Swissport is implementing a “no PO, no pay” policy in a bid to stop people buying outside the procurement policy.
Procurement at the firm used to be like the “Wild West”, said CPO Reiner Orth, so Swissport started rolling out a cloud-based system globally to rein in maverick spend.
As part of measures to encourage compliance Orth said he has implemented a policy of not authorising payments unless a purchase order has been logged correctly.
He said the policy needed to have “appropriate” corrective measures, when people don’t comply with the policy, that escalate for repeat offenders.
“No PO, no pay is a process of escalation. It’s not our intention to penalise people that bypass the system, maybe it happens because we did not inform them properly or train them properly. But if you do see that some people behave in the same way multiple times, then you need to think about consequences,” he said.
Speaking at the Ivalua Now conference in London on Tuesday, Orth also said it was “most important” to have the company board or CEO behind such a policy to make it work.
The introduction of a cloud-based procurement system is part of a procurement transformation Orth is heading at the firm. The new system has been rolled out in Brazil and Orth said it should be operational in the firm's top 10 countries by the middle of 2019, with the rest following.
Swissport, which provides airlines with a range of ground support services including passenger check-in and aeroplane refuelling, had a “greenfield” procurement department when Orth joined in October 2017. The procurement department only managed 30% of spend and all invoices were paper based and manually entered into the computer system by a team of 20 people in the finance office.
Improvements have meant procurement is no longer just a “reactive” department but it is still far from being high performing, said Orth. Even now where the online procurement system has not been rolled out many purchases are made directly to the supplier by the end user over the phone.
“The reality at the moment is people at our airports, when they need a new tool or a new vehicle they pick up the phone and call the supplier,” said Orth.
The cloud system, supplied by Ivalua, provides an end-to-end procurement process including supplier sourcing and procurement-to-pay. Orth hopes it will end the practice of end users making direct purchases. “Every purchase order from now on has to go through the system, no telephone purchase orders, everything is restricted, everything goes through the system. This was our decision for such a tool,” said Orth.
The system will also standardise procurement globally, automate processes including invoicing, and improve transparency with the aim of helping procurement increase the volume of spend it has control over. The new system also provides an unavoidable layer of authorisation. “Every paper-based invoice that will now come in, we know exactly that somebody has bypassed the system,” said Orth. “We will see everything.”
There are still challenges. Orth said he would like to expand his procurement team and to close gaps in knowledge and skills levels of people working at different levels of the organisation. There also still needs to be a change in culture within the organisation for the new procurement system to work.
“This is the biggest challenge we face: to educate people that they’re no longer entitled to call a supplier and place a purchase order. Having such a [procurement] tool requires upfront that you define clear processes and responsibilities, this is what we’re currently doing,” he said.
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