Air New Zealand moves to longer-term deals

29 October 2014

Air New Zealand is building strong supplier relationships and developing longer-term deals to combat pressure on the industry brought about by new technology and stricter safety regulations.

Roger Gray, the airline’s group general manager, business performance group told delegates at the CIPS Australasia 10th Annual Conference in Sydney this month, that the company was looking for “innovative ways” to deliver total cost of ownership with supply partners.

He was presenting on the company’s new aircraft programme and its journey to having a transformational fleet.

Air New Zealand recently purchased a new fleet, which included the 787-9 Dreamliner and the A320neo. The company is receiving 10 787-900s between now and 2016 and has bought 12 A320neos commencing delivery in 2017. The procurement team was responsible for sourcing Buyer Furnished Equipment (BFE) including seats, galleys, in flight entertainment (IFE) and safety equipment, as well as maintenance deals and parts.

“We rely on our support partners to bring us the latest insights into innovation and development,” he said. “We will continue to develop deeper and stronger relationships with our suppliers and strategic partners. We are looking to move from annual or two year supply contracts that are price driven to longer term contracts, five to 10 years in some cases, which focus on joint value creation and minimised through life cost.”

Gray explained that staff work in cross-functional teams, facilitated by ‘continuous improvement’ practitioners, who conduct reviews to identify and eliminate sources of waste.

“In addition, we work closely with our sales partners to ensure we have a competitive and effective product our passengers will love,” he said.

New technology also hugely affects the role of procurement and the supply chain, Gray explained. “Technical procurement in IFE, BFE and the maintenance sector requires strong technical understanding, but even stronger relationships with our leaders in maintenance, engineering and more broadly, to ensure we deliver what they need.”

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