ESMT Case Study
British Airways: A Journey in Procurement Transformation
Q1 In the case what are the challenges faced by the procurement group in coming 2 years ahead? There are several challenges the procurement group faced between 2004 and 2006. First of all, keeping up with the success of the past years, especially the cost and performance improvements and also keeping investors happy (constant increase of share price since the beginning of 2003). Secondly, the procurement group was to face challenges when rationalizing the number of suppliers, building cross business conformity to develop a uniform sourcing process, reduce spending and leveraging it. The roll out of additional tools of Ariba’s spend management solution, which was supposed to cover all spend categories was another challenge. Since it in the beginning only consisted of a small group of suppliers extended over the coming month, which might lead to difficulties when trying to increase conformity with preferred suppliers. Those shall be decreased to 2000, which will make it easier to manage them and also to develop proper sourcing strategies. However integrating the different Ariba system tools represented another challenge, and was important to make sure that orders are based on the same agreed terms. Furthermore the procurement group planned to adjust catalogues. The challenges it faced here were to make ordering simpler, support transactions with preferred suppliers, decrease invoice mismatches, speed up approvals and advance requisition accuracy. In addition to this another future challenge was to rollout to overseas operations and subsidiaries. This would mean another reduction in employee headcount in other divisions and could lead again to resistance to change amongst employees. Therefore change management would be an essential tool to tackle this challenge, while the technical part of the roll out should not be a problem.
Q2 What were the...