One of the interesting stories to emerge out of Heathrow Airport’s Business Summit last week was their plans for an overhaul of their supplier relationship management and the implementation of a category management approach. It’s all to assist their pursuit of £600m efficiency savings in operating costs which the airport insists is not going to come about by squeezing the margins.
The general approach the airport is taking is to simplify their entire supplier base. In an interview with supplymanagement.com, Heathrow’s procurement director Ian Ballentine summed up the current situation thus: “What we have found already is that we have a disaggregation of suppliers in certain areas where [we] would rather [there were] a lot fewer, or we’ve got people going off buying things differently to other parts of the business.”
It’s not difficult to see how that situation came about with such a huge, complex organisation that operates 24/7 to deadlines that would bring a journalist out in a cold sweat, but fortunately Heathrow have the resources and the expertise to hand to address the issues. Merely identifying them is a step many large businesses struggle to take, so at the very least, Heathrow will now have a procedural foundation to base future supply decisions upon.
The procurement arm of Heathrow is also in learning mode, engaging with the many SMEs they deal with to see how they cope with their own supplier demands. It’s easy to get into a mindset of assuming that any big business closely aligned with the infrastructure of a whole nation must necessarily do things in a different, more complicated way than small enterprises. But in reality, systems that work at the smaller scale often translate much better than expected to large companies, and smaller businesses are better placed to try them out. Some systems may indeed fail, but there is much to learn from any eventuality before scaling up to the largest and most critical operations. The secret is to always be open to ideas, and Heathrow are showing that their procurement operation is just that.