The topic of the case was about Operational Management – Procurement process, to be exact. Took a location at Australia, the case told us about one company named Boeing Australia Limited.
What happened to the company (BAL) was the decision whether they should invest in e-Procurement or not – considering the hassle and nazzle that happened during the process – because, interestingly, even though they communicate with their vendors (suppliers) using electronic and automated system, they still have those old papers and pencils at back office.
But then the dilemma arose: If we still could be better off with this kind of condition (manual system), why should we invest in new and expensive stuffs?
Because, my dear friends, when we are talking about new system, it’s all go back to the ultimate question: What’s in it for me? – or how Latin says – Cui bono?
Maybe we could employ the ultimate state-of-the-art system and IT processing, but if in the end it does nothing but loss and send the company to doom, it would be useless. Rather than become a solution, the highly paid IT investment becomes a problem – burden – to a company. Such a bummer.
However, based from the case, the company didn’t invest on the deluxe system – yet. They did what we usually call as ‘sitting at the fence‘. Waiting for alternative system that is cheaper to invest.
Why? Because it would be useless if we invest the expensive system. Whoa, surprise. Here how it works – If we invest in expensive system, automatically it will become our cost too. What? You didn’t think that our oh-so-sophisticated system is not in our cost? Mate, you’re dead wrong. Please consider the maintenance cost – and based from recent class discussion, maintenance cost would be doubled larger and higher than the initial cost that we paid to buy or invest the new system.
And if we have high cost, there are some ways to press the cost, and one way is – God forbids – bear it to the suppliers/vendors/clients – or worse – customers.
How? Why, by pressing down the price that given by the suppliers, buying cheaper stuffs from suppliers or setting expensive price to the customers. If you’re not that ready to bear it all, it would cost you oh so hard and it even knocked your ancestors down. Because my friend, there is a thing that we would say as indirect cost. Yes, fear the word ‘indirect‘. Be afraid. Very very afraid. There is indirect profit, and as the counter-word, there is indirect cost.
That’s why, because the company didn’t want to give the cost to the supplier, they didn’t want to invest into the sophisticated system. Well, actually this kind of thing goes back into the strategy of the company itself. Some companies are didn’t even bother to invest into high and sophisticated system, but then some companies are really cautious.
What interests me most from this case is that the fact that Boeing – despite all the strengths that they have; money, support from government, etc – still that goddamn care to their suppliers. Then I wonder, if they really THAT care to their suppliers, it could be double-care to their clients/customers.
In the end, from the case review I analyzed that based from their SWOT analysis and Value Chain – in a long run they could enter the strategy that more aggressive. Based from the SWOT matrix, clearly that they have strengths and opportunities. In term of weaknesses and threats, they have less – since they have money and supports.
