Boeing Australia Limited: Assessing the Merits of Implementing a Sophisticated e-Procurement System
XUELAI (ANDY) HU
Contents
Contents 1
Executive Summary 2
Issue Identification 2
Environmental and Root Cause Analysis 3
Environmental and Root Cause Analysis 3
Rationalisation and Management of Suppliers 4
Introducing Credit-card Purchasing 4
Formation of the Materials Management Process Council 4
Alternatives or Options 4
Recommendations and Implementation 6
Recommendations 6
Implementations 6
Monitor and Control 7
Reference 8
Executive Summary
Boeing Australia limited (BAL) is the global extension firm of the Boeing Company in US, with operations in 12 locations around Australia and major business in areas of space
…show more content…
Russell Menere, National Procurement Manager of BAL had set a new policy to rationalise BAL’s supplier base to reach a target of 600 over 6 years. BAL’s estimated procurement expenditure was approximately $100 million in 2002. Russell had broken down their suppliers into a total number of 25 commodity groups each with an alphabet letter to present. BAL launched a supplier management programme gave suppliers feedback on how well they perform, at the same time gave feedback from suppliers on how BAL’s performance, the first “BAL Supplier Awards” were presented in November 2002 (Ashworth, 2003).
Introducing Credit-card Purchasing
In order to reduce order-to-delivery cycle time, BAL has introduced the online ordering tools initially. However, these tools were not connected to BAL’s back-end systems. In addition, BAL’s legacy systems did not support interfacing with suppliers’ Web browsers, details of each order had to be physically entered in to BAL’s ERP system. To fix the problem, Russell brought the credit-card system to simplify the purchasing process (Ashworth, 2003).
Formation of the Materials Management Process Council
BAL formed a Materials Management Process Council in 2002 to improve productivity, and in response to complaints by internal customers about inefficiencies in the purchasing process. Approximately seven people across the divisions were working in MMPC (Ashworth, 2003).
Alternatives or Options
1. BAL should invest in a new cost effective
The Boeing Company designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. It operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital. The Commercial Airplanes segment develops, produces, and markets commercial jet aircraft for various passenger and cargo requirements; and provides related support services to the commercial airline industry. This segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents, and technical advice to commercial and government customers. The Boeing Military Aircraft segment researches, develops, produces, and modifies manned and unmanned military aircraft, and weapons systems for global strike, vertical lift, and autonomous systems, as well as mobility, surveillance, and engagement. The Network & Space Systems segment researches, develops, produces, and modifies strategic defense and intelligence systems, satellite systems, and space exploration products.
Airbus was planning to introduce the A380 in direct competition to Boeing 747 to compete in the large aircraft sector. The rivalry between Airbus and Boeing was already intense. Boeing’s market share reduced from 70% in 1974 to 45% in 1990 while Airbus’s market share had increased from 1% to 34% during the same time (Exhibit 5). Encouraged by this increase in market share, Airbus was contemplating the introduction of A380. Development of new product line is extremely expensive in the Aircraft sector. Following is a quantitative analysis of the project to calculate the risks involved in introducing a new line of Aircrafts.
Supply chains must be managed to coordinate the inputs with the outputs in a firm to achieve the appropriate competitive priorities of the firm’s enterprise processes. The Internet offers firms an alternative to traditional methods for managing supply chains. A supply chain strategy is essential
In this assignment I will be writing a formal report that will explain a typical procurement process, I will outline a variety of methods of supplier reimbursement and contract relationships; I will also outline the pros and cons of each contract type. As well as this, I will explain a typical supplier selection process through the use of Carters 10 C’s and a typical selection process model.
1. Why would a large and complex company like Boeing employ off-the-shelf application-specific software for accounting, human resources, supply chain management and other core business processes? And why do they choose to own, host and operate all of their own software rather than to for example outsource payroll to ADP Corporation or sales force management to Salesforce.com? [list]
As Russell Menere, I recommend the management of Boeing Australia Limited to follow the footsteps of Boeing Seattle to adopt and implement cost effective e-Procurement system, which can be interfaced with the legacy information system as we have IT infrastructure in place that is our core strength.
My decision is to continue on the same course that Boeing Australia Limited (BAL) is on. I feel, after reading this case study that BAL has been on the correct path with regard to building their systems architecture. There is a need for a more sophisticated procurement process and the issue of a procurement application may be easily found. The key is the process by which BAL has implemented all other IT applications, they have been very successful. They are thorough and have processes in place to rationalize whether a new by-in application or an in-house developed program would be best. My thought is that at least one, if not more; of the current systems have an appropriate off the shelf
The Boeing Aerospace Corporation was under investigation by the Justice Department in 2003, for two high-profile cases involving Pentagon contracting scandals, the judgment against the corporation at that time was one of the fines against a military contracting company, the investigation took three years and at the conclusion Boeing was fined $615 million and their reputation was smeared, their stocks Shares of Boeing fell $1.15 to close at $85.86.
E-procurement has had an increasingly important role in business-to-business(B2B) commerce. Web-enabled B2B e-commerce enhances inter-organizational coordination resulting in transaction cost savings and competitive sourcing opportunities for the buyer organization. E-business has radically altered the ways in which firms interact with their suppliers(Phillips 2003). Continued improvements in Internet technology connectivity provide an opportunity to make procurement for goods and services more transparent and efficient. Six forms of e-procurement applications
• Learning curve has to be steep, i.e. Cost reduction has to be fast with change in technology
1. How would you describe Boeing’s approach to project management? What are its strengths and weaknesses?
Boeing Australia Limited (BAL) is a global extension of the Boeing Company whose head office locates in the United States.
1. What is the appropriate required rate of return against which to evaluate the prospective IRR 's from the B ANSWER:The appropriate rate of return against which to evaluate the IRR is the risk-free rate, plus the market risk
As the largest aerospace company in the world, the Boeing Company employees more than 153,000 people in some 67 countries. The great dominance of Boeing is due to its 1997 merger with McDonnell Douglas Corporation, an aerospace manufacturer, and its 1996 purchase of the defense and space units of Rockwell International Corporation, an aerospace contractor. The corporation is the world’s number one maker of commercial jetliners and military aircraft with more than 9,000 commercial planes in service worldwide, including the 717 through 777 families of jets
According to the incident investigation report, one of the chain event that contributed to the B-OBMM incident was unapproved procedures to carried out