1.

What are the benefits of the e-procurement systems for the

Airlines Purchasing Department?

Due to less stock, the inventory cost is reduced

Request for Proposal and Request for Information cost is
reduced and so is the transaction cost
Market availability in increased
Improved order accuracy
Reduction in order cycle time
Reduced procurement time
Reduction in the purchase price
Real-time availability of standard & ad hoc purchasing information
Improved supplier data and price visibility
Improved format of product with more information as well
Personalized information to meet individual/departmental requirements
Centralized negotiation of prices from preferred suppliers
Improved supplier and spend information in accessible format (info on
new suppliers)
A More structured supplier-management portal
A more efficient supplier sourcing process with additional value
addition

2. Mention the concerns of key managers in Cathay Pacific regarding

the e-procurement system implementation?

Major concern- How to find a suitable inventory management system

for CxeBuy (previously supported by EMPACS)
Integration of external systems with the e-marketplaces
Creating a database- for example; spend and supplier preference data,
sales and inventory data
Obtaining approval from all the procurement departments for
implementing new systems.
Streamlining of number of suppliers involved various parameters to be
taken into consideration, hence it was highly time consuming
Setting Proper demarcation of ability to get to indexes, spend limits
and so on and furthermore approval structure which was to be chosen
There was an issue of varying ordering and restocking process for
different categories or also between items of the same category
Smooth integration of CXeBuy with the EMPACS and FMIS was reqd. for
the purchase requisition process to be linked with the goods-receiving
and goods-payment processes

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

benefits?
 Cost and benefit analysis method can be used:

Cost Benefits

9-14 months of 8 Cathay Inventory reduction of about

staff and 8 PWC staff
required full-time
19 external consultants
and Oracle specialists to
be posted
Internal and external
communication channels
Hardware and software
required
US$10 m
Integration of requisition and
payment process
Automation of the non-
technical purchases (US$385
m)
Leveraging of corporate
buying power
More information on
expenditure and the supplier
performance is available
Quantifying the improved
order cycles by improved
order accuracy, order time
etc.
Easier for user to use and
understand

Ordering time from different departments and corporation as a whole can

be analysed and amount of time saved should be calculated

4. How can Cathay use the Balanced Scorecard technique to

measure the short term and long term benefits delivered by
CXeBuy?

Balanced scorecard method can be used in following ways:

Integrating the procurement process with the overall business process
Analyzing the financial gains in terms of cost reductions in Inventory,
staffing, etc.
Measurement of the satisfaction levels of system users in terms of time
taken in routine mundane tasks
5. How can Cathay's e- Procurement strategy contribute to its
mission?

Mission To implement a 14 month project aimed at applying Internet

based technology to build the most efficient purchasing process and
capability in the industry
Cathay e-procurement strategy can contribute to its mission in the
following ways:
Reduction of delay of any form via printing, signing or handling
The overall cost per transaction reduced by 59.66 % and the average
time for the entire P O transaction is to reduce (by 58.09 %), thus
adding value to the company
Tool to automate and speed up requisition and procuring process
Central budget can be decided by top management and allocated in
the beginning to the different departmental heads
No raising of tickets for orders, i.e. decentralization of the process with
better control in the hands of respective departments
Availability of few purchasing people to focus on other strategic tasks
Streamlining of delivery of goods for respective departments, hence
eradicating the need for employing a distribution control separately