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October 2011 | Angeline Albert
Workshops with internal stakeholders will
be key to saving British Airways (BA) £144 million
over the next five years, according to the airline’s head of procurement.
According to purchasing chief Tim
Richardson, workshops will be held with internal business units to generate
ideas on how cost can be taken out of the supplier base.
“We are running these workshops in a bid to
delve deeper to get savings,” he told SM.
“We have taken the usual procurement steps. A lot of the procurement we do is
service-based purchasing. The business units have been coming up with process
change ideas that reduce cost for suppliers.”
”The key is working with stakeholders and
not merely challenging them and seeing a dividing line between procurement and
stakeholders,” he added.
Richardson also chairs the ‘supplier
programme board’, which includes the CFO and other senior directors, who
question him about the steps taken to create more value for customers.
Annual procurement spend at the airline is
between £5 and £6 billion and Richardson controls a team of 95. The company is
investing £5 billion over five years in order to offer greater value to
customers. As part of this, the procurement team has handled the purchase of 24
new Boeing 787 Dreamliners and 12 Airbus A380 aeroplanes.
Oil now makes up 50 per cent of BA’s entire
procurement spend, having doubled in price over the past three years. Richardson
said the rising oil price meant fuel efficiency was the top priority when it
came to aircraft and seat purchases. First-class cabins have been revamped,
catering is being improved and new seats for business class and economy have
“To give customers greater value that they
can see, we are ensuring that back end services are not over-specified, such as
facilities management and IT,” he said.
Richardson is also purchasing iPad 2 tablets
for BA’s 14,000 cabin crew staff. This will drive greater communication between
the company and its staff, many of whom rarely enter a BA building. As well as
accessing internal communications, staff can see passenger data and assist
customers with queries.