chris hughes – cpo, heathrow
TRANSCRIPT
TRANSFORMING PROCUREMENT
TO TRANSFORM HEATHROW Chris Hughes de
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‚WITHOUT CHANGE THERE IS NO
INNOVATION, CREATIVITY,
OR INCENTIVE FOR
IMPROVEMENT‛ WILLIAM G. POLLARD
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1. HAVE A
COMPELLING
STORY
3. BUILDING
ENERGY &
EMPOWER
KEYS TO SUCCESSFUL CHANGE…
2. CREATE THE
CULTURE &
COMMUNICATE
4. MAKE IT
STICK &
MEASURE IT
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HEATHROW’S VISION IS
TO GIVE PASSENGERS
THE BEST
AIRPORT
SERVICE
IN THE
WORLD
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WE’RE IN THE MIDDLE
OF A GLOBAL RACE FOR
CONNECTIONS TO GROWTH de
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REALITY CHECK…
2012 - procurement
embedded in business
units across Heathrow
‚too tactical‛
‚process and performance are inconsistent‛
‚adds little value to the bottom line‛
‚too focused on major capex performance and not enough on opex savings‛
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A COMPELLING CASE FOR CHANGE
“ Higher passenger expectations ” want more from Heathrow and our partners
“ New settlement ” tough new savings targets
“ BAA was gone; long live Heathrow ” new bolder vision and priorities
Our business is changing
“ Economic and supply chain developments
“ New technologies and innovation
“ New regulation - EU procurement and CAA
Our markets are changing
“ Completely new organisation structure ” 3 teams into 1 team
“ Nearly 50% of team will be new starters
“ Less reliant on external consultants
Our team is changing
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WE CREATED AN EXCITING
VISION FOR OUR TEAM
…TOGETHER
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OUR TEAM VISION IS TO BE AN INTEGRAL PART OF HEATHROW’S SUCCESS
OUR PURPOSE IS TO CONNECT THE BUSINESS AND SUPPLY CHAIN TO DELIVER OUTSTANDING VALUE
AND TO MINIMISE RISK
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START WITH THE BENEFITS
Greater agility and flexibility across the team
Compliance with regulatory or legal requirement
Improved contracting capability
Better procurement strategies
Greater alignment across the team
Stronger organisation and culture
Improved sourcing capability
Greater alignment with the business
Greater effectiveness in procurement process
More resilient procurement team
Greater efficiency in procurement process
Programme Benefits
Improved
EFFICIENCY in
organisation and process
Improved
CAPABILITY in
sourcing and contracting
Improved
ALIGNMENT across our team
and with the business
Success Measures Procurement Targets
• Deliver and embed £275m EBITDA saving
• Deliver a sustainable return on investment (ROI) of 7:1 per year
• Lower procurement operating costs by 25%
• 75% supplier spend managed through SRM programme
• 100% of category strategies rolled out
• 90% of opex spend compliance through framework or core agreements
• Engage and invest in our team (80% Pulse score)
• Procurement service partner of choice (3.5 out of 5 score)
• Client of choice (3.5 out of 5)
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TARGET OPERATING MODEL (TOM)
B. CREATE THE VISION & PURPOSE
C. DESIGN THE TARGET OPERATING MODEL
D. BUILD THE CHANGE PROGRAMME
A. TOM FRAMEWORK
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TOM STRUCTURE ” ‚WHAT WE DO‛
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TOM PRINCIPLES ” ‚HOW WE DO IT‛
Performance
Processes People
• Value focused – embedding whole life cost
• Operating strategically upstream • Greater empowerment / capability in Business • Easy to do business with (inside and out)
• Leading edge procurement thinking • Intelligent “real-time” information • Effective contract management • Increase usage / compliance of our agreements • Visible, stable workbank for our Suppliers to access
• Embed commerciality into business decisions
• Single way of working across Heathrow
• Clear accountabilities and responsibilities
• Simple risk based processes and governance
• Smarter and standardised tools and templates
• Better quality control and management
• Build a greater skill base – depth and breadth
• More knowledge sharing (inside and out)
• Focus on team empowerment, support, recognition and fun
• Grow and develop our people with clear succession plans
• Create greater team flexibility and responsiveness
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IDENTIFY THE PERFORMANCE GAPS
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Pro
cure
men
t Tra
nsf
orm
ation
Pro
ject
s
Pro
ject
wo
rk s
tream
s
Improving our team
Team values and behaviours
Team development
Lean and agile team
Improving business
engagement
Better business engagement
Better procurement planning
Aligning ways of working
Improving contract and
supplier management
Supplier relationship management
Performance management
Contract management
Improving supply chain engagement
Supply chain engagement
Win support for expansion
Extended supply chain strategy
Improving procurement
strategies
Procurement strategies and knowledge mgmt
Whole life cost management
Outsourcing strategy
CREATE THE PROGRAMME
Improving procurement operations
Process and governance review
Business self-service procurement
Other efficiency opportunities
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MANAGE THE PROGRAMME
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LEADING CHANGE IS LEADING CULTURE
OUR PROCUREMENT TEAM CULTURE
OUR PROCUREMENT COLLEAGUE SUPPORT FRAMEWORK
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SHARE THE OUTPUTS AND LEARNINGS
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• Stronger engagement across our team (20% improvement in team ‘Pulse’ score) • Greater agility and flexibility across the team supported by more training and development • Greater team resilience supported by the new health and well-being initiatives
• Stronger engagement with our business partners (18% improvement in service score) • Improved strategic procurement capability from better category strategies, stronger customer
account management, enhanced SRM, and improved contract performance management • Great efficiency and effectiveness in procurement operations, systems, processes and controls
• Significantly improved functional return of investment (ROI 1.5:1 in 2012 to 15:1 in 2015) • All major contracts renegotiated and 8 new strategic partnerships created • Exceeded opex cost reduction savings targets for 2013, 2014 and 2015
• Increase Airport Service Quality supported by new strategic partnerships • Multiple winner at the Skytrax World Airport Awards 2016 supported by new strategic partnerships • Procurement team core within the Heathrow expansion programme organisation and strategy
MEASURE YOUR SUCCESS
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CELEBRATE YOUR SUCCESS… de
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WORKING TOGETHER TO GIVE
PASSENGERS THE BEST AIRPORT SERVICE
IN THE WORLD
Contact details: [email protected]
www.linkedin.com/in/chrishughes-connect
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