Module 2: Procurement and Supply Chain Management
Session 11: E-Procurement
Written Cases Study 4: Boeing Australia Limited: Assessing the Merits of Implementing a Sophisticated e-Procurement System
Table of Contents
Environmental and Root Cause Analysis
Alternatives and Options
Monitor and Control
Boeing Australia Limited (BAL) is relatively new company and a global extension of the US firm, the Boeing Company. The BAL developed capabilities in the areas of space and communication, site management and the upgrade and maintenance of military aircraft and equipment. As BAL grew, it had developed various systems to support the procurement operations at four key divisions and 12 sites that made up the organization. However there is no interface of these systems and they operated autonomously, resulting in a lot of administrative redundancies, low productivity, and high processing time for the procurement processes. The dilemma exists in whether to continue to sit on the fence and seek a long-term improvement tools for integration with the current systems, or to invest in a new system that would simplify the procurement processes across the different divisions and support complex interfaces with suppliers? As Russell Menere, National Procurement Manager, I recommend to pursue a cost effective e-Procurement system, which would integrate with the various legacy information technology systems currently in place. The e-Procurement tool should simplify the processes across the different divisions and support the multiple suppliers.
The immediate issue BAL facing is the necessity to find an e-Procurement system that would link the BAL, the Australian Defense Force (ADF) and the major suppliers. Following are the requirements to the e-Procurement system: High process efficiency (to help reduce the manual processes, which create errors); Decreased lead times;
Compliance with ADF standards for procurement, which support the provision of services for the ADF. Systemic Issues:
1. Central administration with decentralized procurement processes
BAL had made a strategic move to establish in the organization’s head office the following departments: Central Administration
Management Information Systems
These departments supported 4 key divisions:
1. The Military Aerospace
2. The Commercial Aviation
3. The Knowledge System
4. The Space and Communications
By relocating 4 divisions under one roof BAL achieved synergies through more centralized and standardized operations. Although, the 4 divisions were still autonomous – they executed their own work, reported the same measuring criteria in financial dollars, project performance and product quality terms, as well as range of other measures for the BAL balanced scorecard. 2. Systems Architecture Issues
The information systems architecture encompassed 12 different BAL sites, which were strategically located close to major BAL customers. And at multiple sites the numerous programs and application were used by employees to meet their operational objectives. The following applications were used: 1. ProPricer - bidding for projects;
2. OPP - project scheduling, planning and labour hours;
3. COBRA – cost performance;
4. eMatrix – data management
The work packages form the above systems were fed into the ERP system, and then became KPI’s for the balanced scorecard.
The main problem associated with the above systems architecture was that these were buy-in off-the –shelf applications, and were not developed in –house to meet the specific needs of the BAL various sites, and did not always...
References: 1. Boeing Australia Limited: Assessing the Merits of Implementing a Sophisticated e-Procurement System Case. #HKU271. Centre for Asian Business Cases.
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