Beyond Cost-Cutting: How Smart Procurement Transformed an Airline
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In the world of airlines, cost-cutting is often seen as the go-to for financial health. But what if I told you that smart procurement can achieve far more than just savings? Let’s dive into a real-life scenario where strategic procurement transformed operations for an airline, revealing its true potential.
The Money Drain
Picture this: a famous airline, listed internationally but mainly state-owned, is struggling financially. One major money drain? Overseas hotel accommodations for both its technical and cabin crew. Management and crew unions are locked in a heated dispute over this issue, each side stubbornly holding its ground. This was just one of the big issues adding stress to the company, threatening the airline’s recovery and even its survival.
A Fresh Approach
Fixing this wasn’t just about finding cheaper hotel rooms. It required a complete overhaul of the airline’s procurement approach. This journey involved analytics, relationship management, problem-solving, and even human resources – way beyond the usual procurement tasks.
Bringing Everyone to the Table
Collaborative Workshops: We kicked off with a series of workshops that brought union representatives and management to the table. The aim? To align everyone’s interests and create a shared goal beyond just negotiating prices.
Creating a Weighted Hotel Assessment Matrix:
Together, we developed a weighted assessment matrix to evaluate hotels based on crucial factors like location, safety, amenities, and cost. This matrix applied weightings to assessment criteria, for example, giving more importance to health and safety issues over proximity to amenities. Involving the crews in developing the assessment criteria and then having them carry out the assessments, supported by me, transformed ownership of the process and the outcome for those staying in the overseas hotels.
Global Hotel Tours:
Armed with our matrix, we took union reps on a “hotel shopping” tour across continents. This hands-on approach helped make informed decisions and built trust along the way.
The Results
Big Savings: By choosing hotels strategically and negotiating smartly, we slashed overseas accommodation costs significantly.
Happier Crew: Involving crew members and union reps in the process made them feel valued and engaged, leading to a more motivated workforce.
Better Relationships: The project turned contentious relationships into cooperative partnerships, paving the way for future collaborations.
Why It Matters
This story shows that strategic procurement is more than just buying stuff. It’s about understanding what the organization needs, managing stakeholders, communicating effectively, and having a vision that brings everyone together. In this case, smart procurement not only saved money but also played a key role in improving the company’s overall health and employee satisfaction.
The Big Picture
It’s important to note that this project was not the sole factor in turning the airline around. It was part of a broader series of strategic procurement initiatives that the airline employed experts to facilitate. These projects collectively contributed to the airline’s recovery and long-term success.
Strategic procurement isn’t just a support function; it’s a crucial business skill that requires a wide range of abilities and a deep understanding of business dynamics. As shown by this airline’s experience, when done right, it can lead to amazing transformations that touch every part of the business.
Get in Touch
Curious about what strategic procurement can do for your organization? Contact us at Hospitality Haus and discover how we can turn your procurement challenges into strategic opportunities.
In an industry where every dollar counts, this case demonstrates how strategic procurement can be a game-changer. It’s not just about cutting costs—it’s about creating value, fostering collaboration, and driving organizational success. So, the next time you think about procurement, remember it’s not just a back-office function. It’s a strategic powerhouse that can shape the future of your business. Ready to transform? Reach out to us today!