Purchasing management in Singapore Airlines
Introduction
This paper aims at analysing the supplies management at Singapore Airlines. It includes the criteria for supplier selection, the operations of purchasing and the overall supplier selection. It describes the needs and the goals that a selected organisation should have and the various issues that should be considered in the selection criteria of this organisation. It also gives the recommendations for the ICT that should be applied in order to improve the operations of purchasing process in the organisation. It highlights the appropriate tools that should be included in analysing the various prices of the intended purchases in the market.
Singapore Airlines selected Moog Singapore Pte. Ltd. a firm that designs, manufacture, integrates solutions and products for precise motion control for a 12-year contract to offer support services for equipment for flight control that had been installed by Elma, maker for control equipment had installed (The Buffalo News, 2016).Moog Singapore has systems that achieve high performance in the control of commercial and military planes, space vehicles and satellite broadcasting, missiles, wind energy, industrial machines, medical equipment and marine applications. Its products align with proportionate valves and servo, servo drives and motors, servo actuators, systems for motion, software and controllers, data slip rings and power transmissions. The interest for the company arose from a combination of different capabilities ranging from designing and manufacturing components for critical motion control and the capability to develop and ensure assimilation of the whole system. The company’s solutions were found to work well even in environments that are very sextreme and uses the newest technology. The company’s market include consumers who need their in-house resources to be improved and development of projsects. The firm has its market located mostly in the South East-Asia and Singapore and it extends to various long term customers across different industries. The company face stiff competition from the various multinationals that offer similar products and services in the Singapore market. The organisational goal include providing full system capability and motion solutions that are of high performance. (Moog Singapore Pte. Ltd, 2016)
Supplier Selection Criteria and issues
Supplier selection denotes the process where suppliers are identified, evaluated and contracted (Monczka, et. al 2012). The company aims at give respectable treatment to its suppliers which includes fairness in any of the relationship with them. Business operations, products and services offered by suppliers to Singapore Airlines limited should comply fully with laws or regulations of the countries in which the goods and services to be supplied are based. The business and financial records should be accurately maintained by the supplier according the laws and regulations and the generally accounting principles. In the process of supply selection, there is the need to observe fair competition according to the provision of the locals, such those activity that restricts competition must be eliminated. Any commercial decisions including sales terms, prices, market divisions and customer allocation should be made independent of agreements or understandings with competitors. The company also upholds the need for ethics in selection process, such that dealings of business negotiation are handled with transparency, integrity and honesty. This ensures that there is no any kind of fraud, bribery, corruption, exhortation or such behaviours that involve inappropriate benefits should be tolerated. If there arises a situation that perceived, potential or actual conflict of interest, it should be disclosed fully to the organisation. Any kind of relationship with a distributor , supplier, travel agency or supplier with entities with who have a relationship with Singapore Airline and that is related to business matters, should not be allowed to interfere with supply of products or services to the organisation. The suppliers must have in place safety and health protection policies, and have management systems that will ensure provision of a working environment that is secure. This should provide safety of every product or service offered to the organisation through the right policies, implementation and monitoring. The supplier must meet the organisational need to abide with environmental laws, and practices that pertain to waste disposal, emission and pollution of air compliance and try to minimise the effects of the business processes on the environment. The management of the environment is a key factor that is considered by Singapore Airline while selecting suppliers. The suppliers must also adhere to the standards of labour, in regard to non-discrimination, equal opportunity, minimum age, wage standard and working ours.
For any organization, effectiveness in evaluating a supplier and the purchasing process is a very vital. Due to the fast rate of globalization, unpredictable price in the market, rapid technological changes and increasing concern for health and safety measures, there is an increase in the number of factors to be considered. Singapore should aim at looking into such factors in setting up a criteria for supplier selection (Beil, D. (2009).
Quality: this refer to conforming to fitness or requirements to use. This should be in terms of absence of defects or design of the product to the degree that it will satisfy the airlines specification. Delivery: this refers to quality specifications and ability to meet deadlines, a criteria that will apply to suppliers before being considered for selection. Repair service. This refers to whether the supplier will manage to provide repair service on time for the products delivered to the airline. Technical capability: connotes the current and future technological capability design and speed of production. Management and organisation: refers to the structure of the supply firm and its adherence laws (Monczka, et. al 2012).
ICT for Purchasing Operations
Information technology is increasingly becoming very important in the process of purchase and supply management, which means that there is high need for an organisation to acquire it the any procurement process (Gray and Zappalà, 2012). Thus, Singapore Airline needs to adopt information technology in the process of supply management, including standards and policies to cover the various risks and procedures that come with this process. This adoption also needs to a reference to other available guidance that that may be considered. When the organization adopts the e-procurement system, it must ensure that an additional procedures that are put in place meet the organisational or legal obligations that guide the purchasing process. The need for this ICT will guide the transparency and accuracy of the whole process to ensure that there is elimination of any undesired elements. ICT will ensure that there is electronic invoicing, a process of transmitting and storing of invoices by electronic means to eliminate the delivery of hardcopy documents. E-invoicing include the invoice content , a means to show that the invoice is was for supply that is genuine , audit trail maintenance involving arrangement that will ensure auditor’s access to information, credit notes content , a means that will make sure that the invoice is original and upholds integrity ,deciding on whether self-billing will be done and how it may be controlled , electronic invoices storage means and whether application of digital signatures can be acceptable for e-invoice authentication and the necessary audit trails and controls.
The airline also needs in formation technology for classification of commodities which involves assigning a coding system that is structured for the products or services the organisation intends to buy. This coding will ensure easy identification of products and services. ICT is also necessary for managing electronic records to enable effectiveness in information sharing and exchange of knowledge. Online security and authentication controls are also important facet that will be provided by a good e-procurement system. The system will require high level of confidentiality in order to ensure online data security is attained. This will require the verification of user by user identification that is unique, validation through digital certificate or passwords, controlling the access or verifying the user privileges. Also important is an audit trail that will contain a record of the various actions of the parties involved in different procurement process.
The ICT tool that will best apply for Singapore Airlines is an Electronic Catalogue, which contains a list of various supplier products or services and which can be accessible through internet. Management of an electronic catalogue can be done in three different ways: managed and hosted in-house, third party outsourcing, or can be managed and hosted by the supplier. This tool gives a list of products being offered by the supplier. Another tool is the use of a procurement software such as Coupa Procurement that will enable the organisation to use less time for purchase orders and less money. Such a tool will can span the whole process of purchasing from requisitions, approval, invoicing and the; management of the inventory (Gray and Zappalà, 2012).
Purchasing Cost Analysis
Any purchase of goods and services in an organisation require some kind of cost analysis part of which involves pricing verification. Cost analysis refers to examination and breakdown of costs after obtaining the relevant information. The best way to obtain the information on cost is to ask about the prices of goods and services through provision of a secrecy or non-disclosure arrangement which will facilitate swap over information. The organisation is bound by ethics to keep the information confidential. Singapore Airline needs to attain the best value for each good or service that it intends to purchase through conducting a competition via bids, quotes or proposal. Even where completion is absent, there is the need to make sure that the price the organisation pays is reasonable and fair. The purchasing team should obtain various quotation for each purchasing and use the quotation as a base of evaluating every supplier. The most important items to consider from the supplier quotation are the cost, terms and conditions for individual supplier, such as terms of payments and modification of machines and similar products (Krishnan, 1995).
For the purpose of cost analysis, it is important to compare the competitive bids. By requesting for various prices from the suppliers, the reasonable price is determined though this does not preclude totally analysing the cost. The product with the lowest cost may come with additional early replacement cost, modifying and test cost necessary for the product to be applicable (Gupta, 2009). This means that products sold at the lowest price are not always giving the best option. A comparing prior quotations may be effective when one is determining whether the current quotation for the same product or service is viable. This comparison will aid the organisation when the procurement time is critical and asking for competitive bids means that procuring process will be late. Another technique that the organisation should apply is comparing a price list that is already available. This is necessary for the products or services that are similar to the items that are availed to the public. This should be done while considering the normal prices in the industry for the goods or services. The airline may also apply the comparison of similar items especially when they are unique with a statement outlining why the item will not attain the specification set by the company. Another technique is the use of a benchmark for comparisons of items, done on the basis of measurable similarities like price for individual pound, price for individual test sample (Woods Hole Oceanographic Institution, 2007). By applying these tools or concepts, the appropriate cost will be obtained at two ideal times; when a new supplier is being taken through the qualification process and at the time of contract evaluation or renewal more so if there was a failure in the past.
Conclusion
This report has outlined the analysis of the purchasing needs of the Singapore Airlines and has focused on the entire purchasing process to identifying such needs with the overall purchasing goal. In the process of supplier selection, the organisation needs to achieve fairness in the treatment of all its suppliers and the criteria for the selection requires that the interested suppliers should comply with the code of conduct outlined by the organisation that also involve compliancy with laws and regulation of the state. The criteria considers the quality of the products and services provided by the supplier and the delivery time, repair services, technological capability and how its management adheres to the law. To cover the various risks and procedures that are involved in the purchasing management, there is a need for the organisation to adopt information technology. ICT will ensure that transparency and accuracy of the purchasing process, and help in eliminating any undesired results in the entire process. This will be achieved if the right ICT tools are used for the procurement process to ensure maximum benefits at minimum cost of the good or service provided. For these benefits to be achieved, a thorough analysis of the cost of products and services offered by the suppliers must be done.
References
Monczka, R., Handfield, R., Giunipero, L., Patterson, J. (2012).Purchasing and Supply Chain Management.249
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Gray, C. , Zappalà, S. (2012).Impact of e-Commerce on Consumers and Small Firms. Ashgate Publishing, Ltd.104-110
Krishnan, P. G. (1995). Purchasing and materials management. New Delhi: McGraw-Hill.60-64
Gupta, K. R. (2009). Cost management: Measuring, monitoring & motivating performance. Delhi, India: Global India Pub. 77-82
Woods Hole Oceanographic Institution (2007). Price Analysis Techniques. Retrieved from: http://www.whoi.edu/procurement/price-analysis-techniques
Beil, D. (2009) .Supplier Selection. Ross School of Business. Retrieved from: http://www-personal.umich.edu/~dbeil/Supplier_Selection_Beil-EORMS.pdf
The Buffalo News (2016). Moog wins Singapore Airlines support contract. Retrieved from: http://www.buffalonews.com/business/moog-wins-singapore-airlines-support-contract-20160219
Moog Singapore Pte. Ltd, (2016).About Moog Singapore. Retrieved from:
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