“If an enterprise does not get the best people at the bottom of its management pyramid then some years down the line it is not go-ing to find them at the top, no matter how much outsourcing it might be doing.” (Chorafas, D. N. (2003), p. 97)
This diploma thesis will analyze the outsourcing partnership between Lufthansa Cargo AG (LCAG) and GlobeGround Inc. (GG) at the station Miami/ USA. The paper will represent the current situation, detect sensible subjects and will give recommen-dations to the local- (MIAFH/A) and the regional- (MIAFH) Handling-Management at LCAG in Miami.
The main business of an airline is to offer transport services from Airport A to Airport B. The transported object can either be passengers, cargo or mail. In the 1990’s air-lines followed the strategy to integrate more pre- and after-flight related services into their part of the value chain. Enormous pressures lead to changes in strategies. These pressures are mainly caused by the events of 9-11, SARS, the global reces-sion, the Iraqi war, the latest oil-price trend and not to forget the current exchange rate of the US$1 2 . The yield per kg is also decreasing as there are more competitors on the market and even forwarders started to charter own equipment for flying goods around the globe.3 But, even if there are some break points in growth; several studies forecast an annual growth of air cargo of about 6% worldwide during the next years. 4
Outsourcing non-core businesses is one attempt to reduce overhead costs and to versatile the business for being more competitive. It often seems as the easy avail-able medicine to cure suffering businesses. The possible loss of know-how, control and quality of services is often neglected. Steering an outsourcing relationship is therefore one of the main tasks in such a cooperation and require, besides costs and time, also the according knowledge.
Table of Contents
1. INTRODUCTION
1.1. Background and Aims
1.2. Construction of the Paper
2. BASIC KNOWLEDGE
2.1. Introduction into the Airfreight Business
2.1.1. Differentiation
2.1.2. The Transportation Chain and its Relevant Parties
2.1.3. Cargo Ground Handling
2.1.4. General Varieties of Stations and Operations at Lufthansa Cargo AG
2.2. Involved Companies
2.2.1. Lufthansa Cargo AG
2.2.2. GlobeGround Inc.
2.3. Market overview
2.3.1. Miami as an International Air-Cargo Hub
2.3.2. The Station Miami (MIAFH/A)
3. THEORY TO OUTSOURCING AND ITS MANAGEMENT
3.1. Terminology
3.1.1. Steering
3.1.2. Outsourcing
3.2. Reasons for Outsourcing
3.2.1. Overall Aim in Outsourcing – Strengthen the Competitiveness
3.2.2. Cost Aspects
3.2.3. Strengthen the Core-Competencies
3.2.4. Service Improvement
3.3. Outsourcing – Lifecycle
3.3.1. Overview
3.3.2. Determine Sourcing Strategy
3.3.3. Define the Operational Model
3.3.4. Provider Selection
3.3.5. Contract Development and Negotiation
3.3.6. Transition to the Provider
3.3.7. Operating an Outsourcing – Cooperation
3.3.7.1. Managing the Provider’s Performance
3.3.7.2. Monitoring
3.3.8. Backsourcing
3.4. Critical Success Factors
3.4.1. Critical Hard Factors
3.4.2. Critical Soft Factors
3.5. Steering an Outsourcing – Cooperation
3.6. Incentive Systems and Motivation Assurance
3.7. Risks and Negative Impacts from Outsourcing
4. ACTUAL ANALYSIS AT MIAFH/A
4.1. Course of Action
4.2. Initial Situation – Foundation of Steering Mechanisms at MIAFH/A
4.2.1. History of the Cooperation LCAG and GG at MIA
4.2.2. The Contract
4.2.2.1. Responsibility and Quality Assurance in the contract
4.2.2.2. Pricing and Cost Structure
4.2.2.3. The Service Level Agreement and Escalation Procedures
4.2.3. Layout of the LCAG-Station (GCHS) at Miami International Airport
4.2.4. Authorities and Interfaces between LCAG and GG
4.3. Hard factors
4.3.1. Contractual Service Standards
4.3.2. Non-Contractual Performance Indicators
4.4. Soft Factors
4.4.1. The Evaluation Process
4.4.2. Results of the Questionnaire
4.4.3. Results of the Interviews
4.4.3.1. General Results and Basic Issues
4.4.3.2. The General Problem – Lack of Discipline
4.4.3.3. Cultural and Language Barriers
4.4.4. Meetings and Communication
4.4.4.1. Meetings
4.4.4.2. Communication
4.5. Summarization and Criticism
5. RECOMMENDATIONS
5.1. Overall Recommendations
5.2. New Layout of MIAFH/A
5.3. Improvement of the Reporting-system at MIAFH/A
5.3.1. Daily Monitoring at Supervisory Level
5.3.2. The MIAFH/A – Scorecard
5.4. Improve Interactions
5.5. Audit
6. CONCLUSION
Objectives & Research Focus
This thesis examines the outsourcing partnership between Lufthansa Cargo AG (LCAG) and GlobeGround Inc. (GG) at Miami International Airport. The primary goal is to analyze the current steering mechanisms, identify critical issues, and provide strategic recommendations for local and regional management to improve service quality, communication, and performance monitoring.
- Analysis of the existing outsourcing business relationship between LCAG and the handling agent GG.
- Evaluation of current hard and soft steering mechanisms, including performance indicators and reporting systems.
- Identification of operational deficiencies such as lack of discipline, communication barriers, and ambiguous contractual definitions.
- Development of a comprehensive improvement plan, focusing on a new layout, a scorecard-based reporting model, and a governance structure.
Excerpt from the Book
4.4.3.2. The General Problem – Lack of Discipline
The interviewees often named similar points which lead to a lack of discipline and are not satisfying. The mentioned points are as follows:
• GG makes LH “look like a banana boat” is one comment to the circumstances that GG office staff does not wear their uniform constantly.
• GG office does not represent the company Lufthansa as a well known quality - airline, due to the chaotic and unorganized situation.
• The parking-lot for LCAG customers is often blocked by GG-employees.
• The warehouse does not reflect the “top quality” carrier LH, due to the unstructured and unclean design.
• GG-staff does not follow the told procedures, but commits to do so.
Summary of Chapters
1. INTRODUCTION: Outlines the background of the outsourcing partnership at the Miami station and defines the scope and structure of the diploma thesis.
2. BASIC KNOWLEDGE: Provides an overview of the airfreight industry, the relevant companies, and the specific market situation at Miami International Airport.
3. THEORY TO OUTSOURCING AND ITS MANAGEMENT: Explains the theoretical framework of outsourcing, the lifecycle phases, critical success factors, and management strategies for outsourced operations.
4. ACTUAL ANALYSIS AT MIAFH/A: Conducts an in-depth analysis of the current situation between LCAG and GG in Miami, covering contractual foundations, performance monitoring, and internal surveys.
5. RECOMMENDATIONS: Proposes specific improvements for steering the partnership, including organizational layout changes, reporting systems, and a new governance model.
6. CONCLUSION: Summarizes findings and discusses the long-term strategic risks associated with extensive outsourcing of non-core processes.
Keywords
Outsourcing, Lufthansa Cargo AG, GlobeGround, Airfreight, Ground Handling, Service Level Agreement, Steering, Performance Management, Process Compliance, Miami International Airport, Logistics Management, Supplier Relationship, Quality Assurance, Scorecard, KPI.
Frequently Asked Questions
What is the core focus of this diploma thesis?
The work focuses on analyzing and optimizing the outsourcing partnership between Lufthansa Cargo AG and GlobeGround Inc. at the Miami station, specifically addressing management and steering challenges.
What are the primary themes discussed?
Central themes include the outsourcing lifecycle, contractual management, service quality assurance, performance monitoring through KPIs, and the management of soft factors like communication and culture.
What is the objective of the research?
The objective is to diagnose the current operational situation and provide actionable management recommendations to improve cooperation efficiency, discipline, and customer satisfaction.
Which methodology does the author use?
The author combines theoretical research with an empirical analysis, utilizing personal interviews, questionnaires with staff, and observational analysis of day-to-day operations at the Miami facility.
What is covered in the main section of the paper?
The main section analyzes the "Actual Analysis" at MIAFH/A, evaluating existing steering mechanisms, reporting tools, and identifying specific problems in communication and process discipline.
Which keywords best characterize this work?
Key terms include Outsourcing, Airfreight, Ground Handling, Service Level Agreement (SLA), Performance Management, and Process Compliance.
What specific leadership issue is identified in the Miami station?
The thesis identifies a significant lack of discipline and a "clique-problem" within the local GlobeGround office, combined with a lack of support for LCAG-driven decisions by the local management.
How does the author propose to improve the current reporting deficit?
The author suggests the implementation of a new "MIAFH/A Scorecard" to consolidate performance indicators into a single, transparent weekly and monthly reporting tool for all stakeholders.
- Quote paper
- Daniel Effenberger (Author), 2005, Steering an outsourced handling agent at Lufthansa Cargo AG/ Miami, USA, Munich, GRIN Verlag, https://www.grin.com/document/36858
