Keywords: procurement, bought out items, production delay, local suppliers, stockiest, competitive advantage, total cost of ownership, Pakistan, original equipment manufacturers, OEMs, aviation industry
Competitive advantage of procurement from OEMs and local suppliers in Pakistan aviation industry
Pakistani aviation industry's requirement of components and raw material for meeting customer's orders are of heterogeneous nature. Bought out components used in different assemblies and raw material for manufactured parts are imported. It results into receiving parts which may not conform to specifications due to deficiency in product specifications by buyers and misinterpretation by vendors. Buyers aspire to work directly with the original equipment manufacturers (OEMs) of these spares and international stockiest. Therefore, procurement through vendors is a vital supply channel. Present research is focused on evaluating the competitive advantage of procurement directly from OEMs/stockiest and local suppliers of Pakistan. Procurement data was collected from a number of companies. Analysis showed procurement from local suppliers incurred delays in receiving parts, non-conforming received parts and high prices. Companies that establish direct interaction with OEMs, international stockiest and foreign suppliers on internet and other communication channels did not face these problems.