possible to determine exactly where
the baggage is and unload it for security. On airport with a great number of transfer
passengers it is moreover necessary to provide sorting and redistribution of baggage
in a very short time in order to guarantee the minimum transfer times of the
passengers (Kazda and Caves 2007).
Arrival bags are taken from the aircraft and placed airside on a continuous belt which
carries the bags to landside bag reclaim hall, either directly through the
airside/landside screen or via a transfer belt which feeds a free-standing carousel with
a sloping bed (Kazda and Caves 2007).
The new baggage system that is being used at Heathrow Airport Terminal 5 can
process up to 12.000 bags per hour through the tilt tray sorter. It has 18.000 meters of
conveyors being used for bags entering the system, normally from check-in or transfer
process. Passenger who are late have their bags moved around on the 8000-metre,
high speed baggage rail link. Those who get early to Terminal 5, have the bags held in
a 4.000-bag capacity store. Every bag has a unique bar code which allows the system
knows what time and where the bag is going to (Doherty, 2008).
2.7 - Operations Management
Operations management is about the way that companies produce goods and services,
everything in terms of production, is the operations managers who organize. The
operations function is central to the organization. There are three core functions which
are: the marketing function which is responsible for communicating the organization’s
products and services to its markets in order to generate customer requests for service,
21
the product/service development function, which is responsible for creating new and
modify products/services in order to generate future customer request for service and
the operations function, which is responsible for fulfilling customer requests for
service throughout the production and delivery of products and services. (Slack,
Johnson and Chambers, 2001)
In large airports it is necessary to provide automated sorting of baggage. Automation
can increase the capacity of a terminal building significantly and also improve the
service standard. Automated sorting uses baggage tags with bar codes, magnetic cards
or electronic chips for baggage and destination identification. Nowadays, bar coding
is the most frequent used in terminals with high number of flights (Kazda and Caves,
2007).
2.7.1 - The Activities of operations Management
According to Slack et al (2001), operations managers have some responsibilities for
all the activities in the organization which contribute to the effective production of
goods and services. There is the direct responsibility for the activities which produce
and deliver products and services, the indirect responsibility for the activities of other
functions of the organization and the broad responsibility to respond to the emerging
challenges for operations management in the future.
2.7.2 - The direct responsibilities of operations management
There are some general classes of activities which apply to all types of operation no
matter how functional boundaries have been draw. The first responsibility of any
operations management is to understand what it is trying to achieve, developing a
clear vision of how the operation should help the organization achieve its long-term
goals (Slack et al, 2001).
Another responsibility is to develop an operations strategy for the organization,
because operations management involves many decisions making in a short period of
22
time and it is vital the operations managers have a set of general principles towards
the long-term goals. The next one is designing the operation’s service processes. This
activity is to determine the physical form, shape and composition of products, services
and processes. Planning and controlling the operation is the activity of deciding what
the operations resources should be doing. And the last one, improving performance of
the operation which is very important due that a failure to improve at least the rate of
customer’s expectations condemn the operations function always to fall short of what
the organization should expect from it (Slack et al, 2001).
2.7.3 - The indirect responsibilities of operations management
Many decisions taken outside the operations function still can have an effect on
operations activities. It is working together with the other parts of the organization
which forms the most important indirect responsibilities of operations management.
Developing and improving the relationships between operations and other functions
of the firm should be central to operations’ contribution to overall performance (Slack
et al, 2001).
2.7.4 - The broad responsibilities of operations management
Both the direct and indirect responsibilities of operations management are largely
focused on those concerns which are of clear and immediate benefit to the
organization itself. But increasingly it is recognized that all businesses, including their
operations managers, have a set of broader responsibilities. There are six relevant
issues that are linked with operations management, which are: globalization,
environmental protection, social responsibility, technology awareness and knowledge
management. All of those broad responsibilities represent considerable challenges to
modern (Brown, n.d.).
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2.8 - The scope of project risk management
The efficient and effective project management requires appropriate management of
all the sources of uncertainty. According to Green (2001), uncertainty in any project is
considerable, and most project management activities are concerned with managing
uncertainty from the earliest stages of the Project Life Cycle, clarifying what can be
done.
Risk management processes that adopt a simplistic focus on threats will not address
many of these sources of uncertainty. It is useful to define ‘risk’ as an uncertain effect
on project performance rather than a cause of an uncertain effect on project
performance. Risk management processes concerned with threats and opportunities
but will still tend to be focused on uncertain events, conditions, or circumstances. This
does not facilitate consideration of aspects of variability that are driven by underlying
ambiguity. To address uncertainty in both variability and ambiguity terms it is needed
to adopt a more explicit focus on uncertainty management (Turner, 1992).
According to Adams and Barndt, (1988), uncertainty is related to ‘variability’ to
performance measures like cost, duration, or quality. In a project context these aspects
of uncertainty can be present throughout the project life cycle, but they are
particularly evident in the pre-execution stages, when they contribute to uncertainty in
five areas which are: variability associated with estimates, uncertainty about the basis
of estimates, uncertainty about design and logistics, uncertainty about objectives and
priorities and uncertainty about fundamental relationships between projects parties.
2.9 - The project life cycle
The project life cycle is a convenient way of conceptualizing the generic structure of
projects over time. It is often described in terms of four phases, using terms like
conceptualization, planning, execution, and termination (Adams and Barndt, 1988).
Alternative phraseology may be used, such as formation, build-up, main programme,
and phase-out (Thamhain and Wileman, 1975), but the underlying phases identified
are essentially the same.
24
According to Thamhain and Wileman (1975), there are eight stages in the project life
cycle that can be seen on the table below.Table 1 – Eight stages in the project life cyclePhases Stages StepsConceptualization 1. Conceive
the productTrigger eventConcept captureClarification of purposeConcept elaborationConcept evaluation
Planning 2. DesignThe productStrategically
3. PlanThe executionStrategically
4. AllocateResourcesTactically
Basic designDevelopment of performance criteriaDesign developmentDesign evaluation
Basic activity and resource-based plansDevelopment of targets and milestones Plan developmentPlan evaluation
Basic design and activity-based plan detailDevelopment of resource allocation criteriaAllocation developmentAllocation evaluation
Execution 5. ExecuteProduction
Co-ordinate and control Monitor progressModification of targets and milestonesAllocation modificationControl evaluation
Termination 6. DeliverThe product
7. ReviewThe process
8. SupportThe product
Basic deliverable verificationDeliverable modificationModification of performance criteriaDeliver evaluation
Basic reviewReview developmentReview evaluation
Basic maintenance and liability perceptionDevelopment of support criteriaSupport perception developmentSupport evaluation
To be fully effective, risk management needs to address the whole project life cycle
rather than selected stages, guiding and informing each and every stage of the project
life cycle. The scope and depth of analysis should increase as the project progresses
toward the execute stage. Prior to each stage a preliminary risk analysis should guide
the first step, but as more details and options are considered in subsequent steps,
25
further risk analysis should be performed with increasing detail and precision to
continuously guide and inform the project management process. Risk management
should be an integral part of project management at each stage of the project life
cycle, designed to accommodate the focus of each stage in an integrated, holistic
manner (Thamhain and Wileman, 1975).
2.10 - Chapter Summary
This literature review gave enough insight in risk managements, different types of risk
management, the common risks faced by companies, operational risk which included
controlling the risks, strategies for managing risks, the action required and the
decision process in operation. A chapter about baggage handling explained how it was
done in general and how it was one at Heathrow Airport Terminal 5, the scope of
project risk management, the project life cycle and also a chapter about operation
management which included the activities of operations management, the direct
responsibilities of operations management, the indirect responsibilities of risk
management and the brad responsibilities of operations management. It also revealed
the research that had been done in this specific research topic. It is clear from the
literature above, that there are a number of factors that may contribute to become an
action plan to solve the problem.
The next chapter presents the Research Methodology that was applied in this study.
The chapter looks at the rationale for the study, the research design, the research
process, limitations of the study and the elimination of bias during the study.
26
Chapter 3 - Research Methodology
3.1 - Introduction
This chapter explains in details how the research was conducted and also it gives
justification for the methods used. Such information is important to provide validity
and reliability to the findings and recommendations of the research. Specifically, it
explains how the information was collected, where it was found; how it was accessed
and processed to than arrive at the conclusions. Research is a process, a series of
activities unfolding over time. It involves a number of things such as choice of the
research design, the collection of data and evaluation of results and so on. One of the
most important decisions to make is the general approach the research is going to take
(White, 2002).
In this chapter is a presentation of the rationale for the study, the research design
namely types of research, the target population, the type of sampling done and reasons
for choosing each sampling type. The chapter also explains the research instruments
that were used, the research process, the administration of questionnaires, how data
was analysed and what was done to ensure its validity and reliability. The chapter also
presents the limitations of the study and how elimination of bias was done.
3.2 - Research Questions
There are two questions to be answered in this research which are if BAA used the
most effective way when introducing a new baggage system and also if the risks about
operational management were covered doing the right procedures according to the
literature.
3.3 - Research Design
Research design is the plan and structure of investigation which explains where the
study was intended to be carried out. The research design section gives an overall
view of the method chosen and the reason for that choice (Saunders et al, 2007).
27
A single case study strategy was adopted for this research in order to identify specifics
factors that contributed to the baggage problem at Heathrow Airport Terminal 5. The
case study method involves an empirical investigation of a particular contemporary
phenomenon within its real life context using multiple sources of evidence (Robson
2002).
According to Morris and Wood (1991), the advantage of using the case study method
is that it provides a rich understanding of the context of the research and the processes
being enacted. It also has considerable ability to generate answers to the questions
‘why?’ as well as the ‘what?’ and ‘how?’ question, although ‘what?’ and ‘how?’
questions tends to be more the concern of survey strategy. For this reason the case
study strategy is most often used in explanatory and exploratory research.
3.4 - Type of Research
There are two types of research which are qualitative research and quantitative
research. In this study both types of research have been used.
3.5 - Research Instruments
Research instruments associated with qualitative methods include interview and
questionnaires. The questionnaires were also used as a method to collect quantitative
data.
3.6 - Data Collection
In this study both, primary and secondary data was collected. Primary data was
collected using one set of questionnaire (Appendix 5) to test the customer perception
about the system used in Heathrow Airport Terminal 5. The questionnaires had both
open and multiple choices questions.
They were designed to facilitate the collection of qualitative and quantitative data.
From the open question it was possible to check the opinions from the respondents,
which consequently enhanced the testing of hypotheses. The multiple choices
28
questions were designed to obtain more quantitative data in order to define the
customer perception with a statistical analysis.
Parameters such as security, fast decision, problems with baggage and customer
service were used to determine what experience the customer had using Heathrow
Airport Terminal 5.
The questionnaires were applied on both, at the arrival and departure of the terminal.
Interviews were also used to collect data. It was done with people that worked at
operational level at Heathrow Airport Terminal 5. Interviews (Appendix 6) with
people who developed the system were another option, but due the material that the
company sent via e-mail was enough to obtain the information needed. To gain access
to those people who work at Heathrow Terminal 5, a formal letter was written by
Bruce Sheppy, the head of business department at Cavendish College (Appendix 7)
which gave a professional impression from managers at Heathrow Airport Terminal 5
and facilitates the arrangements for interviews.
As secondary data were used specifics articles about everything related to the topic of
baggage system, operational management, operations, and so on. Also for the
secondary data, other relevant documents were used such as files sent by BAA, BA
and Vanderlande Industries related to the research.
3.7 - Target Population
For the purpose of the study the target population, which is the total collection of
elements that the study was intended to make some inferences were passengers who
had previous experience using Heathrow Airport Terminal 5, people who worked at
Heathrow Airport Terminal 5, specifically those who deal with the baggage system.
3.8 - Sampling
Sampling is the collection of information from a portion of the total population and on
the basis of the information collected from the subset, to infer something about the
whole target population (Ghosh, 2002). The sampling techniques available can be
29
divided in two types: probability/representative sampling or
non-probability/judgemental sampling. The probability samples is often associated
with survey and experimental research strategies and non-probability samples is more
frequently used when adopting a case study strategy (Saunders et al, 2007).
The approach used on the study was a phenomenological with a non-probability
sample, using the judgement samples. There are some limitations using this type of
sample, such as number of people interviewed, statistical analysis cannot be made, but
in this case it was used to get specified answers to make my own conclusions based
on knowledge of the people interviewed.
The sampling method used was appropriated considering the time and difficulties to
get people interviewed. The passengers normally were most of the time busy and the
people who worked in the Airport were very difficult to find because due all the
technology used in Terminal 5, people who deal with baggage system, do not stay in
the Terminal itself, they stay in restricted areas.
3.9 - Administration of Questionnaires and Interviews
The study had one set of questionnaire and one set of interviews. The questionnaires
were for customers. A total of 60 questionnaires were administered in the sample. The
questionnaires were distributed to the passengers by the researcher, who at the
distribution stage read out the contents of the questionnaires in order to clearly
explain the questions contained there and allow for questions and clarifications from
respondents.
The respondents were then allowed to respond to the questionnaires at their own time.
At the stage of collecting the questionnaires, the researcher again sat with the
respondents to allow for further questions, clarifications and correct any mistakes that
could have been made by the respondents when filling in the questionnaires. The
interviews were done with people who worked at Heathrow Airport Terminal 5. A
total of 6 interviews were administered.
30
A pilot interview was done to test the interview content, structure and to evaluate that
the questions were phrased in a concise and understandable way. At the presentation
stage, the researcher read the contents of the questions in order to clearly explain the
questions. The interviews were audio-recorded had approximately 30-45 minutes and
each question was read by the researcher and the person interviewed answered that
question. At the end of the interview the researcher asked if there was any further
points that the person interviewed wanted to add.
The interviews schedule can be seen on the table as follow.
Table 2 - Interview Schedule
APPOINTMENTSLOCATION RESPONDENTS JOB TITLES
22nd April 2009
(Wednesday)
1100 hrs
Heathrow
Airport
Terminal 5
Respondent 1 Supervisor
22nd April 2009 (Wednesday)
1200 hrs
Heathrow
Airport
Terminal 5
Respondent 2 General Manager
23rd April 2009 (Thursday)
0930 hrs
Heathrow
Airport
Terminal 5
Respondent 3 Operational Manager
23rd April 2009 (Thursday)
1500 hrs
Heathrow
Airport
Terminal 5
Respondent 4 Operational
Supervisor
24th April 2091 (Friday)
1500 hrs
Heathrow
Airport
Terminal 5
Respondent 5 Check-in Supervisor
27th April 2009 (Monday)
0930 hrs
Heathrow
Airport
Terminal 5
Respondent 6 General Manager
3.10 - Data Analysis
31
Ghosh (2002) argues that the purpose of data analysis is to build up a sort of
intellectual model where the relationships involved are carefully brought out so that
some meaningful inferences can be drawn. Analysis of data is to be made with
reference to the purpose of the study and its possible bearing on the scientific
discovery. Analysis is made with reference to the research problem at hand or the
hypotheses. The first step in the analysis of data is a critical examination of the
assembled data. A total of 60 questionnaires were collected and 6 interviews were
done.
The questionnaires were entered in the computer using Microsoft Excel to make
graphs of the demographics and customer perception/acceptance of the new baggage
system. Interviews were audio-recorded and transcribed (Microsoft Word) which
reproduced as a written document.
3.11 - Elimination of Bias
Cooper and Schindler (2003) observe that the characteristic of sound measurement is
that the tool used should be an accurate counter or indicator of what one is interested
in measuring. In addition the tool should be easy and efficient to use. There are three
major criteria for evaluating a measurement tool namely validity, reliability and
practicality.
Validity refers to the extent to which a test measures what you actually wish to
measure. For this study, different sources of evidence, structured interviews and
questionnaires were researched.
Reliability has to do with the accuracy and precision of a measurement procedure
while practicality is concerned with a wide range of factors of economy, convenience
and interpretability. In an attempt to eliminate bias during the study, the following
steps were taken: The questionnaires were subjected to a pilot study to measure their
suitability, validity and reliability before being finally used in the field, the same
action was used for interviews. Also for the interviews, the questions were semi-
structured and the same approach was used for each individual person interviewed.
32
3.12 - Study Limitations
Though the study was successfully conducted, BAA and BA could not provide
specific actions taken during the introduction of the new baggage system. They
claimed that it was classified information that should not be given out. The other
problem was the limitation in terms of information given by the passengers which
most of the time did not want to answer the questionnaire, and for that reason, most of
the people answered very fast which could compromise the findings. This was the
major limitation to the study.
The issue of inadequate resources was another limiting factor in the study due the
topic be very specific and there is no general theory about operations risk
management in aviation, but the general operational risk management theory was
successful applied at the research proposed. The author’s inexperience in research and
interviewing skills might lead to ineffective facilitation of interviews. This can mean
being unable to detect signs which could lead to a further understanding about more
relevant information of the context. However, confidence and experience gained after
the pilot and subsequent interviews conducted compensated for the initial amateurism.
3.13 - Chapter Summary
This chapter highlighted the importance and rationale for the study, which was
basically to provide a basis for the formulation of appropriate policies in the research.
The research was designed in such a way that both quantitative and qualitative
approaches were used and the target population was passengers who used Heathrow
Airport Terminal 5 and people who worked dealing with baggage system. The target
population was sampled basically, one set of questionnaire and one set of interview;
questionnaires were used with passengers and interviews with people who worked at
the Airport as a way of clarifying and getting additional information. The data
collected was analysed using the Microsoft Excel and Microsoft Word. The next
chapter presents the study’s findings and analysis of data.
33
Chapter 4 - Data Presentation
4.1 - Introduction
This chapter presents the data of the results that the author researched. It begins with
the questionnaires applied with passenger at Heathrow Terminal 5 and ends with the
interview applied to people who work at Heathrow Terminal 5.
4.2 - Findings from the questionnaire
Question 1- Specify your gender.
Male Female65% 35%
Figure 1 – Gender
Gender
Male
Female
Of all the respondents in the questionnaire, 65% were male and 35% were female.
Question 2 - Which group of age do you include yourself?
Group of Age
18-28 25%29-39 20%40-50 40%51-60 15%
60 or more 0%
34
Figure 2 - Group of age
Group of Age
18-28
29-39
40-50
51-60
60 or more
People with age between 40 and 50 years old were the most interviewed with 40%,
people from 18 to 28 years old had 25% of the questionnaire answered, 20% of the
people between 29 and 39 years old, 15% of the people interviewed had between 51
and 60 years old and no one with more than 60 years old was interviewed.
Question 3 – Have you ever had any problems with your baggage? (e.g. delays, lost
baggage, etc.)? If yes, what was the problem?
Yes No85% 15%
Figure 3 - Problems with baggage
0%10%20%30%40%50%60%70%80%90%
Yes No
Most of people interviewed had previous problems with baggage.
The common problems that people interviewed related were delays and lost baggage
in the follow proportion.
Lost Delays
35
baggage20% 80%
Figure 4 - Common problems with baggage
Problems with baggage
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Lost baggage Delays
Question 4 – Have you noticed any difference about how your baggage is handled
here in Terminal 5, compared with other terminals and airports?
Yes No45% 55%
Figure 5 - Customer perception
Customer perception - baggage handled
0%
10%
20%
30%
40%
50%
60%
Yes No
Passengers were divided in terms of the perception of dealing with baggage at
Terminal 5, where 45% of the people interviewed noticed difference and 55% did not
notice any difference.
Question 5 – Which were the differences apparent in any of the following activities?
36
Table 3 – Differences noticed by passengers
Activity PassengersSpeed (time to collect the baggage or to check in)
IIIII IIIII III
Less problems with baggage (e.g. lost baggage, delays, etc.)
IIIII III
Others – specify IIII(very easy)I (Overweight was more adequate)
Many people did notice differences, and most of them notice difference in terms of
speed, less problems during the arrival and some people thought it was easy and fast.
Question 6 – Which activities do you consider most and least important when
somebody is dealing with your baggage (please, use the scale of 1 for the most
important and 5 for the least important)?Table 4 – Activities most and least important (handling baggage)
Scale Security Speed
Customer service (when something happens with your baggage and somebody needs to help you)
To be sure my bags are being handled by a fully automatic system without manual contact after check in
1 IIIII IIIII IIII
III IIIII III
2 IIIII I IIIII II IIIII IIII I3 IIIII
IIIIIIII III
4 II III IIIII IIII5 I*each group of five “I” represents 10 people.
Most of the people interviewed thought that security, speed and customer service
(when something happens with your baggage and somebody needs to help you) as the
most important activities and to be sure that my bags are being handled by a fully
automatic system without manual contact after check in was the least important for
them.
Question 7 - Heathrow Airport Terminal 5 is using a high-tech automatic system to
handle baggage. Do you yourself feel more secure with your bags than in other
airports with more manual handling service?
37
Figure 6 - Customer perception - security
Customer feeling more secure with automatic system
0%
10%
20%
30%
40%
50%
60%
70%
Yes No
When people had the knowledge that their baggage were being deal by an automatic
system, 65% of the passenger felt more secure than their baggage being deal by
humans (staffs) and 35% did not feel more secure with all this technology.
Question 8 – In your opinion, what improvement(s) in the baggage handling service
should airports introduce?Table 5 – Improvements at Terminal 5
Improvements Manual labour checks
Double up on man power
More staffs around passenger
Most of the people interviewed did not give any idea of improvement, but some of
them gave, such as “double up on man power”, “manual labour checks”, “more
staffs around passenger”. Some people interviewed said that with all the technology
that is being using at Terminal 5 there is no need for improvements in terms of
baggage handling.
4.3 - Finding from the interviews
Questions 1 and 2 were personnel and there was no valuable information related to the
objective of the interview.
The findings from interviews are structured under the questions as headings:
38
3) How do you compare the operational baggage system which operates at Heathrow
Airport Terminal 5 from the baggage system which operates in other airports?
4) Is it likely that this new baggage system will be implemented at other terminals?
5) What were the main risks that were faced before the new baggage system was
introduced?
6) How would you explain the operational problems experienced on March 27th?
7) To what extent is the system solving the baggage problems encountered on March
27th?
8) In your opinion do you believe the customers have noticed any differences since
this new high tech baggage system was introduced?
The questions were semi-structured and all the respondents had the same approach.
The objective of the interview is to analyse and investigate the risks and process when
the new baggage system was introduced and also if the passengers noticed any
difference with the new system.
4.3.1 - Question 3
How do you compare the operational baggage system which operates at Heathrow
Airport Terminal 5 from the baggage system which operates in other airports?
The purpose of finding the difference between the operational baggage system at
Heathrow Airport Terminal 5 from the baggage system which operates in other
airports is to check if this new system is more efficient in terms of operations than
other baggage system.
The respondents had the same start saying that the baggage system used at Terminal 5
was unique and it was developed exclusively for Terminal 5. The respondent 1 added:
‘The baggage system at Terminal 5 was designed by BAA, BA and Vanderland
industries. They used more than 400,000 hours just in softwares developments and
also they needed to get manufactures in 3 different countries, the Netherlands,
Germany and the US to get the system ready.’
39
The operational baggage system is basically operated by softwares and the manual
contact happens in two stages, at the check-in point where the staff put the bar code
on the baggage and at the gate point where the carriers get the baggage to put into the
airplane.
All the processes that separate which baggage is going to which airplane, at what time
and what is the final destination are all processed by the system and delivered in the
most efficient manner in terms of time. The respondent 2 added: ‘It is possible due
that this system is unique and it can process up to 12,000 bags per hour through the
tilt tray sorter and at any point in the time there will be 18,000 metres of conveyors
being used for bags entering the system, normally from the check-in or transfer
process. For the passenger who arrives late the system has an 8,000 metres high
speed baggage rail link.’
The system has another characteristic which is not usual in airports, the fast bag drop,
which permits the passenger to check-in several hours before the flight. The system
put the baggage in a 4,000 bag capacity until the time of the flight. The respondent 4
added: ‘Every bag entering the system is individually bar coded before being
screening and routed to its destination. It allows the system knows at what time each
baggage has to be ready in the gate point to be collected by the carriers’.
The main difference that was seen about Terminal 5 from other terminals is the
number of bags that can be processed (up to 12,000 per hour), the number of bags that
can be stored (4,000 bags) and the tilt tray sorter which can be up to 18,000 metres
which can allow more flights in less time spent to deliver baggage on time and
everything made and processed by software. The respondent 3 also added: ‘The
complexity at Terminal 5 is more depth where the system does everything from the
check-in point to departure gate, from one gate to another during transfer and to
passengers on arrival in the baggage reclaims area in the best time consuming
manner.’
4.3.2 - Question 4
Is it likely that this new baggage system will be implemented at other terminals?
40
This question has the aim to identify the future possibilities of using such technology
in other terminals.
The respondents again answered that the system at Terminal 5 was developed
exclusively for Terminal 5. But there are plans to future investments in the baggage
system for the other terminals. The respondent 2 added: ‘Well, BAA just redeveloped
Terminal 3 of a new modern forecourt at the end of 2007, but there are plans for £1
billion upgrade for the next ten years which will construct a new automated baggage
link to connect Terminal 1, Terminal 3 and Terminal 5.’
Investments in Terminal 1, Terminal 3 and also Terminal 4 that will be using that £1
billion investment plan to improve the processes of baggage system as can be seen on
the table as follow:
Table 6 - Future investments in terminal 1, 3 and 4 at Heathrow
Terminals Action
Terminal 1 The baggage link will be refurbished and also an upgrade in the existing baggage system with new check-in and upgraded x-ray screening capacity.
Terminal 3 An integrated baggage system will be developed
Terminal 4 The baggage link will be refurbished and a new and integrated baggage system including the replacement of existing sorters will be done.
Basically the baggage system used at Terminal 5 will not be implemented in other
terminals, the respondent 5 added: ‘About the chance to the same baggage system that
operates at Terminal 5 can be used in others Terminals, the probability is very low or
even 0% due that the baggage system was done specifically for Terminal 5 with its
dimensions, building facilities, potential number of customers which leads to potential
number of baggage to be processed at the same time, and other Terminals have its
characteristics which would be not similar to Terminal 5.’
41
4.3.3 - Question 5
What were the main risks that were faced before the new baggage system was
introduced?
The purpose of this question is to achieve the main objective of this research which is
to identify the main risks that BAA and BA faced before they introduced the baggage
system.
There were several risks faced by BA and BAA during the process until the system
was introduced. The respondent 3 added: ‘The baggage system vision was ambitious.’
Before the system was introduced BAA and BA were committed to use tried-and-
tested technology to mitigate risk. When the team first started the set of installation
the system, the environment was not the perfect one which meant that time, cost,
quality and safety risks all had to be managed. The respondent 2 added: ‘The most
significant risk in baggage handling is the system integration that involves data from
BA and BAA starting to flow between both companies as the team tests the resilience
of the system’
The effective transmission of data over the Heathrow and Terminal 5 communications
network was another risk. The respondent 1 added: ‘...and also its receipt and
understanding by the baggage system, such as core to the testing and management of
the overall baggage product.’
The time that staffs had to interact, understood and manage the system was another
risk due that the baggage system was released on 28th September 2007 to start the
trial, less than 1 year of the date to open the Terminal. The respondent 4 also added:
‘...BAA and BA started the trainings in a weekly basis instead of daily basis.’
4.3.4 - Question 6
How would you explain the operational problems experienced on March 27th?
42
This question has the objective to understand what factors contributed to the
operational problems experienced on March 27th, the open day of Terminal 5.
Almost all the respondents agreed that the operational problems experienced on
March 27th started months before that day. The respondent 5 added: ‘BA and BAA
changed the names and faces that represented both organizations.’ The respondent 1
also added: ‘Some people have talked about the senior disagreements that did take
place, and that their roles was to get together with their counterparts, understand the
real issue and find a way through.’
Also some rumours about BA might not be ready for opening because BA knew that
once they were committed to the open date, the business and reputation damage
would be devastating if dead lines were not delivered or an unknown risk
materialized.
The system problem was the last problem on the opening day, the respondent 6 added:
‘The problems started with the car parking provision, than with the delay in staff
security screening and staff familiarization which resulted in a backlog of baggage.’
Also the respondent 1 added: There was a technical problem with airport’s three-
stage luggage processes system. The first stage which was the fast bag drop was
working as expected but the second stage which was the underground conveyor
system became clogged. At that point, the staffs failed to remove the bags quickly.
And the respondent 2 added: ‘The computers also did not recognize staffs identities
which made them not able to log on to the system.’
There is no exactly explanation, but some facts that proportioned and helped to
happen what happened.
4.3.5 - Question 7
To what extent is the system solving the baggage problems encountered on March
27th?
This question has the aim to verify the efficiency of the new baggage system.
43
For this question no statistics numbers were cited by the respondents, they answered
based on what is happening. The problems that happened in the first few weeks were
documented. The baggage system has not to do about the delay problem at Terminal
5, the respondent 4 said: ‘...is happening due other airlines are not getting the
baggage on time, there are also different carriers using different process at
Heathrow.’ The respondent 1 added: ‘When the baggage is transferred from BA to
BA, the statistics are fairly robust, but when they are coming from other carriers they
are not so.’
The figures compared with last year are getting better, but there are much more work
to do due the respondent 3 said that ‘the system can work near the perfection when the
BA flights are all on the same Terminal, using one baggage system and one baggage
team’ but it is impossible to happen due the capacity of the Terminal 5 cannot get all
BA flights, it will be needed to wait until Terminal 5 A and B get ready to try this
move.
4.3.6 - Question 8
In your opinion do you believe the customers have noticed any differences since this
new high tech baggage system was introduced?
This question has the objective to check if the passengers noticed any difference,
according to BAA and BA.
All the respondents believe that the customers noticed differences with the new high
tech baggage system. Respondent 3 said: ‘...now they can check-in in five minutes,
there is no more need to wait until the check-in is open.’ Respondent 1 added: ‘...if the
passengers came early they can use the fast bag drop which will keep in safe their
baggage in the store bag.’ Respondent 2 added: ‘The technology used in Terminal 5 is
not only to BAA and BA interests but much more for the passengers due that the
objective of the system is to avoid long queue in the check-in, minimize the number of
lost and delayed bags, minimize the time to collect the baggage when the passenger
arrives, everything in the best time consumer manner.’
44
The table below describes some observations during the interviews, the duration and
where the interviews were conducted.
Table 7 - Observations during interview
RESPONDENTS PLACE DURATION OBSERVATIONS
Respondent 1 Office 30 –35 mins Relaxed and confident. The respondent gave a lot
of informations.
Respondent 2 Office 20 – 25 mins Interrupted once by mobile phone
Respondent 3 Meeting Room 25 – 20 mins The respondent does not seem very confident
Respondent 4 Office 30 – 35 mins Very reserved
Respondent 5 Office 25 – 30 mins Confident
Respondent 6 Meeting Room 35 – 40 mins Relaxed and confident
45
Chapter 5 - Analyses of findings
5.1 - Questionnaire
The first two questions there is no need of analyze due it was done to get demographic
statistics.
Question 3 - Have you ever had any problems with your baggage? (e.g. delays, lost
baggage, etc.)? If yes, what was the problem?
At this answer most of the people had previous experience with baggage problems. As
the questionnaire was applied just with passenger that had previously used Heathrow
Airport Terminal 5, most of the passenger which had problems with their baggage
could have those problems during the initial period of activities at Heathrow Airport
Terminal 5, which was very bad in terms of statistics in number of lost baggage and
delayed baggage. According to BBC News (2008), almost 300 flights in and out of
Heathrow Airport were cancelled during the first five days after open Terminal 5,
which caused a chaos.
Question 4 - Have you noticed any difference about how your baggage is handled
here in Terminal 5, compared with other terminals and airports?
There were more passengers which did not notice any difference about how the
baggage was handled. It can be explained because most of people interviewed did not
use the fast bag drop, which is a differential in Terminal 5. The passenger can have
the basic process in the check-in point where there is a need of the manual contact,
which is the same in all terminals. It can lead that most of the passengers did not
experience what the Terminal offer in terms of differential in check-in. the reasons for
that could be many, from cultural prospective to marketing perspective. If the airport
does not show its differential and benefits to its customers, the customers cannot
identify what is different from Terminals 5 to another terminals.
Question 5 - Which were the differences apparent in any of the following activities?
46
a) Speed (time spent on your baggage until you collect it)
b) Less problems with baggage (lost baggage, delays, etc.)
c) Others – specify.
In this question, most of the people that noticed differences at Terminal 5 said that the
speed in terms of the time spent until the passenger collect their baggage and less
problems in terms of lost baggage and delays were the main differences that they
noticed. Others passengers said that the using the fast bag drop was very easy and
very fast.
Question 5 - Which activities do you consider most and least important when
somebody is dealing with your baggage (please, use the scale of 1 for the most
important and 5 for the least important)?
In this question the passengers interviewed said that speed, customer service and
security were the most important. According to Department of Transportation (2006),
the baggage problems (long baggage claim time, delayed, damage, lost baggage, etc)
are ranked as the second more important on the customer complaints list. It has a high
impact in customer satisfaction and loyalty level. And the least important activity was
the threat of the technology used at Terminal 5 which does not need any manual
contact with the baggage.
Question 7 - Heathrow Airport Terminal 5 is using a high-tech automatic system to
handle baggage. Do you yourself feel more secure with your bags than in other
airports with more manual handling service?
Most of the people interviewed said that they felt more secure that the bags are being
handled with less manual contact. According to Daily Mail (2009), at Heathrow the
numbers of lost bags in the first three months in 2008 were 270,106, which included
the first five days after Terminal 5 opened. People link the term fail with human error
and less people dealing with your baggage means less propability that any problem
can occur.
47
Question 8 - In your opinion, what improvement(s) in the baggage handling service
should the airports introduce?
In this question people who was interviewed and said that did not feel more secure
with the baggage being handled by an automatic system said that improvements in
double man power or manual labour checks could be done. But on the other hand
people who answered either that felt more or less secure with the automatic system
said that more staffs around could be one improvement. It can lead that at Terminal 5
there is a lack of staff s around the check-in to help even people who want to use the
fast bag drop.
5.2 – Interview
The first two questions will not be analyzed because they are personnel answers and
have not specific that could be used as part of the research.
3) How do you compare the operational baggage system which operates at
Heathrow Airport Terminal 5 from the baggage system which operates in other air-
ports?
In this question the operational baggage system at Heathrow Airport Terminal 5 can
be seen as a unique and much more modern comparing to other terminals. Most of the
terminals still have a considerable human content on baggage handling. At Heathrow
Airport Terminal 5, the number of staffs dealing with the baggage is fewer than other
terminals. It can be seen few people working at the check-in points, due the high
number of check-in points automated. In Heathrow Airport Terminal 5, a high tech
baggage system is being used and according to BAA (2008), the new baggage system
is extremely sophisticated and has been designed for performance and reliability.
The baggage system at Terminal 5 was designed more than 400,000 hours of software
development followed to get manufactures in the Netherlands, Germany and the US
to get the system ready. This system is unique and it can process up to 12,000 bags
per hour through the tilt tray sorter, at any point in the time there will be 18,000
metres of conveyors being used for bags entering the system, normally from the
48
check-in or transfer process. Also there is an 8,000 metres high speed baggage rail
link for passenger who arrives late. Another point is a 4,000 bag capacity store for
those passengers who get to Terminal 5 early.
Every bag entering the system is individually bar coded before being screening and
routed to its destination. All those process is automatic, basically the only manual
contact that the bag has is during the check-in point that the bag is bar coded by BA
staff and when carriers pick up the bag from the point that the bag goes to the
airplane. The main difference about Terminal 5 from others airports is the number of
bags that can be processed (up to 12,000 per hour) and the number of bags that can be
stored (4,000 bags) which can allow more flights in less time spent to deliver baggage
on time. More than 360 airlines in the world use a lot of technology to track their
baggage; the industry standard is the world-trace which is to find lost baggage.
The complexity at Terminal 5 is more depth where the system does everything from
the check-in point to departure gate, from one gate to another during transfer and to
passengers on arrival in the baggage reclaims area in the best time consuming manner.
4) Is it likely that this new baggage system will be implemented at other termin-
als?
At this question was clear that the new baggage system developed to operate at
Heathrow Airport Terminal 5 was only for that Terminal due the characteristics that
the building had. BAA and BA have a £1 billion plan to spend in other terminals at
Heathrow Airport which can be seen on table 6 pp.41.
According to Loader (2007), operational risk is defined as ‘the risk associated with
human error, systems failures and inadequate procedures and controls during the
processing of business related transactions and the loss of reputation by a failure to
implement the processing correctly’. According to Kazda and Caves (2007), the
baggage handling process still has a considerable human content, leading to many
health and safety concerns.
49
It could be a factor the made BAA and BA to implement the £1 billion package to
improve Terminal 1, 3 and 4 because the reputation of an airport can be damaged
because of the human factor mishandling that can occur, leading to a certain number
of lost or mislaid bags. Technology is seen as a solution to minimize those threats that
aviation has.
According to Doherty (2008), the new baggage system cost approximately £200
million. It is nothing compared with the costs that Aviation lost just with baggage
problems, which according to the Journal of Theoretical and Applied Electronic
Commerce Research (2008) the airplanes ship nearly two billion bags per year and the
cost that mishandled bags that aviation industry has to pay is about U$3,7 billion per
year, which does not include delayed flight costs due to baggage problems, refund to
the passenger gate parking costs due to baggage delayed flights, etc. Krzymuski
(2007) adds that it could increase costs in more U$4 billion per year.
5) What were the main risks that were faced before the new baggage system was
introduced?
There were a lot of risks that were faced before the new baggage system was
introduced. According to Triana (2006), these common risks that companies face, two
areas can be applied for the purpose of the study. First area is the employee due that
people are always unpredictable and that in itself is a huge risk for companies. A
hiring, training and retaining quality employee is a challenge for companies and
causes the biggest expense and a bad reputation for the company. For Heathrow
Airport Terminal 5, it is a constantly risk to be managed. An employee’s lack of
productivity or un-expectant departure can greatly impact project work and plans for
implementing new products and services. The second area is the technology. The use
of new technology can be very expensive and if it does not work properly it can take
an organization down on both sides, loss of profitability and consumer retention. If an
organization does not keep up with new technology it could be left behind and
become uncompetitive.
The baggage system was very ambitious. BAA and BA had a significant risk when
the system integration that involves data from BAA and BA started to flow between
50
both companies. The effective transmission of data over Heathrow and Terminal 5
communications network was other risk. The main risk was the receipt and
understanding by the new baggage system, such as core to the testing and
management of the overall baggage product.
According to Jeynes (2002), there are ten elements of operation that represent those
main risk areas which are: Premises, product, purchasing, people, procedures,
protection, processes, performance, planning and policy. In operational risk
management in aviation, the following areas can be considered as a dangerous threat:
People – the workers in the organisation, skills needed, training needed motivation
and commitment, employment contracts. It affects directly the process of installing or
constructing anything. A wrong person on the wrong function can cost money and
time for the company.
Procedures – production procedures, record keeping and reporting systems,
monitoring and review, use of standards, emergency procedures. If the wrong
procedure is taken, the entire project could fail. The wrong decision making can cause
a failure in long or short term.
Performance – targets set, monitoring, measurement tools, consistency, validity of
data. The operational management level has to keep the performance at an acceptable
standard level, once that the performance can delay the processes.
Planning – management skills, external factors and level of control. Keep the
schedule on time is a tough role, managers must have the right skills to manage the
time scale.
Each element represents its own type of risk which can impact positively and negat-
ively. No one can eliminate all the risks in all areas, but minimizing the risks is the
key factor. It is a risky business setting up, operating and developing a successful op-
eration and it becomes more difficult if the operation is huge, such as at Heathrow
Airport Terminal 5.
6) How would you explain the operational problems experienced on March 27th?
51
At this question there was no one right explanation, but some facts that proportioned
what happened. The first fact was the BAA and BA changes the names that represen-
ted both companies, which could lead to different types of dealing with people.
People can have different understanding from different approach. BAA and BA
thought that it could not bring a different understanding. According to Jeynes (2002),
all risks identified must be collated to reduce overlap and repetition and also a list of
primary risk factors must be done and also a long-term action is needed with an ac-
ceptable time scale, considering the cost implications and the potential results of
planned actions. BAA and BA did not plan properly due the changes that both com-
panies had.
Another factor was the disagreement about the senior management which their roles
was to get together with their counterparts, understand the real issue and find a way
though. According to Chapman and Ward (2003), the action required to minimize the
risks at the operational management level, could range from technical analysis of po-
tential risks, replacing of existing equipment, training for specified group of workers,
recruit internal staff or making contract with external sources in order to up-grade
skills or knowledge base and expertise and establishing more effective, wide-spread
information that include all relevant group of workers.
The changes made by BAA and BA did not up-graded skills or knowledge, it just con-
sumed time.
The system problem was the last problem on the opening day which many problems
came at the same day in a snowball effect. The problems started with the car parking
provision, which was no clear signal and also was far away from the terminal, delay
in staff security screening and staff familiarization which resulted in a backlog of
baggage. There was a technical problem with airport’s three-stage luggage processes
system. The first stage which was the fast bag drop was working as expected but the
second stage which was the underground conveyor system became clogged. At that
point, the staffs failed to remove the bags quickly. The computers also did not
recognize staffs identities which made them not able to log on to the system.
52
The operational problems caused on the 27th March, started with the planning on the
early stage of construction, production and development of the Terminal itself. More
tests could be done in order to avoid and understand all the risks that could happen.
7) To what extent is the system solving the baggage problems encountered on
March 27th?
According to Kazda and Caves (2007), baggage handling is becoming a critical
activity. The airlines are trying to shorten the turn round time between individual
flights and at the same time, the average load factors are increasing.
The problems that happened in the first few weeks were documented and in terms of
statistics the number of errors is less than was before. Delays are still happening but
this has nothing to deal with the baggage system, it is happening due other airlines are
not getting the baggage on time, there are also different carriers using different
process at Heathrow. When the baggage is transferred from BA to BA, the statistics
are fairly robust, but when they are coming from another carriers they are not so. The
figures compared with last year are getting better, but there are much more work to
do. The system can work near the perfection when the BA flights are all on Terminal,
using one baggage system and one baggage team.
In Denver Airport, Colorado, USA, the baggage system’s US$ 186 million original
construction costs grew by US$ 1 million per day during months of modifications and
repairs. In August 2005 it became public knowledge that United Airlines was going to
abandon the system (Doherty, 2008). It does not look like the case at Heathrow
Airport Terminal 5 because the system is working as expected when BA deal with
BA, but all the potential that is expected can be seen just when flights from BA are all
in the same Terminal using one baggage system and one baggage team.
8) In your opinion do you believe the customers have noticed any differences
since this new high tech baggage system was introduced?
At this question, there is a contradiction. People who work at Heathrow Airport
Terminal 5 believe that the customers have noticed differences with the new high tech
53
baggage system. They appointed some points which could be the differential. The
check-in could be done in 5 minutes, the passenger could came early and using the
fast bag drop could do the check-in hours before the flight and the baggage would be
kept in the 4,000 storage bag that the Terminal provides. BAA and BA said that all
the technology used at Heathrow Airport Terminal 5 is not only to BA and BAA
interests but much more for the passengers due that the objective of the system is to
avoid long queue in the check-in, minimize the number of lost and delayed bags,
reduce the time spent to collect the bag on the claim hall and so on.
The questionnaire done with passengers at Heathrow Airport Terminal 5 at the arrival
and departure points gave the opinion that 55% of the people interviewed did not
notice any difference about how the baggage is handled in Terminal 5, compared with
other terminals and airports.
Passengers cannot be familiarized with the new system, but more important is that the
questionnaire with passengers showed that most of them feel more secure with an
automatic system that need less manual contact with their baggage.
54
Chapter 6 - Conclusions and Recommendations
This chapter will give a summary of findings, conclusions and recommendations of
the research.
6.1 Conclusion
The study done had the aim to identify the main risks when a new baggage system is
introduced, the effective process of a new baggage system and its benefits and also to
analyse how the risk management theory can be applied in baggage handling
automation process in airports.
The research had an extensive literature review in order to identify what previous
authors have written about operational risk management, secondary research such as
books, articles and data collection was used and also primary research such as
interviews was used on this study. The findings were analysed both qualitative and
quantitative methods where quantitative were used graphs and tables and qualitative
were linked with what the theory said about the topic. The conclusions and
recommendations for this study were based on the findings of this research.
The study results have clearly shown the main risks when a new baggage system is
introduced which requires an effective and efficient process of operational
management since it begins. Any small risk found must be minimized in order that it
could cause bigger problems in the future. The study had shown many different types
of risks that could be found and also how to deal with those risks.
An efficient baggage system can bring some benefits to customers and many benefits
to companies as Terminal 5 is using a high tech baggage system which is operated by
machines and softwares and the airport do not need to employee many staffs for this
role. On the passenger side, benefits can be seen such as the use of the fast bag drop
which allows the passenger make check-in hours before the flight, through a kiosk in Terminal 5 which
minimize the time spent and queues comparing to normal procedures that normally is
done in check-in. Unfortunately Heathrow Airport Terminal 5 is not exploring this
55
new advantage that the customer can have because passengers are not well informed
about the fast bag drop and because there is no staffs around to explain it.
A case study of Heathrow Airport Terminal 5 was chosen due the high tech baggage
system that the airport is using to analyse what the theory say about risk management
and what people who work at the airport had done. A better understanding of risks
must be known by management level due that their decisions point where the process
goes and it is crucial that a wrong decision made about any kind of risk can be much
bigger in the future.
The timescale for the process of understanding the new baggage system that was done
was not enough, due that on the opening day many staffs did not know how to deal
with potential issues.
The analysis concluded that what the theory say about risk management many times
were not applied during the process of operations at the time that the new baggage
system in Heathrow Airport Terminal 5 was introduced which contributed to result
the catastrophic opening day on 27th of March 2008.
6.2 Recommendations
Recommendations are divided in two parts. The first one is specifically to Heathrow
Airport Terminal 5 and the second one is general to aviation.
6.2.1 Heathrow Airport Terminal 5
The follow recommendations can be applied at Heathrow Airport Terminal 5.
- Training must be done to all employees that have any task linked with the
baggage system and handling baggage in order to understand all the process of
the new baggage system.
56
- The fact that the new baggage system is 100% operated by machines and
softwares does not mean that the company does not need to have staffs around
to look after the processes. BA and BAA could have more staffs where the tilt
trays and conveyors are in order to minimize and identify any constrains that
may happen.
- BAA has plans to improve the baggage system of other terminals. BAA
should focus on operational risk management in order to identify and avoid
risks and also be ready for any issue that may occur during the process of the
improvement.
- More staffs around the kiosks that permit the passenger to use the fast bag
drop clarify any doubts about it and also to help the passenger how to use and
the benefits that it can bring.
6.2.2 Aviation sector
The follow recommendations can be applied in the aviation sector.
- Minimizing risks must be the priority in any improvement. The theory helps to
understand how to deal with potential risks and also gives strategies about
minimizing risks. The management level that leads the process must be
comfortable with potential risks that will occur.
- Timescale is crucial. Any small delay in the early stage becomes a big delay in
the future. Plan the timescale appropriated with possible delays at some points
and also if the time given is not enough to be sure that the process is finished,
do not make decisions based on the first timescale. It needs to be adapted for a
good and acceptable standard.
- Investment in research and development. Technology is a good alternative for
air companies who want to save time and cost. But a technology that is not
understood by the employees can be a high level of threat.
57
Chapter 7 - Personal Development Plan (PDP)
Personal Development Plan can be defined as a process that helps you to think about
your own learning, performance and/or achievements and to plan for your personal,
educational and career development. Personal Development Plan or PDP helps
learners think, not only about the learning that has already taken place, but also
planning for the future.
7.1 - S.W.O.T. Analyses
An S.W.O.T. analysis is a good tool to identify the strengths, weaknesses,
opportunities and threats that will lead me to decide what action plan I will take.
Strengths and Opportunities
- Versatile: Good at doing a lot of different things and able to learn and develop
new skills quickly.
- Flexible: Good flexibility at work and management.
- Study: I am very interested to learn.
- Problem solving: I can hear the situation and make decisions without showing
emotions.
- Aviation: As my first degree is in Civil Aviation, there are a lot of studies,
areas and opportunities to be discovered and developed in my country (Brazil).
- Curious: Everything I am interested at, I look for more informations and I try
to learn by myself.
58
Weakness and Threats:
- Time-management: I try to do a lot of things at the same time and in the end I
always have too much work to do in a short period time.
- Studies: I have planned to finish my DMS/MBA in 2009, but if something
happens and I need more time to finish my studies I will lose some
opportunities, because in my country if you are getting old (more than 30)
without experience, you cannot find a good job, because the companies in
Brazil tend to give opportunity to people who just finished their courses at
universities, which generally it ends when the person has around 23 – 26 years
old.
- Shy: I feel shy when I am not comfortable with the subject or if I do not know
the people. I also feel shy when I have to do presentations in front of people.
- Leadership: I do not feel confident to give orders to delegate people to do the
work on the way that I want. Sometimes I prefer do the work by myself than
ask to somebody do it.
7.2 - Action Plan
The action plan that I will take can be seen as follow:
59
Table 8 - Action plan
Key Priorities from 05/2009 to 01/2010 Strategy & resources / support needed Date to be achieved
1. Finish my Master of Business Administration by May 2009
2. Apply for trainee jobs in Brazil
3. Improve the confidence when talking in front of people
4. Improve leadership skills
5. Increase knowledge/carrier development
1. Spend all free time I have to finish my studies on the planned time
2. Make a research about companies which I would like to work. Became a member of the best job sites in Brazil
3. Find courses related to learn how to talk in front of people
Find courses which develop specifics skills
4. Find post-graduate courses which match the position that I will be
May 2009
July 2009
September 2009
January 2010
July 2010
60
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Appendices
Appendix 1 - Risk factors identified: premises, product, purchasing
Risk factor Premises Product Purchasing Common features
Employment: location/skills/demographic
Access, size/capacity, facilities, car parking, image
Age of workforce (10%to retire in 10 years), mid life-cycle stage of product, distribution routes, local skill base
Distribution routes, few local suppliers, poor communication link with production
Occasion and distribution channels
Legislation: employment/health and
safety/environment/other
Lack adequate facilities, age premises/stairs/corridors, unsafe structure, heating/lighting, noise: close to residential area, restrictive planning requirements
Fire risk re use of materials, need for safer substitute materials, product safety features, disposal when obsolete, amount/type of packaging used
Need to source safer materials, poor facilities for drivers, insufficient storage, disposal of waste
Inadequate storage facilities, need for new sources safer supplies
Security Safety in local area, safe storage of vehicles, warehouse facilities poor
Copyright protection, storage and warehousing, access to data, pilfering smalls parts
Perimeter fence damaged and stores not fully secured, checking-out system not working
Local security measures inadequate, internal security systems
Competition: industry/consumer/internal
Unreliable power supply locally, poor local amenities, growing sector/no purpose built premises, image: nearby derelict shops
Decline in traditional industries locally, shot-term life span so constant up-date needed, new R&D facilities needed
Turnaround time for deliveries increase, packaging, limited access to eco-friendly substitute materials
Packaging and disposal image/R&D
Finance: internal/external Increasing maintenance costs, cost relocation of key staff, cost insurance and security, incentives for staffs
Increasing cost materials, cost of scrap, high cost packaging re price, increased transport
Increased cost of transport, late payment by customers, our late payment restricting supply from main supplier
Cost of materials, cost of insurance, fuel costs
65
costs
Appendix 2 - Risk factor identified: people, procedures, protection
Risk factors People Procedures Protection Common features
Employment: location/skills, demographic
Low levels of skills locally, need for training, high level temporary work contract used
Worker inexperience, recording procedures not fully working
Flexible working and need for staff cover for absence, unauthorized access to site
Staff turnover and absence
Legislation: employment, health & safety, environment, other
Welfare facilities limited, health concerns re light noise levels, high staff turnover
Need to substitute safer materials, use of PPE, health surveillance in paint shop, maintenance, disposal of hazardous waste
Worker protection measures, need to up-date H&S training, no proper consultation system in place, protection of young workers, noise levels, fire hazards
Noise levels, hazardous waste and scrap, training and supervision
Security IT systems not secure, authorized access systems not fully working
Data protection, need to monitor internet use, virus control, secure storage of vehicles
Potential arson at edge of site, unauthorized use of vehicles
Vehicles, IT systems
Competition: industry/consumer/internal
Competition for skilled staff, retaining trained staff few young people in industry
Compliance with quality system in workshop, need to replace 2 machines, speed of finishing goods, stock control
Image of premises, protecting access to supplier base, competing for skilled staff
Competing for staff, quality of product`
Finance: internal/external Cost of training, rising cost of employment, high sickness absence over, 12 months period
Cost of waste/scrap, cost of rework for low quality, increase in customer returns
Cost of replacing old equipment, need noise reduction measures, cost supply of PPE for new staff, increasing wage bill, access to pensions 2001 onwards
Employment costs, investments in plant & machinery
66
Appendix 3 - Risk factors identified: processes/performance
Risk factor Processes Performance Common featuresEmployment: location, skills, demographic
Lack skill in new workers, little choice about process, some work repetitive
Targets not set consistently across firm, data collected incompatible across firm, discipline procedures too heavy-handled
Way work is measured against targets, skills
Legislation: employment, health & safety, environment
Need to replace some equipment with safer versions, potential health problems in paint shop, manual handling, safe disposal waste materials, fire hazard, noise levels
Internal procedures for dismissal not used correctly, RIDDOR details not collated, no-one monitoring sickness absence, need to review power use re, climate levy
Replacing equipment, use of existing systems
Security High damage levels to portable equipment, use of trucks on-site, power supply and computer-aided processes
Close-knit local community and access to sensitive information
Competition: industry, consumer, internal
Becoming out-of-date, need to use new materials, transport costs
Inconsistent against MSS criteria, poor industry bench mark rating
Rating against internal and external criteria
Finance: internal/external
Insurance costs, costs of rework, costs of sales, stock control and cashflow
Cost of absence, potential cost of levy, potential loss of market share
Cost of poor quality
67
Appendix 4 - Risk factors identified on planning and policy
Risk factors Planning Policy Common featuresEmployment: location, skills, demographic
Access to temporary staff, involving mobile staff, little current knowledge of future skills needs, changes needed to employment practice
Existing employment policies not adhered to, no policy on disability or rehabilitation, discipline & grievance procedure too cumbersome
Employment practices, identify future needs
Legislation: employment, health & safety, environment
Use of new materials in planned production, time available to existing staff to find new suppliers, lack internal competence on H&S
Need for smoking policy, gaps in compliance with H&S regulations, policy on disposal of obsolete goods
Urgent need to ensure, compliance with legislation
Security Poor base of relevant data to draw on
Security of personnel records
Access to data
Competition: industry, consumer, internal
Access to relevant market data, internal and external, technology expertise
Need for eco-friendly purchasing, market awareness
Market analysis
Finance: internal/external
Minimal value remaining in existing plant, substantial investment required, both short and log term
Confirm policy on late payment, returns needed on capital invested
Investment
68
Appendix 5 - Questionnaire
Questionnaire
1) Specify your gender.
a) Male b) Female
2) Which group of age do you include yourself?
a) 18-28 b) 29-39 c) 30-50 d) 51-60 e) 60 or more
3) Have you ever had any problems with your baggage? (e.g. delays, lost baggage,
etc.)? If yes, what was the problem?
a) Yes b) No If yes, what was the problem?
_____________________________________________________________________
4) Have you noticed any difference about how your baggage is handled here in
Terminal 5, compared with other terminals and airports?
a) Yes b) No
5) Which were the differences apparent in any of the following activities?
69
a) Speed (time spent on your baggage until you collect it)
b) Less problems with baggage (lost baggage, delays, etc.)
c) Others – specify.
_____________________________________________________________________
6) Which activities do you consider most and least important when somebody is
dealing with your baggage (please, use the scale of 1 for the most important
and 5 for the least important)?
Security ( )
Speed ( )
Customer Services (when something happens with your baggage and somebody
needs to help you) ( )
To be sure my bags are being handled by a fully automatic system without manual
contact after the check-in. ( )
7) Heathrow Airport Terminal 5 is using a high-tech automatic system to handle
baggage. Do you yourself feel more secure with your bags than in other airports
with more manual handling service?
a) Yes b) No
8) In your opinion, what improvement(s) in the baggage handling service should
the airports introduce?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
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Appendix 6 - Questions interview
1) What are your responsibilities here?
2) Can you tell me about your background?
3) How do you compare the operational baggage system which operates at
Heathrow Airport Terminal 5 from the baggage system which operates in
other airports?
4) Is it likely that this new baggage system will be implemented at other termin-
als?
5) What were the main risks that were faced before the new baggage system was
introduced?
6) How would you explain the operational problems experienced on March 27th?
7) To what extent is the system solving the baggage problems encountered on
March 27th?
8) In your opinion do you believe the customers have noticed any differences
since this new high tech baggage system was introduced?
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Appendix 7 - Letter of recommendation
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