E- Procurement in the Aviation Industry Introduction The aviation industry is an extremely very competitive industry. It contains small number of companies that control the most of the market share. The aviation industry could be featured as unique one. Some experts have stated that the industry is a very rapid environment and it goes through discontinuous and rapid changes in the domain of competitors, technology, demand and also regulation. Sometimes changes can even be volatile in nature. Therefore strategic decision making can be difficult at times under such constantly changing environment.
Industry has also embraced globalization just like the other industries. This really has the aviation industry a very complex environment. Information communication and technology (ICT) played a key role in taking several strategic decisions since the development of Electronic data inter change abs computer reservation network. During the 90s use of internet helped the companies to expand the sales channel. In the late 90’s the companies tried to gain strategic advantages in the B2B market place. Due to such demand quite a few e B2b market place emerged. Electronic market places have become mediators to generate demand to initiate transactions.
Many experts also believe that e market places have the ability to improve the supply chain of a company. However, each and every year due to lack of revenues quite a few e market places had to stop their operations. Some forms strategic alliances or get taken over for survival. The study looks has been done in lieu to analyze the role of e-market place; e-procurement to be more specific in developing an effective and efficient supply chain management. During the course of the study some of the areas of application of e-procurement as well security issues related to the e-procurement operations would be analyzed (Gates, 1995, p.
54). Types of e-market places in Aviation Industry There are mainly three main types of markets in aviation industry Public e- business paces. Example: www. partsbase. com Consortia e-business places: Example: www. aeroxchange. com Private e-business places. Example: www. myboeingfleet. com E-Procurement and the areas of usage Disintermediation Information technologies such as transparent and wide area communication through internet show that traditional intermediaries or middle men can be removed by using e market places in effectively.
This is known as disintermediation. If a company is using an intermediary for transaction, then the company has to pay something extra to the middle men. Hence the company is likely to increase the price of the goods to recover the cost paid to the intermediaries. Therefore advanced use of e market places is assumed to decrease the transaction cost of the producers. This would also help the company to globalize the activities, reaching the end users directly. Cost reduction and time efficiency Use of advanced ICT has increased the level of industry competition.
This has reduced cost and drastically increased connectivity of technology. According to experts a web interface may lead to two main types of advantages. It may help the company to reach the buyers quickly. It reduces supplier response times. Hence, this results in various sorts of savings in the management. Improved uses of information technology decreases cost and assuage imperfections leading to more effective markets. Transparency in supplier base Analysis of the affect of the e business place on procurement and transaction costs in the aviation industry can be a complex one.
Usually aviation projects are highly technical in nature and the risk factor is quite high. Sometimes the projects may have a life cycle of more than 50 years. This may include rebuilding, product modification, re-engineering, etc. Add to those products that are being manufactured in low volume with innovative design needs modification tracking certification. By using advanced technology the buyers may focus on scrutinizing the paper catalogues. After recognizing the appropriate product or product part the buyers may place the orders that can be visible to multiple suppliers (Raisch, 2001, p. 155).
Reductions in Inventory Availability of aircrafts has to be increased at peaks. Demand of air craft’s varies from time to time. The variation may be on weekly, daily and even annual demand. To reduce stocks or inventories the companies can use e-market places to manage stocks and reduce costs in an efficient manner (Oesterle and Fleisch, 1999, p. 105). Examples of Best Practices British Airways have adopted effective e-procurement strategy. The company has set up a system for the corporate extranets as well as for travel agencies.
Electronic ticketing has been adopted by the company to enable online reservations. It most definitely speeds up check in procedures. This is reducing the commission fees of the travel agents; at the same time it is helping the company to reach the customers directly. Safety and Security Issues It has already been discussed that the use of e-market places is very much at the nascent stage of development. However, keeping the bundle of benefits provided by the use of e-business the figures can change quite quickly over the years. However, there is a major problem related to security and trust.
As a matter of fact, as per a research conducted by price water house coopers, the more the companies get to know about the e-market applications, the more skeptical they become. This is mainly due to the fact that most of the companies rely on password control while dealing suppliers on line. However, the passwords alone is not going to be sufficient for using e-market places in a safe and secure fashion (Sarkar, 2010, p. 201). Conclusions It is quite evident that in the recent years the world has witnessed raid rate of growth in ICT and in e-market places.
Effective usage of e-market places has the potential to improve the offerings of the airlines industry. However the use of e-market places in procurement is still at the nascent stage of development. As a matter of fact there is room for research in this domain; as very little research has been conducted in the usage of e- market place in aviation business. This study has looked to highlight the current scenario of the application of e-market place and it represents an in-depth analysis about procurement in the aviations industry.
References Gates, W. (1995). The Road Ahead. USA: Penguin Books. Oesterle, H. and Fleisch, R. (1999) Business networking: shaping enterprise relationships on the Internet. DE: Springer Verlag. Raisch, W. D. (2001) The E-Marketplace: Strategies for Success in B2B eCommerce. USA: McGraw Hill. Sarkar, B. (2010). Management Information System. IND: Matrix Educare