What is Value to Aviation Operations?
Many modern line-level aviation managers maintain an imperfect perception of value relating to cost-effective aviation operations. These immature, untrained value hunters act as if leadership prizes value solely from the bottom line perspective, no matter where it comes from, or how those dollars magically appear at the bottom of corporate balance sheets.
Your organization's managerial bargain hunters and shrewd negotiators may actually transfer organizational risk to safety as the organization tries to grow and develop their aviation assets. In short, as aviation operations grows, management may attempt to reduce the amount of safety that they enjoyed when they were considerably smaller.
For example, we repeatedly witness multiple cases where senior managers seek to trim their safety budgets that were established when they were one-third of their current size, or in a recent example, 20%. Logically, safety suffers when operators tremendously increase in size, yet attempt to rein in safety expenditures.
Why are they cutting safety expenditures now? (Rhetorical question, that we all know the answer to).
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Real Threat to Aviation Safety - Happening Today!
Less attention to safety for operators that have grown 300-500% over the past five-ten years will never prove to be a prudent move. This business strategy exasperates internal aviation safety professionals and is explicitly warned against by modern aviation risk management academia.
In modern aviation risk management circles, this practice has been highlighted as a red flag of danger and is to be avoided at all costs. Paul Snyder of North Dakota University clearly describes this dangerous business practice in “Practical Safety Management Systems: A Practical Guide to Transform Your Safety Program into a Functioning Safety Management System,” 2017.
Understanding Value Beyond Finances
So what is value? Is value always measured in dollars?
Does value magically appear whenever you charge higher rates to clients or reduce costs at the expense of your business partners? Of course not. This short-sighted, myopic viewpoint leaves a trail of resentment, broken promises and eventual conquest by more astute businessmen.
Does value equate to maintaining harmonious business relationships with your vendors in order to grow and capitalize on future opportunities together? That is part of the answer.
Or does value come from working with unique vendors, discovering new opportunities, and then leaving the vendor scratching his head, wondering why you neglected to share the opportunity? In most organizations, there will be vendors supporting operations with an expectation of being your "opportunity-hunting-partner. Alert managers can easily recognize these vendors from:
- Exceptional service at reduced rates; or
- Standard service offering at discounted rate; or
- Always appearing to go above and beyond what is expected of them.
In the case of exceptional vendor behavior above, the vendor has apparently identified additional "future value" from their client-business-relationships. What is this value? There are many factors, each of which depends upon the:
- Vendor's business model,
- Nature of service or product offered (unique or easily replaced);
- Role the vendor plays in supporting your operations (participative or disinterested); and
- Vendors' expectation of the business relationship.
While the above scenario focuses on vendors, we can easily extend this logic to business partners. Do you seek additional business opportunities with your business partners, or do you prefer to find opportunities and manage them internally to maximize your own organization's profits?
How can you add value to your business relationships?
Do you give reliable feedback to your vendors and business partners? Or are your relationships strictly about business, with a zero-sum game where the organization's prosperity maintains the highest priority?
Related Aviation SMS Articles
- Why Include Vendors in Aviation Safety Management Systems
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How to Find Value From Your Aviation SMS?
From the above discussion, you will notice that I used "vendors" as an example to seek value from your aviation safety management system (SMS). In fact, we really haven't been discussing "aviation SMS" at all, as the vendor example is simply "common sense" from any value hunter's perspective.
However, don't discount this vendor example as not having any value to your organization. Imagine the following scenario:
Your company hires a contractor to support on-board catering. Management is thrilled with the 30% discount the vendor provided to secure your company's business.
Upon annual renewal, management again seeks to tighten the power grip over the vendor. Management threatens to seek another catering company should the vendor refuse to "give a little more" discount.
What relationship does your company now have with this catering vendor in the example? Is it a trusting relationship? Or does it appear your company is only interested in your bottom line and not your supporting vendor partners?
I can tell you exactly how this vendor will feel. These vendors feel resentment that your previous discount went unappreciated and that you are not interested in a win-win relationship, but a zero-sum game. Serious fractures to the trusted vendor relationship threaten your company.
"Big deal, we can find another vendor," you may say.
Yet consider safety. Do you want a resentful vendor providing services to your company? Or a helpful, vigilant partner who is constantly maintaining a vested interest in the success of both companies?
Of course, you want the vigilant partner who will warn you of approaching danger. If I were the resentful vendor, I may let you sink and say, "Oh well, you should have been better at business. Better luck next time."
This scenario is avoidable and if you focus on your vendor relationships, you will seek the win-win for both companies.
Final Thoughts on Finding Value from your Aviation SMS
Managing hazards and risks is only one aspect of an efficient aviation SMS implementation. Once in a while, we need to step back and ask ourselves some serious questions, such as:
- "How can we make "this" better?" where "this" is whatever system or operation your are considering;
- How can we add value to our business partner's services?
- Are there any other projects this vendor/partner and our company can do together for a team win? (increases vendor commitment to your company)
- Do we have any ideas how we can make our vendor better at providing their services and improving our efficiencies?
I am only scratching the surface for finding value for aviation operations.
There are also many ways to find value from your SMS data. You simply have to open your mind and extend the boundaries to include the win for companies supporting your mission.
When your support groups are happy and profitable, this reduces risk dramatically and improves safety. For example, one should see subsequent increases in hazard identification and safety reporting metrics when your business partners are also actively engaged in "protecting their investment."
When vendors win with you, they recognize your value and they will naturally want to protect their investment. Otherwise, disillusioned vendors will only provide the "bare minimum" per contractual obligations.
The next time management considers trimming the budget at the expense of their safety providers, forward this article to those managers. This is a real problem in our global aviation system. I am not comforted by the numbers of managers who believe safety is best managed from the "lowest cost provider" model.
Finally, if your company has doubled or tripled in size since setting your aviation safety budget, consider perceived "safety levels" from your passengers' or investors' perspectives. How would they feel that as your operations grow, the amount of budgeted safety actually decreased?
Having access to real-time safety data increases your chances of finding opportunities. We often miss out on opportunities because we either don't have the data or the data is too difficult to organize to facilitate timely, fact-based decision-making processes.
We can help. The SMS Pro team has the expertise and database to present real opportunities to management. And it is easy to get started.
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