Bal Case Study
BAL Case Study
The continued advances in procurement and information technologies, have presented BAL an opportunity to build on initiatives put in place since 1999. The P-Card initiative has produced cost savings through the shortening of procurement process for non traceable generic goods, but new e-based initiatives must be sought to further stream line the bidding and contracting process.
One tool presently available is e-buy. A tool developed with other large buyers and our Parent company Boeing. Since 80% of the procurement transactions are for these “day-to-day” buys, it is imperative these new processes target this segment. Making the process dimplier and more efficient on
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• Indirect Spend – BAL’s indirect spend adds up to 80% of total procurement transactions, but only 20% of the dollar value spent. Because these items are mainly generic with many global suppliers, lower costs and less “hands” on procurement processes need to be implemented. P-cards were the start, but we have to look at ways to streamline supplier bidding, negotiating and supplier evaluation. Present negotiation, or price negotiation, for these items presently use too many resources and is time consuming. Most indirect spend items are generic, in nature, and do not have to conform to rigid specifications. They are also available from many suppliers. Lower cost should be the driving factor in price negotiation. • Direct Spend – Direct spend accounts for 20% of procurement transactions, and 80% of the total spend. These items have to have mandated traceability, strict adherence to rigid specifications and are considered a critical or strategic buy. These items must be purchased from a certified supplier. The certification can come from the ADF in the form of a preferred supplier mandated from them, or for BAL to certify the supplier themselves. 2. Supplier Management
Our goal of rationalizing the number of suppliers from 1,300 in 1999 to 800 in 2002 has enabled us to start the implementation of more in depth supplier management practices at BAL. The ADF mandated requirement of traceability of “fly-away” parts has initiated