Boeing Australia Ltd. ( BAL ) is a comparatively new in private owned company and a planetary extension of the U. S. house. the Boeing Co. BAL has continued to develop capablenesss in the countries of infinite and communications. site direction. and upgrade and care of military aircraft and equipment. Historically BAL has had a myriad of systems encompassed in its diverse systems architecture which was preponderantly site-centric in nature. The chief issue is the procedures. There are redundancies ensuing in low productiveness and high processing clip in procurement procedures.
Particularly after the assignment of the National Procurement Manager in 1999. assorted short-run betterments that ensured uninterrupted concern betterment were put into topographic point like rationalisation and direction of providers. debut of recognition card buying and the formation of the Materials Management Process Council ( MMPC ) . Up to twelvemonth 2002 BAL had chosen to follow the executive direction directive to avoid upgrading its procurance system in the visible radiation of its comparatively little size and budgetary restraints.
However. the long term scheme of the company now focused on transfusing operational efficiencies which circulated around the determination of execution of rearward auctions as practiced at the Seattle US office. The challenge was to find whether an e-procurement tool was the right way for the company to take sing additions in productiveness either through cost nest eggs or by decreased processing clip.
Part 3: Systemic Issues
1. BAL has alone bequest systems across its four key divisions and 12 sites: Nature: Operational and StrategicTerm: Short and Long Term BAL has maintained independent operations across its four chief divisions and its 12 sites across Australia. They found and executed their ain work. reported the same measurement standards in fiscal dollars. undertaking public presentation and undertaking quality footings every bit good as a scope of other KPIs required for BAL’s balanced scorecard. These factors showcase huge sums of incompatibilities and loss of entire cost of ownership which can be brought down if the demands were consolidated.
2. Complicated Information Systems Architecture ensuing in exponential costs: Nature: Operational and StrategicTerm: Short and Long Term
As illustrated above. there were multiple systems that were executing similar maps. There was redundancy in the procedure as a whole. A considerable sum of clip and duplicate of attempts was taking to immense costs being incurred on a day-to-day footing. BAL’s systems architecture was based on a “buy-in” scheme where the tools in action captured above were purchased off the shelf. If the applications did non interface with the other applications used. BAL invested in programming to heighten functionality and where possible automate procedures.
On an mean if the costs of the systems were to be calculated. BAL has invested about $ 160. 000 in the purchase of the systems.
3. Leveraging off the purchasing power of the parent company increases rhythm clip and does non happen expected purchase: Nature: Operational and StrategicTerm: Short and Long Term
The National Procurement Manager introduced the short-run betterments to the procurance procedure. However. the program to leverage off the purchasing power of the parent company in the US has many booby traps including a major challenge of get the better ofing the US government’s export processs which starts by finding whether the point needs US Commerce Department’s blessing or US State Department’s blessing based on the nature of the export. BAL has to guarantee the necessary processs for obtaining export licences in the absence of which holds can be so important that they can invalidate the competitory advantage gained by the purchase. So a new tool to leverage purchases needs to be adopted.
4. Choice of Suppliers is a challenge and bounds equal chance: Nature: Operational and StrategicTerm: Short and Long Term
BAL providers by and large needed authorities accreditation. Occasionally the Commonwealth of Australia would urge that BAL usage certain providers for certain purchases. Although the determination was left to BAL. the company supported the Commonwealth in privation of better providers. Such a provider choice procedure was non based on competitory command which gave equal chance to all the sellers to take part in a peculiar command. Part 4: Environmental and Root Cause Analysis
In the position that BAL is sing to upgrade its procurance platform to include rearward auctions. it is of import to understand what benefits an e-procurement system can convey to the organisation. What are functional in the company at present and why are they deficient?
BAL has a “system architecture issue” at present. The company has legion systems that are based at each site location depending on the separate map of that peculiar site. This complex systems architecture is taking to inconsistent and non-integrative systems. This in bend prolongs the rhythm clip by the maps performed by systems like OPP scheduling system ( for planning of labour hours ) and Automatic Time-recording system ( personnel work clip on store floor and office. labour clip for each occupation ) . eMatrix ( project initial contract. SoW. drawings. correspondence ) and Western Data Systems ( ERP ) ( to track contracts. stuffs resource planning ( MRP ) . W-I-P. undertaking bing. procurance. stock list. payables and Labor hr planning ) .
At least an sum of $ 160. 000 has been expended to get the systems in topographic point as follows:
Information Tools in action:
•ProPricer – $ 8000 at least
•OPP scheduling system – $ 129 at least per annum
•COBRA – $ 30. 000 at least
•eMatrix – $ 30. 000 at least
•Western Data Systems ( ERP ) – $ 100. 000 at least
•Automatic Time-recording system – $ 30. 000 at least
Such a huge disbursal on the systems purchased demands to bring forth adequate profitableness and efficiency of service for the highly politically of import client Australian Defense Force.
The entire cost of ownership besides can non be determined efficaciously as each site has its ain manner of working with its ain system and procurance operation. It was non until the National Procurement Manager introduced the “credit card buying system” . that the buying activity was tracked ensuing from gulf between the online ordination tools and the backend system.
The company used to leverage off the purchasing power of the US parent company. nevertheless longer rhythm clip due to holds and complications ensuing from the US export policy can invalidate the competitory advantage gained by the purchase. So the demand to turn up and follow a new tool to leverage purchases arises. At the really least. means to implement a strict and efficiency driven system needs to be devised.
A budget of about $ 100 million has been allotted for procurement outgo by BAL for twelvemonth 2002. Out of the $ 100 million. about a $ 50. 000 can be assigned to the procurance of an e-procurement system.