Sourcing Review Process

1. Sourcing Review Process When engaging in a complex sourcing project, it is important to have ongoing reviews with Procurement leadership. Each step below represents a leadership review: 1 2 3 4 • Create a bid/negotiation strategy (ppt.), include: • Product/service information, market data (including what OAL’s are doing, market share of each supplier, competitive landscape), annual VOB, projected savings etc. • Bid list, including key information on considered suppliers • Timeline for completing strategy • Impact of RAP and approvals for any changes in specs • Once bids are received, perform initial analysis comparing the following between suppliers: • Product/service being offered by suppliers • Total cost of ownership (TCO) • Any risks associated with selecting each supplier • Must be reviewed with Procurement leadership before Internal Customer • Analysis should be updated throughout the negotiation process • Should show any changes in price, or product offering • Any updates on risk profiles • Any Internal Customer feedback • A Term Sheet should also be created which provides a comparison of key contract terms each supplier has agreed to thus far • Present final analysis with recommendation • Term sheet with any remaining open items highlighted • If supplier is not the incumbent, prepare a transition/ implementation strategy • If recommendation approved, prepare a contract folder which includes: transaction summary, appropriate sign-offs per RAP, final contract Prior to sending RFP/engaging supplier in negotiations Bids received / Suppliers engaged After each major negotiation round or significant development Recommendation ready for review American Airlines Procurement - Proprietary & Confidential