Working in tandem with the concept of e-business, e-Procurement, a B2B concept, is the online purchase of goods or services electronically. Cathay Pacific's CxeBuy electronic procurement system came into existence at its headquarters in Hong Kong by the end of 2001, across different departments and spend categories. Central to achieving Cathay's e-business vision was the impetus to apply Internet-based tools to building the most efficient purchasing process and capability in the industry. CXeBuy was the first Oracle Internet Procurement (OIP) solution ever implemented by Oracle for an airline. In March 2002, the Australia was identified as the first location to be benefited from CXeBuy as it had the potential of linking its six ports under a common purchasing process and supply base. Japan, with its five ports, was slated to be the next target for implementing this process. Initially Cathay Pacific adopted this strategy in order to be more competitive and to Web-enable the procurement of goods and services for five of the airline spend categories, namely: in-flight service, cargo, information technology, marketing and office supplies. The driving force behind this concept was the perceived potential to network all parties involved with the marketing, distribution, consumption and servicing of a Cathay's business in order to provide opportunities to significantly improve the co-ordination and efficiency of operations (OECD, 2001). The driving forces for adopting an e-procurement system and the salient features of such a system at Cathay are;
Internet is to be used to transmit order information, between Cathay and its suppliers
It was implemented to replace the existing Engineering Maintenance Planning and Control System (EMPACS). EMPACS also the inventory management system, has been around for the last 25 years.
Management felt the need to streamline the requisitioning processes and purchase order approval processes.
Financial Management Information System (FMIS) was used for processing payments and general bookkeeping activities. FMIS carried supplier address and billing information. Both EMPACS and FMIS used to manually key in the address and details whenever new suppliers were added or to change the details of existing suppliers. This manual operation was prone to errors.
Common exchange rates information database was being maintained at SHARE which was used by many departments during their operations. SHARE held many different exchange rate tables like inter-airline billing rates, exchange rates in settling invoices raised by overseas suppliers etc. for the same period at any one time. These exchange rates were being manually updated.
One separate Airline Purchasing Department (APD) comprising 50 staff was functional since 1996 to serve the five major user departments and respective spend categories: Marketing, Fuel Services, Information Technology, Ground Services and In-flight Services. The APD staff was to identify an appropriate supplier, enter the information onto EMPACS and generate a purchase order that was printed through the IBM mainframe located 20 kilometers away from Cathay's head office. Every few days a batch of purchase orders would be physically transported from Quarry Bay to Cathay City, where they would then be distributed to various department managers for approval to purchase.
The approval process in itself used to take a few days with as many as seven approval, validation and distribution steps. Then