Stakeholder engagement key to British Airways savings

13 October 2011

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13 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 been bought.

He said:

“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.

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