CEO backing vital to ensure procurement compliance, says BA

26 May 2011

26 May 2011 | Lindsay Clark

Support from the top of the business and monitoring compliance is essential to gain value from purchase-to-pay systems, according to BritishAirways.

Speaking at yesterday’s AribaLIVE 2011 event in London, Trevor Tyler, procurement operations manager at the airline, said it was vital the company’s chief executive backed the system, following the drop in revenue in the wake of the 9/11 terrorist attacks.

In 2001, the UK national carrier introduced an electronic purchase-to-pay system - based on Ariba Buyer - to improve contract spend and visibility, but struggled to get user compliance.

Then the chief executive, Rod Eddington, sent out an edict for internal customers to use the system, known as BA2Buy. “There was one pivotal moment in this whole process in December [2001], stemming from the atrocities of 9/11, where our CEO said that from April 2002, all indirect spend, around a third of our spend, has to go through BA2Buy. It was a declaration at the highest level of the organisation, to the whole organisation, to say, ‘this is what’s going to happen’.”

“People just used it. They hated it, but they used it,” Tyler said. 

Monitoring non-compliance was also a key part of the process. “If an invoice turned up that did not have a purchase order through the product, we were able to take a course of action,” he said.

“We wrote [a letter] to those individuals from the head of procurement, which said ‘you’re breaking our policy, the rules of the company, if you do this three times, you will go through a disciplinary process which could end up with you not working for this company any more.’

“That’s quite a harsh measure, but none the less it works. We get very little non-compliance,” he added.

As a result BA has managed to reduce its costs from more than £70 per transaction, to less than £10. It has also improved spend visibility and allowed the company to get greater benefits from its negotiated contracts, which staff raise a purchase order on.

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