Learn What SAP Supported Procurement Needs Airlines Have
So there you are, o’dark thirty and your flight is about to take off. Do you have any idea what types of services a typical airline procures to make that flight happen, besides buying or leasing the plane in the first place?
- Aircraft servicing and cleaning
- Airport aviation security
- Cargo and mail (on/off-airport) including warehousing and document handling
- Catering services
- Executive aviation handling and VIP services
- Flight operations and crew administration
- Irregularity operations support
- GSE (Ground Support Equipment) or AGE (Aerospace Ground Equipment) maintenance
- Load control
- Lost and found facilities and systems
- Operation of airport lounges
- Passenger handling with check-in, gate, departure, arrival and transfer services
- Ramp services including baggage handling/sorting, GPU, pushback and others
- Representation and accommodation
- Surface transport of passengers and crews
- Station control with supervision and administration
As you can see, an airline deals with a large number of procurement items and needs a sophisticated procurement system to support them.
One possible solution for this, which requires some development, is to use SAP’s solution MM External Services Management (MM SRV), an application component within the Materials Management (MM) module. It is able to support the complete cycle of bid invitation, award/order placement phase, and acceptance of services, as well as the invoice verification process.
Airline Service Procurement Cycle
The procurement steps to support these requirements include:
- Determination and recording of requirements
- Determination of possible sources
- Bid invitation procedure
- Entry of data from quotations submitted by bidders
- Comparison of quotations
- Award phase - contracts negotiation
- Create / update contracts (pricing conditions will be derived from the contract)
- Create Release Orders (for each flight)
- Entry of services actually performed
- Acceptance of services performed
- Verification of invoices for services
- Pay vendors (IATA ICH / SIS)
All of these steps both depend on high quality data, i.e., vendor data, product and service data, and externally supplied data via a variety of information channels. As specialist in both airline procurement processes and SAP BW datawarehouses, we see a great deal of potential to improve each of these procurement steps and increase airline profitability through better decision support processes.
Lonnie D. Ayers, PMP
President, SAP BW Consulting, Inc.