Strategic procurement    
Strategic procurement    
Strategic procurement    
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Contents
Abstract    2
Introduction    2
Strategic procurement    3
Sourcing methods and supplier base    4
Supplier Relationship Management    6
Strategic source framework which can lead to procurement excellence and value growth    9
Importance of procurement for MAS operating in complex market environments    10
Driving Procurement Excellence    12
Project Risk and Procurement Management    13
Conclusion    13
References    15
Abstract
Procurement plays an increasingly significant role in supporting big companies to attain their savings and profitability goals. The importance, size, and complexity of company purchases are increasing, so the way companies buy has changed. The leading purchasing firms are taking benefits of several opportunities to influence enterprise sourcing, optimize supply bases, minimize associated costs in a supply chain, as well as to maximize the value of their products and services. This type of opportunities is described in a very systematic strategic procurement framework for services and materials. With an emphasis on shareholder value growth, leaders of industry are turning to innovative business designs in order to capture and to sustain profitable value and growth. Planned procurement can take a new level and be functional to business designs that will impact achievement of corporate revenues and competitive financial positions. This study includes a critical examination of the sourcing methods and supplier base and a strategic source framework which can lead to procurement excellence and value growth is also proposed in this study.
Introduction
Today's procurement is about understanding and manipulating an overwhelming set of variables that can be delivered on time and within budget. The environment is becoming more complex and demanding, so the trend toward how to manage procurement is following this complexity. Recently, the purchase function is considered a written job, monotonous paperwork, dull and inactive, and an administrative function. Purchase manager is a fall person whose only goal is to continue to provide workshops and avoid inventory. The situation has completely changed today. The procurement functions are seen as a strategic initiative as well as are seen as adding more value to the whole business process. The profile of a purchasing manager has changed moreover the expectations of these managers or leaders are different. Contemporary purchasing managers manage procurement and procurement functions at the strategic and operational levels. In addition to performing other functions and ensuring service levels, they actively involved in building supplier networks to estimate, control and reduce costs. Their job functions are gradually interacting with supply chain and manufacturing functions. Procurement refers to the acquisition of materials, supplies, services, and so on needed by a company and a project for successful operations. In these respects, the procurement strategy will refer to a cost-effective approach to the planning of the company's need supplies, also consider several factors for example procurement schedules, budgets and funding projected opportunities and risks.
Strategic procurement
Chosen Organization: Malaysia Airlines System (MAS)
Malaysia Airlines is Malaysia's national airline that operates airline services on the network of domestic as well as international destinations on four continents. MAS’ slogan is “Beyond Expectations”. Through a variety of other subsidiaries, the aviation industry produces aircraft parts, provides freight and cargo transportation services, and provides laundry and dry cleaning services to the aviation industry (Baiden, Razak, and Danku, 2015). The airline industry has become an award-winning airline with more than 100 flying machines providing management services to more than 110 destinations on four continents. The airline system is a globally expanding company that grows as customers demand international coverage. The aviation industry has enhanced onboard services; consistent ground support and better infrastructure will set the standard for the world. After the Malaysia Airlines System (MAS) ceased operations, the procurement team was established after the establishment of Malaysia Airlines (MAB) on September 1, 2015. MAB is part of a large group of companies such as Malaysia Airlines Group ("MAG") (Commission, 2017).
As a relatively new organization that is undergoing restructuring, the task at hand is to:
· Establish a centralized procurement team to support subsidiaries under MAG (the “Group”), which can play an integral role in the leadership journey of Malaysia Airlines.
· As a high-performance procurement organization, it has a significant impact on the bottom line.
Sourcing methods and supplier base
Whether it is trying to increase profitability before the company is able to keep water efficient or doing business, strategic sourcing provides a consistent platform for MAS to increase and to gain profitability. Generally, strategic purchases are primarily related to reducing supplier costs and reinvestment of contracts. General schools of this definition and idea ignore other (usually more important) components of strategic sourcing; this process is customizable. In order to implement an effective strategic purchase plan, strategic purchases should be widely considered, through an improvement in the process and an alternative cost-saving approach through soft cost savings like this. When traditional cost reduction methods are used such as RFP, RFQ or direct interaction with suppliers, and comprehensive assessment of process optimization opportunities results are often higher than expectations. In the cu
ent news, this integrated approach is being used by a company that has been a series of mishaps and ongoing financial crisis - Malaysia Airlines (MAR). MAS have suffered a lot in the last financial year. First, the MH370 flight disappeared in March, and then in July MH 370 Flight crashed in Ukraine (AltanTV and Guinea Pareo, 2013). Both tragedies have increased the financial crisis of MAS in the last few years. Actually, the company lost 770 million pounds in 2013 after such consecutive losses in 2013. Since the name of the
and has recently been at the lowest point in history and the company is in danger of bankruptcy, MAS is working for the deficit by reducing the cost and improving the existing procedures. As we all know, the equipment and services of MASs are more expensive than its competitors. This situation can be used to achieve more competitive prices through direct interaction, and to use RFX programs in indirect and direct content (Ericsson and Weste
erg, 2011), reduce costs through the use of benchmark pricing and quantity Shows an opportunity to do
For example, AirAsia is a famous company in the international aviation market and is notorious for its low ticket prices. The functions listed so far are typical of traditional procurement efforts, focusing on reducing supplier costs, restoring supplier base and reducing operational costs. However, as mentioned earlier, by adopting the overall approach to achieving true strategic sourcing, alternative areas of process improvement and soft cost savings should be considered, often ignored by the purchase, purchase professionals, and category buyers. As an example of this approach, MAR has assessed investment opportunities, although in this case, the company's trend is just the opposite (Gladen, 2012). MAR has started removing Boeing 737-400 aircraft and invested in the 737-800 model, which has high fuel efficiency and low maintenance costs. Apart from this, reconstruction of existing as well as new planes...