Reducing the Delayed Lead Time of Purchase Requisition to Purchase Orders for Standard Part Commodity in the Procurement Department of the Avionics Sector

Abstract

The efficiency and effectiveness of procurement processes perform a critical role in the smooth operation of organizations, particularly in industries with intricate supply chains, such as the aviation sector. This thesis focuses on the delayed lead time of purchase requisitions to purchase orders for standard part commodities inside Procurement Department. Through a comprehensive analysis of the procurement workflow, data collection, and interviews with key stakeholders, this study aims to identify the root causes and consequences of the delayed lead time in the procurement and also determine the best strategy supply chain for the procurement department. The root cause reveals several factors that contribute to the delayed lead time, such as ineffective and inefficient processes, manual working procedures, particularly in the negotiation and evaluation process between buyer and Supplier, bureaucracy in the document, poor in managing and updating the data of requirements supplier, no back up for new prospect supplier, and a lack of monitoring and communication between internal and external departments. Furthermore, the consequences of this delay include delays in following processes in other departments, increasing the potential of product delivery delays to clients, and affecting customer satisfaction. Based on the findings of these studies, several business solutions have been proposed to address these challenges. The conclusion of the entire analysis process is the implementation of e-procurement with a vendor management system. By implementing these suggestions, the Procurement Department significantly reduced the lead time by 65%. The benefits obtained lead to increased operational efficiency, reduced possibility of product delays to consumers, and increased customer satisfaction.