The Role of Strategic Sourcing on Operational Performance of Maintenance, Repair & Overhaul (MRO); The case of Ethiopian Airlines Group
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Date
2019-06
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Addis Ababa University
Abstract
Strategic sourcing concept and practice is growing at a rapid rate throughout the world because organizations view it as a way to achieve strategic goals, improve customer satisfaction and provide efficiency and effectiveness to operations. This study was guided by the following general objectives: to investigate strategic sourcing current practice and its effect on ET-MRO’s operational performance. Both descriptive & explanatory research designs were used to conduct this study. The target population for the study were the employees of Ethiopian MRO business unit and procurement & supply chain management team which are under chief financial officer of the Ethiopian Airlines Group. A sample size of 117 employees, were selected for data collection through questionnaire and additional 5 employees both from management and non-management staff were randomly selected for customized interviews. The collected data from questionnaires and interviews were analyzed using SPSS. To test the validity of the research instruments, the researcher sought expert’s opinion from two senior management employees who were not included in the final study and a reliability test was also done using SPSS. The findings from the study were presented in detail using both descriptive as well as inferential statistics. The finding indicated that a gap between strategic sourcing best practice and Ethiopian Airlines current practice especially on supplier selection and management, contract management as well as total cost of ownership consideration. 83% of respondents agree to the question “luck of alignment of strategies while selecting part and service suppliers”, showed that selection of suppliers based on company strategy lucks alignments. Based on the respondent’s response to the questions and summarized results on the three strategic sourcing functions, the study concludes that ET-MRO’S operational performance is affected by the current strategic sourcing practices. The study pointed out opportunities for improvement on enhancing strategic souring practices. Accordingly, recommendations are provided both for practice and for future studies targeting better operational performance.
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Strategic Sourcing, Operational Performance,, Supplier Selection, Contract Management,, Total Cost of Ownership