Special Decision – Purchasing policies (Change of supplier)

Area – Air Nimbus currently works with “Vest Brothers” providing expendable supplies such as Oil, tires,
hydraulic fluids, and other non-engine related parts. However, Air Nimbus has received a bid from
“Apex”, a competing firm.

Title – Chief Financial Officer

Rationale – It was strongly suggested by the Chief Financial Officer to switch to Apex due to the
following reasons.

 Compared to our current Vest Brothers contract, switching to Apex Suppliers will save an
estimated $10,000 yearly on consumable parts. These ongoing savings bolster Air Nimbus' cash
flow. The cumulative cost reductions add up over time, helping us achieve our target profitability
and stabilize the balance sheet. Moreover, efficient supply-side budgeting releases funds for
other smart investment projects. Apex's reasonable pricing plan provides essential financial
flexibility during this important period of turnaround. Transitioning contracts are strongly
supported by the $10K efficiency gain, since decisions are made based on performance impact.
 Implementation of Electronic Data Interchange would save costs in the long run since this
technology implementation reduces lost or misplaced supplies and parts by 10%.

Title – Chief Operating Officer

Rationale – Chief Operating Officer agreed with the points mentioned by CFO, and the following points
were mentioned to strengthen the view on why Air Nimbus should switch to Apex.

 The implementation of Electronic Data Interchange would reduce the time spent searching for
misplaced inventory and parts by 10%. Furthermore, EDI analytics enable the operations team to
more accurately forecast and plan for future material requirements by gathering extensive data
on historical use and open orders. A considerable decrease in expedite costs will result from
more accurate planning (Benjamin, , De Long, & Scott Morton, 1988).
 Working with both the suppliers will become an issue, since high amounts of resources needs to
be spent to standardize both Vest brothers and Apex’s working methods. For instance, Vest
brothers does the operations manually, but Apex uses EDI. This would complicate the process
and would prove difficult to standardize the process across both the suppliers.

Title – Chief Executive Officer

Rationale – We carefully examined Apex's offer after Vest Brothers refused to match pricing from rival
bidder Apex Suppliers. Together with enhanced customer service and expedited ordering via cutting-
edge Electronic Data Interchange, they promised $10,000 annual savings. Even though we cherish our
long-standing partnership with Vest Brothers, it makes sense to test Apex's offering while reducing risk
(Stephan & Gunther, 2006). There is a 30-day cancellation policy in the Apex contract. This trial
foundation makes it possible to evaluate service delivery and cost aspects simultaneously. Decisions will
be made not only based on price but also on the whole value proposition to our airline. Optimizing
operational performance is still our responsibility, whether we use current or new vendors.
Title – Chief Human Resource Officer

Rationale – Long-term staff productivity will increase, and inventory management will be optimized by
the new Electronic Data Interchange (EDI) system. Nevertheless, overcoming the short-term obstacles of
implementing new workflows is necessary to realize these benefits (Izak , Albert, & Charalambos, 1995).
The Chief Human Resource office has proposed to provide employees with extensive EDI training
packages to facilitate the transition. While acclimating to the system may take time, staff members who
receive focused training will be equipped with the knowledge and abilities to fully utilize EDI. Making
education a priority now enables workers to turn obstacles into future productivity advantages.

Title – Chief Marketing Officer

Rationale - By replacing uncertainty and inefficiency with dependable visibility, EDI deployment enables
our staff to concentrate more on productivity and astute supply chain planning and less on paperwork.
The implementation of EDI helps us achieve our overarching objectives of cost control and performance
optimization by promoting consistent improvements in these operational domains. Over time, the
system pays for itself through improved staff utilization and immediate savings. This leads to increased
service quality and reliability of services provided to the customers (Izak , Albert, & Charalambos, 1995).

References
Benjamin, , R., De Long, D., & Scott Morton, M. (1988). The Realities of Electronic Data Interchange: How
Much Competitive Advantage? Center for Information Systems Research, MIT.

Izak , B., Albert, S. D., & Charalambos, L. I. (1995). Electronic Data Interchange and Small Organizations:
Adoption and Impact of Technology. MIS Quarterly .

Stephan, M. W., & Gunther, F. (2006). Supplier switching decisions. European Journal of Operational
Research.