Ian Ballentine, procurement director at Heathrow Airport, was offered a seat on the executive committee if he could “reshape” the function within a year of joining the firm.
Ballentine told SM about the deal, struck with the then chief executive, just over a year after he succeeded in the challenge and took his place at the top table.
Ballentine joined the firm in November 2012, and in late 2013 he joined the committee. He said: “I took the job here because the previous chief exec said: ‘I need someone to come on board and really reshape procurement for what I think it can become in an organisation, and if within a year you can demonstrate you can do that then I will give you a place on the board’.”
Ballentine started out in charge of procurement for the operations division of Heathrow, but following his success his role was widened to include the remaining IT and construction divisions in a new merged function. His work revolved around changing perceptions of procurement as being “bureaucratic”, “slowing things down and not adding value” to “really demonstrating the savings off the bottom line”.
“The [savings] we say we’re going to deliver, that money is removed from their [the stakeholder's] budget. We then have to work with the business to deliver it,” he said.
Ballentine has separated the purchasing function into four areas, covering terminal buildings, infrastructure, IT and general procurement. Within each “delivery arm” there are category specialists and “business partners”, whose job is to act as “conduits” between stakeholders and procurement.
“It’s understanding the business requirements, what it wants, and being able to translate that into a good procurement strategy,” said Ballentine. “We are no longer about price, it’s all around value.”
Heathrow has a target to save £600 million over the five years between January 2014 and December 2018, with procurement contributing £275 million, not including capital savings, towards this total.
Ballentine’s strategy is to work with 50 suppliers where they spend 75 per cent of their £1.8 billion annual budget, to reduce costs by working collaboratively. This involves redrawing contracts so both parties are incentivised to cut costs and share in the savings. Areas they are looking at include air traffic control, car parking, bus transport and energy.
He said the key difference a seat on the committee made to procurement was a focus on the supply chain. “I no longer want the supply chain to be seen as suppliers, I want them to be seen as partners of this business,” he said. “If you spend nearly £2 billion a year, you need somebody strategically thinking about that all the time, and they need to help influence the direction of the company.”
Ballentine said a board role required different skills. “You’re no longer just thinking about how to deliver the function, you’re thinking about how you can deliver what’s right for the company,” he said.