26 October 2010 | Angeline Albert
Virgin Atlantic’s procurement team is on track to make savings “just shy of £10 million” this year following a programme to embed the function in the business.
It builds on the £20 million savings success achieved the year before during a purchasing transformation dubbed “the challenge”.
Speaking to SM, head of procurement Andrew Walker said the work in 2009, addressing £350 million of spend, created a “halo effect” for the team – increasing the perception of procurement following great performance.
“In 2009 our 12-month challenge programme was set up to give us a banner, some momentum and an entry into the business,” he said.
Category management is now embedded in business units. This includes Virgin Atlantic’s products and services division, which buys all the catering and on board food and beverages, as well as supplying the business class lounges. “In January 2008 we did not have a category manager for that, but were all over the stationery contract,” said Walker.
Other measures include a new contracting and purchasing policy, a user guide to help the business understand procurement, a seven-step strategic sourcing method and cost modelling.
This year’s savings target of around £10 million was less aggressive than in 2009, reflecting a greater alliance between business and procurement, Walker said. “The focus is much more on procurement being part of the cost management process of the organisation, rather than the guys we run to when we need to save some money.”
A chunk of this year’s target comes from a high volume of small savings, while the rest will result from a couple of significant initiatives, which Walker could not reveal for commercial reasons.