E-Procurement Challenges Facing Boeing Australia Limited - Case Study Example

Boeing Australia Limited By: Institution: Course: Instructor: Date of submission: Executive Summary E-procurement entails the internet utilization by companies to purchase or procure services and goods, ensure the advertisement of goods, manage services, select vendors, organize contracts’ fulfillment, as well as effect payments (Neef 2011, p. 28). Boeing Australia Limited is among the countries that have embraced e-procurement. Historically, the company has had numerous systems contained in its varied systems architectures whose nature was site-centric. Processes mainly redundancies are the main issue facing the company as it leads to high time for processing and low productivity in the processes of procurement. Among the e-procurement challenges facing Boeing Australia Limited include constrains in its budget and the Australian law. When considering e-procurement, the company’s size is an important factor to consider. It is also important to note that the upgrading of information technology through the e-procurement tools’ implementation come along with certain risks. Introduction BAL (Boeing Australia Limited) started its operation in 1996 as an extension of Boeing Company in the US. At number 349 out of 2000 Australian companies, much of income comes from the manufacturing of aircraft as well as repair services within Australia industry. Last year for instance, the company managed to generate $1,221,488,000. The company has consistently developed capabilities in communications and space areas, maintenance and upgrade of military equipment and aircraft, and site management (Ashworth 2013, p. 12).. Following the 1999 procurement officer’s appointment, numerous short-term advances that ensured continuous improvement of the business were introduced into the company and they included supplies’ management, introduction of purchasing using credit card, as well as the formation of MMPC (Materials Management Process Council). However, the company’s long-term strategy presently focuses on instilling the efficiency of the operations which revolves around the reverse auctions implementation decision. Until the recent years, procurement was not multinational corporations’ component. However, this has changed since procurement has become prominent due to the rise of competition in the global environment (Boeing 2016, p. 1). The paper will look at procurement within Boeing Australia Limited. It will also revolve around the procurement strategies. Limitations of BAL's Current Procurement Processes In the present day economy, the link that the company forges with suppliers is essential to the integrity, competitiveness, as well as the agility of its team. Up until 2002, Boeing Australia Limited has not been in hurry to upgrade its procurement systems. The top management’s directive was that the company will wait until an appropriate procurement tool with the capacity to suit the needs of BAL is available at a reasonable price. Although there occurred sophisticated systems of procurement within the market, no justification was provided by the company owing to its small size as well as budgetary constraints. Therefore, the company’s main challenge is identifying a suitable procurement tool that the suppliers will find not to be expensive. The company’s new procurement strategy called “lean” that it developed recently requires that a single distributor as well as various selected mills will be entitled to handle all the requirements of commercial airplane manufacturing for flat-rolled products of aluminum as well as intermediate and small extrusion for a period of the next 10 years (Boeing 2016, p. 1). The supply chain restructuring ensures the elimination of speculative demand and at the same time ensure a continuous raw materials’ supply to the internal operations of Boeing Australia Limited at a low cost. While carrying out the procurement, the company should consider the role that the Australian parliament would play since the company it is through the company that the Australian Defense Forces procure its goods mainly aircrafts (Ashworth 2013, p. 21). The company is also involved in the software development within the defense force of Australia, meaning that the procurement process is a joint venture. The company works closely with the Australian government to ensure the creation of value. Therefore, the company does this through partnership meaning that it to agree to the laid down terms and conditions. The AIG (Australian Industry Group) has been seeking to improve the process of procurement (Australia 2010, p. 19). The current issue that the company is faced with is the crucial decision making an investment in current e-procurement system. The dilemma does exist on whether it will use this new long-term tool of improvement for integration in the present system or conduct an investment in new system that will bring ease in the processes of procurement. The immediate matter faced by BAL is the obligation to find a system of e-procurement that would ensure a link of the BAL, major suppliers, as well as ADF (Australian Defense Force). Apart from that, BAL is required to comply with the procurement standards of ADF and at the same time is required to adhere to central administration which comprises of decentralized processes of procurement (Australia 2010, p. 1). How can you effectively manage customers, suppliers, and the internal organization using e-procurement strategies? A firm can utilize e-procurement to ensure the management of their suppliers, customers, as well as internal organization through numerous ways. In managing suppliers, one can do this through the use of their websites to ensure that they are ordering electronically. Another form of management of the suppliers and customers is the utilization of extranet. A firm can also ensure the integration of the supplier with their system. Another e-procurement management strategy is e-marketplace (Braim 2016, p. 6). Every aspect of the company makes a contribution towards the satisfaction of the external customer by ensuring that its internal customers are satisfied. This means that the e-procurement’s effects on the department of procurement will have an effect on other departments because of their reliance on procurement to ensure that the materials are brought at the right price, time, quantity, quality, as well as from the right source which ensure the production of good for the final customer If for instance, the arrival of the essential components is not on time, production will not be on time, and at the same time the department of sales may fail to deliver the products to the customers. Although e-procurement is the board’s catalysis to put more focus on purchasing, it is important to perceive it as an effective strategy of procurement. E-procurement ensures that a chance is created for effective relationship between the suppliers and the consumers under a control which is centralized (Australia, & Australian Government Information Management Office 2016, p. 5). What issues, in relation to procurement, need to be considered when trying to upgrade a company's technology platform? In the recent years, the landscape of technology has been under constant change and most of the customers have the anticipation that the business would operate faster, become more connected, and at the same time provide them with the current advances. It is thus essential for the companies to ensure it is utilizing the latest technology as well as the effect it will have on the process of procurement. In broad sense, e-procurement entails the transfer of data electronically to offer support to tactic, operation, and strategy (Batenburg 2007, p. 7). There has been an increase in the dependency on IT (information technology) for companies an essential competitive advantage. It is important to consider the process of technology acquisition as it is essential in bringing about greater organizational operations’ efficiency, better environment of working, as well as effective processes of decision making. It is important to consider working closely with finance/information technology specialists when planning to enhance, upgrade, or adapt the tools for e-procurement (Neef 2011, p. 36). Another issue is the identification of the reason behind the implementation of the technology and among them includes ensuring that the efficiency of the business has improved by putting more focus on processes related to business (Braim 2016, p. 8). The company ought to have a precise as well as clear comprehension regarding the working of the present infrastructure work an processes. The next step after that is identifying the type of technology that the company needs. The company should identify the capability of the new IT platform including the benefits it is likely to bring. It is important for the business to indicate the kind of features it is going to include in new IT. Another important factor to consider is the risk involved in implementing this technology. The failure risk is an essential issue that both the public administration as well as supplier companies faces. These companies develop as well as procure new technology to bring about an enhancement of their operations. There has been an ongoing argument that the best way to cope with new information platform is the utilization of sophisticated management and stamina. Another argument is that it is important to remedy the aversion of risk within the society and among public procures to face the global competition challenge. Reducing the aversion of risk as well as ensuring the sharing of risks has been identified as essential factors when considering upgrading the company’s new technology platform. The company should consider the new technology’s structure development (Australia 2010, p. 10). As there has been the growth of technology with time, it is important for the companies to consider the critical, issues in technologies such as aligning the priorities of investment, measuring ROI, and managing cost. While these issues are essential, majority of the executives within companies across the globe have little or no visibility regarding the role of the new technology. Some have the feeling that they lack the capacity to change or shape the utilization of technology within the company (BuyIT 2012, p. 1). Is the size of a company an important issue when considering an e-procurement strategy? The size of the company is an important issue when considering an e-procurement strategy. This is mainly because of the scope and the scale of activities. According to Dawn, Pearcy, Larry, and Giunipero (2008), e-procurement is the top of the list of systems of supply management and many companies are already using it or are making plans to utilize it. According to the study, approximately 50% of firms already utilize e-procurement strategy, and at the same time, roughly 33% of other firms are making plans to utilize it soon. The software of e-procurement ensures that the department of e-procurement is ordering for products from suppliers online and at the same time allows the company to give the approval of the same before time. At the same time, the strategy ensures that the company is controlling as well as keeping records of the spending by the buyer (Australia 2010, p. 12). Most of the respondents cited upgrading an already existing e-procurement system or buying new technology as the number one procurement investment. Various companies have cited numerous reasons for utilizing e-procurement in their firms and they include the following: It brings improvement to the overall influence and effectiveness in the spending by the corporates Improve procurement performance and value communication Increase the spending percentage under management Both the size as well as the industry is heterogeneously alternatives for a diverse as well as large number of conditions or factors that possibly determine the history as well as the extent of e-procurement. The size of the company indicate the span of supply chain as well as the activities scope of a firm with the assumption that firms that are having many employees will be having numerous suppliers, business units, departments, as well as establishments for executing procurement. This means that larger companies will attain more benefits from e-procurement since they have a large number of orders purchased and they also have a diverse and larger purchase portfolio. The size is directly linked to the firm’s financial resources with the assumption that the IT investment budget as well as the turnover of the firms with numerous employees will be large (BuyIT 2012, p. 1). Big firms like Boeing Australia Limited have less restriction when it comes to investment in upgrading or acquiring new technology such as e-procurement. When it comes to outsourcing, the opposite can be experienced whereby very big firms such as Boeing Australia Limited have a low probability of adopting e-procurement since they have a high chance of outsourcing it. Conclusion One of the components characterizing many businesses in the present world is the e-business such as e-procurement. Today, half of large as well as middle sized companies including Boeing Australia Limited are already utilizing the systems of e-procurement to ensure the purchase of services and products from suppliers. At the same time, numerous other companies are in the process of implementing the same strategy. In the present day rapid changing environment of the business, companies whose supply chain is competitive supply chain always remain ahead of others. Elaborate procedures of procurement do not guarantee superior combination of quality and price in large firms. Bibliographies Ashworth, P. 2013. Boeing Australia Limited: assessing the merits of implementing a sophisticated e-procurement system. Hong Kong, Centre for Asian Business Cases, School of Business, University of Hong Kong. Australia, & Australian Government Information Management Office. (2016). Strategic guide to e-procurement. Canberra, Dept. of Finance and Administration. Australia. 2010. Commonwealth procurement circular. [Canberra], Dept. of Administrative Services, Purchasing Reform Group. Batenburg, R. 2007. E-procurement adoption by European firms: A qualitative analysis. Journal of Purchasing and Supply Management. Retrieved from http://www.elsevier.com/locate/pursup Boeing. 2016. Boeing Australia and Pacific. Braim, S. W. 2016. Procurement transformation. [Tokyo, Japan], Asian Development Bank Institute. BuyIT. 2012. Buiding the Business Case for e-procurement. BuyIT Best Practice Network. Dawn, H, Pearcy, Larry, C, Giunipero. 2008. "Using e‐procurement applications to achieve integration: what role does firm size play?", Supply Chain Management: An International Journal, Vol. 13 Iss: 1, pp.26 – 34 Neef, D. 2011. E-procurement: from strategy to implementation. Upper Saddle River, NJ, Financial Times/Prentice Hall. Rahardjo, E. 2016. Decision making in information technology acquisition: a system analysis approach. Saint Louis: University of Missouri. Satish, S. 2010. Effects of e-procurement on internal and external customer services. Institute of Management and Entrepreneurship. Read More