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GROUP 3

Sulagna Datta
Sreedev Basu
Tamaraselvi Arumugam
Venkatesh Balakrishnan
Ramzi Benzaci

QUESTION 1: What are the benefits of the e-procurement systems for the
Airlines Purchasing Department?
There were a lot of benefits expected for the APD or Airline Purchasing Department.
Some of these are :
1.
2.
3.
4.

Better and improved supplier and spend information


A more efficient supplier sourcing process that generates value
Reduced Request for Proposals and Request for Information costs
Increased market visibility

QUESTION 2: Mention the concerns of key managers in Cathay Pacific


regarding the e-procurement system implementation.

CXeBuy, as an e-procurement system, lacked the inventory


management function that was previously supported by EMPACS
Streamlining the number of suppliers Decisions had to be made to
forgo supplier relationships with those that were of less value in
terms of the range of product offerings and price differentiation
Cataloguing Terms for maintenance of the catalogues had to be
negotiated with suppliers and the e-marketplaces
Incorporating the spend authorisation protocol To ensure that the
requisition-to-payment process could be electronically executed in
an efficient and timely manner
Business Process Reengineering of procurement practices
Continuous process development along with change management
should be ensured
Systems Integration CXeBuy should be completely integrated with
EMPACS and FMIS

Question 3: What kind of financial metrics can be used to quantity the


benefits?
The six key business benefits from implementing the e-procurement system could
be classified under the following heads:
1) Time
a. Improved information intelligence for reporting purposes
b. Improved compliance with corporate spend policies and supplier
contracts

c. Shortened req-to-cheque cycles


2) Money
a. Reduced procurement administration costs
b. Strengthened negotiating muscle with suppliers
3) Opportunity Cost
a. Freeing up of purchasing staff to engage in strategic tasks

Case already suggest using category 1) Time savings as a financial metric, and
gives a sample calculation in Exhibit 10 showing the reduction in transaction cost
from HK$ 205.8 to HK$83.0.
Apart from Time, two other possible metrics, from our above classification, could be:
2) Money amount saved from reductions in administrative costs, and the
money saved by negotiating better deals due to the extra bargaining power.
3) Opportunity Cost value of the other strategic tasks that are now
accomplished using staff freed up by CXeBuy

Question 4: How can Cathay use the Balanced Scorecard technique to


measure the short term and long term benefits delivered by CXeBuy?
The Balanced Scorecard technique could be used to look at performance of CXeBuy
under the following target categories:
1) Enterprise level
2) Project level
3) Process level
In the short term, process level analysis would yield immediate valuations of
benefits and savings in terms of:
1) Financial Gains: cost reductions (staffing, inverntory, etc.)
In the long term, project and enterprise level analysis of the larger system, not just
CXeBuy as a standalone would show benefits in:
2) User satisfaction: reduced time in routine and mundane tasks would lead to
more time for greater control over working environment and thus better
service
3) Procurement process alignment with overall business objectives
4) Future potential for improvements, value creation and adaptability to change.

QUESTION 5: How can Cathay's e- Procurement strategy contribute to its


mission?
Cathays e- Procurement manages, thanks to the web, to enable the procurement of
goods and services for five of the airline spend categories (in-flight service, cargo,
information technology, and marketing and office supplies).
Indeed, through Cathays e-Procurement strategy and valuation we can identify six
keys business benefits that show they how contribute to its mission:

Reduced procurement administration cost

Improved information intelligence

Improved compliance with corporate spend policies and supplier contracts

Shortened required times to cheque cycles

Strengthened negotiating muscle with suppliers

Freeing up of purchasing staff to engage in strategic tasks