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Building procurement capability through transformation Jane Harley, Chief Procurement Officer Qantas Group
Building procurement capability
through transformationJane Harley, Chief Procurement Officer
Qantas Group
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Australia &
New
Zealand
Japan
Singapore
Vietnam
Hong
Kong1
Price sensitive segmentPremium business and
leisure travel segment
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10.7 million Members
1. Jetstar Hong Kong operations subject to regulatory approval
Targeted to diverse customer segments and marketplace
Group multi-brand structure
PROCUREMENTFY15 FACTS
ICT Services and Supplier ManagementTeam help manage a portfolio of $280M (including Amadeus)
Top 5 suppliers represent 66% of spend
Help manage > 500 current agreements across ICT
3,756 Purchase Orders placed
Supporting 55% of all ICT projects
$10.35 Billion
12,031 SuppliersQantas spends $10.35
billion per annum procuring
goods and services from a
pool of 12,031 suppliers.
103 destinations
23 CountriesThe number of locations
Qantas flew to (excluding
codeshare)
Engineering Supply
Chain8.9m items in stock across 125k
active part numbers
50k Purchase Orders placed
>5 million movements of parts
per year (this is based on both
usages and UCRs)
20k Repair Orders placed
>450k Part requests (Demands)
from engineers/internal
customers fulfilled
TOP 100
Our top 100 suppliers
accounted for 79% per
cent of total spend
TOP 500
Our top 500 suppliers
accounted for 95% per
cent of total spend
11.5m lounge visitorsAlmost 12 million visitors entered
our lounges during FY15. 9.5m
through our Domestic Lounges &
2.0m through our International
Lounges.
$3.90 Billion in
FuelOf our total spend, $3.94
billion was spent on fuel.
An A380 uses 360,000 litres
of fuel on a SYD-LHR flight
sector
5 Million ItemsOver 5 million items are loaded
onto our aircraft every day.
Qantas prepared 34m meals
for 24m passengers. Over
74,000 litres of champagne
was served on Qantas flights
last year.
7.7 YearsThe average aircraft fleet age is 7.7 years.
Fleet types reduced from 11 to 9 with the
exit of B734 and B767.
4 out of 6 non-reconfigured B747 aircraft
were retired
Fleet size
Qantas - 211 & Jetstar - 88
854,451 InvoicesQantas paid 854,451 invoices in FY15.
500,000 NightsEquivalent annual accommodation
requirements for Qantas flight & cabin
crew world wide. 170,000 or 34% of
which were in 2 ports, Los Angeles and
Dubai .
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‘Feels like home’
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Qantas Group in global context
North America
2015 profit $13.2b
Passenger Growth
+3.3%
Total Passengers
in 2034: 1.4b
Latin America
2015 Profit $1.0b
Passenger Growth
+4.7%
Total Passengers
in 2034: 605m
Africa
2015 Profit $0.2b
Passenger Growth
+4.7%
Total Passengers
in 2034: 294m
Asia Pacific
2015 Profit $5b
Passenger Growth
+4.9%
Total Passengers
in 2034: 2.9b
Europe
2015 Profit $4.0b
Passenger Growth
+2.7%
Total Passengers
in 2034: 1.4b
Middle East
2015 Profit $1.6b
Passenger Growth
+4.9%
Total Passengers
in 2034: 383m
1. Source IATA, ‘Airline Profitability Improves with Falling Oil Prices’, 10 December 2014. Net post tax profits in USD. 2. Source IATA ‘New IATA Passenger Forecast Reveals Fast-Growing Markets of the Future’, 16 October 2014. Annual forecast growth refers to average annual growth.
Global Airline Profit1 in 2015
& 20-Year Passenger2
Forecasts
Continued delivery of business transformation
• All targets to date met or
exceeded with $875 million
benefits to be realised by FY15
• Most challenging initiatives
front-loaded
• Around $600 million of
remaining $1.1 billion benefits
are already in implementation
phase
• Decisive factor in our
performance is transformation
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Our focus through transformation
• Sustainable change
• Focus on superior service,
investing in customer product
and innovation in the air and
on the ground
• Restructured network around
global gateways
• Leveraging and activating
deep customer insights
• Driving cross-brand loyalty
• Increasing productivity
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Procurement’s contribution to transformation
• Laid the foundation for
change in 2012
• Helping the business
get the most value out of
what we buy and how
we buy it
• Embedded into
business strategies
• Agile, adaptive
CIPS CONFERENCE 2015
How we deliver valueCIPS CONFERENCE 2015
1. Partnering with the business
2. Streamlining our processes
3. Investing in our people
Aligning with our business’ goalsCIPS CONFERENCE 2015
• Feedback
• Familiarisations
• Physical integration
• Language
• Tracked benefits
• Collaboration
• Value delivery
• Consistency
• Invested in the basics
• Complemented
technical skills
• Procurement
Capability Framework
Partnering with our
business
Streamlining our
processes
Investing in our
people
Case study: aircraft utilisationCIPS CONFERENCE 2015
Case study: partnering with EmiratesCIPS CONFERENCE 2015
Case study: QF100CIPS CONFERENCE 2015
Case study: international economy diningCIPS CONFERENCE 2015
Case study: Perth loungeCIPS CONFERENCE 2015
Case study: Spend AwareCIPS CONFERENCE 2015
• Spend Aware program will drive sustainable
procurement cost reductions across the Group,
with ~$2bn spend in-scope
• Key objective is to transform our supplier approach
- Improve forecasting to control spend
- Strengthen enforcement of supplier charges
- Enforce spend decision upfront, not after the fact
- Manage suppliers across Group, to leverage scale
• Key enablers
- Improve business process and technology
- Implement behavioural and cultural change
~$30m
Benefits realised by FY17
Reduction in number of
suppliers
Spend Aware Program: Sustainable Cost Reductions
• Sourcing
• Contracting
• Procure to Pay
Solid base of
procurement
skills • Business
partnering
• Business
acumen
• Planning and
project
management
• Stakeholder
engagement
Capability
development• Strong talent
pool
• Development
opportunities
• Integration
and innovation
Leadership
What have we learnt?CIPS CONFERENCE 2015
Three key take-awaysCIPS CONFERENCE 2015
Practical ways to ‘make it stick’:
1. Collaboration is key
2. Transform for ‘match readiness’
3. Invest in building capabilities beyond procurement because
procurement is a business skill.
Thank you
