British Airways suppliers scrutinised for risk status

18 June 2009

19 June 2009 | Martha McKenzie-Minifie

British Airways (BA) is the latest company to introduce a "supplier watch" scheme in what appears to be a trend for firms to increase their scrutiny of key vendors in the downturn. BT took similar action late last year.

Tim Richardson, head of procurement at BA, revealed the move at AribaLive 2009 World Tour in London this month. He said BA planned to extend its essential supplier list from 20 to 200 and to monitor these closely to assess and predict risk.

The listed suppliers could include businesses used to pay vendors, as well as big strategic suppliers such as BAA and fuel companies.

The airline was considering a daily or weekly report on suppliers' operational health, to be published internally, said Richardson.

At BT, Graham Hanson, vice-president procurement transformation, told SM the company had identified about 100 critical suppliers and was closely watching their financial status.

He said the chief procurement officer and chief financial officers from various BT business lines met quarterly in its supplier watch forum. A weekly update is reviewed by staff "a level below" those four-yearly forums.

"We are doing this to ensure we have an up-to-date view of the financial position of our critical suppliers. Where appropriate, mitigation strategies and plans will be put in place," he said.

Mitigating supplier risk and managing supplier performance is now "one of the main worries for firms", said Ariba president Kevin Costello, referring to a study published last month. Other concerns were identifying savings and automating procurement processes.

SMjun2009

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