Flybe case study: How to transport the Back Office - Richard Young, Flybe.
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Flybe case study: How to transform the Back Office An honest case study of the transformation program of the Back Office at FlyBe Learn how Richard and the team managed change to transform HR, Finance and Procurement at one of Europe's largest Airline
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Flybe case study: How to transport the Back Office - Richard Young, Flybe.
- 1. Richard Young, Group Procurement Director 23rd June 2016 Transforming the Back Office
- 2. Agenda Introduction Business update – Saad Hammad Company and Procurement overview Q&A Back to Basics © Flybe 2016 Company Confidential & Proprietary 2
- 4. Flybe - 2016 • Activity: Airline & MRO • Financials: £624M revenue • Number of aircraft: 76 • Number of bases: 10 • Codeshare partners: 9 • Passenger total: c. 8M • Number of FTEs: c. 2300 © Flybe 2016 Company Confidential & Proprietary 4 Embraer 175/195 Q400 Dash 8
- 5. “White label” • Brussels Airlines • SAS © Flybe 2016 5Company Confidential & Proprietary
- 6. Spend Analysis Addressable spend to analyse Credit Cards & Expenses Property / Estates Aircraft Lease Supplier InvoicesExpense Claims Credit Card Purchases Segmentation of spend Define new Segments (#76) Define new Categories (#18)
- 7. Dashboard © Flybe 2014 Company Confidential & Proprietary 7 Payment terms RAG: Metric Flybe BIC No. days XX >30 (average weighted by spend) Metric Flybe BIC £ spend XX% >95% # POs XX% >75% V vendors XX% >50% Contract coverage (What's covered by a contract) RAG: Procurement supported (What’s supported by Procurement) RAG: Metric Flybe BIC £ spend XX% >95% # POs XX% >95% V vendors XX% >95% Vendor spend frequency (Repeat spend vendors vs One-offs) RAG: Metric Flybe BIC £ spend XX% >90% # POs XX% - V vendors XX% -
- 8. People Roadmap Systems & Tools Controls Process FY XX FY XX FY XX Vision Benefits rules defined and deployed Define Contracting process and DoA Risk Mgmt & Due Dilligence tool Review of Business P2P / Transaction Buying Establish sourcing tree and implement in ERP MI: Supplier and spend data analytics P2P – all business areas Develop SRM tool kit Develop Procure ment QMS – process & SOP Define reporting requirement s CIPS accreditation Legal forms – T&Cs and NDA Deploy Sourcing Process Develop training needs analysis Design future organisation structure Define review process and coverage of people Identify critical positions and succession approach Develop resource plan based on task analysis Behaviors and Rules of Engagement Review of current team, skill gap analysis Review of team appraisals and objectives Agree corporate procureme nt policiesAudit of savings Develop Savings audit pro- forma Implement strategy deployment project approach eSourcing: Contract repository Deploy RfX templates Deploy Bid Assessment tool Market research tool Supplier Workshop Establish comms approach (internal and external) Develop supplier portal on website Training deployment – CIPS and otherCategory Management familiarisation Purchasing card policy Deploy centralised P2P Buying
- 9. Operational Model - Contracting support - T&Cs review & approvals - Management of original contracts and repository Legal - Budget and spend approvals - Demand plans - Scope & Spec - Technical assessment - Contract Management (cost control) End User Demand Creation - Lead sourcing process - Negotiations and contract award - Seeks authority to commit (CAD) - Presents contract for signature - SRM Procurement Demand fulfilment Supply Demand
- 10. © Copyright Showeet.com BASIC TERMS “ABOVE THE LINE” = STUFF THAT TYPICALLY FORMS THE INITIAL DISCUSSIONS Brief Specification Term Pricing Quantities Contracting can sometimes be like an Iceberg….. EXTENDED TERMS“BELOW THE LINE” = STUFF THAT FORMS THE COMPLETE CONTRACT Termination Non-exclusivity Warranty Right to Audit Liability Indemnity Confidentiality Intellectual Property Data protection TUPE Sub-contractors Payment terms SLA/KPI CI Auto escalation
- 11. Sourcing Process
- 12. Organisational Structure Company Confidential & Proprietary 12 Director R Young Head of Sourcing M Flanagan Category Manager To be Confirmed Category Buyer A Mcgregor Head of Sourcing K Godmane Category Manager A Mackenzie Category Buyer L Capel Senior Fleet Planning Executive S Gloux Fleet Manager R Flavell Project Manager (part time) B Westbrook P2P Data Controller P Baldwin Estates Controller H Lister Procurement, Estates and Fleet Planning April 2016 Temporary Reporting To be Confirmed Position
- 13. BACK TO BASICS
- 14. Background • Legacy systems • Limited/no integration • Manual processes and spreadsheets • Master data • Reporting • Single points of failure © Flybe 2016 14Company Confidential & Proprietary Procurement Finance HR Planning and Financial Reporting
- 15. Timeline © Flybe 2016 Company Confidential & Proprietary 15 2014 2015 2016 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 RFI RFP CONTRACT PROCUREMENT FINANCE / PLANNING & REPORTING HR INTEGRATIONS & TECHNICAL Key ERP vs Best of Breed decision
- 16. ERP or Hybrid (“Best of Breed”) Decision criteria: – Flexibility – Agility – Time to implement – Total Cost of Ownership – UX/UI Finance HRProcure Payroll Enterprise Resource Planning - ERP DoCs* ERP Option Finance HRProcure Payroll Enterprise Resource Planning - ERP DoCs* Hybrid Option *DoCs – Direct operating Costs PlanningPlanning [Others] [Others]
- 17. The house of B2B Core systems © Flybe 2014 Company Confidential & Proprietary Procurement Finance HR Planning & Financial Reporting
- 18. Wax Digital Functionality and Credentials We have purchased the full Source to Pay (“S2P”) suite consisting: 1. Source to Contract (“S2C”) – Supplier registration – eSourcing (RfI, RfQ, RfP) – eAuction – Contract Approval – Contract Management 2. Purchase to Pay (“P2P”) – Catalogue management – Purchase Requisition – Requisition Approval – Purchase Order – Receipt of Goods & Services – Match invoices and trigger payment (in Sage) © Flybe 2014 Company Confidential & Proprietary 18
- 19. Supply Management P2P – Future state “DOCs” “INDIRECTS” “M&E” Glossary (*) e.g. simulators, flight services M&E Maintenance & Engineering DOC Direct Operating Cost Sourcing Vendor Mastering Contract Management Contract Repository Ground Handling / Operations Hotac (CREW) Airports Navigation Fuel Maintenance services Workshop services Parts (C&E) PbH incl. Rotables Technical publications Tooling Logistics Services Marketing, promo & print IT & Telecoms Consultancy Legal/professional services Finance services HR services Utilities, Rent & rates Subscriptions Insurance Misc operations* Training Fleet finance Office supplies Facilities Work wear Plant Hire Vehicles Each “P2P” manages ordering process, invoice matching and payment trigger to X3 system Taxis Rental cars Accommodation Crew food/RoB Temporary labour Fuels & Oils Document management Material & Services dictionary
- 20. Naming Conventions • UNSPSC (United Nations Standard Products and Services Code) • Standard naming conventions for products (goods) & services • Mostly commonly used convention across multiple industries worldwide • Gives structure to organising spend data • Accelerates sourcing activities Segment / Family / Class / Commodity / Part Number © Flybe 2014 Company Confidential & Proprietary 20 44 10 15 01 44 10 31 03 Segment Family Class Commodity
- 21. What are the main changes? Wax Digital implementation Flybe Suppliers © Flybe 2014 Company Confidential & Proprietary 21 • New supplier registration process (on-line portal) • Purchase Orders subject to approved Purchase Requisitions • Receipting of goods and services • Suppliers consolidation, greater % of contract cover, less suppliers • No invoices to process in EXT • Contract Approvals (CAD) eliminates paper - on-line or app • Advanced contract repository (e.g. alerts for end of term) • MI – suppliers, spend • Structured data – UNSPSC naming conventions • No PO no Pay approach • New invoice process – Off-site handling – Move to e-invoicing / self service portal (we don’t want paper invoices) • New on-line process for sourcing (RfI/RfP/e-Auction) • Self service portal for – Invoice submission – View status of orders/payments – Supplier registration
- 22. Learnings • Specification clarity • Be clear on the end to end process - ‘as-is’ / ‘to-be’ • Data • Training (what and when) • Business change project not an IT project • Internal engagement and strong governance • Change management – communications • Set realistic timescale and budget – build in some contingency • Consultants there to guide but make your own judgements and decisions © Flybe 2016 22Company Confidential & Proprietary
- 23. Q&A
Editor's Notes
- Good morning ladies and Gentlemen. Welcome to Flybe’s presentation of its full year results for the year ending 31st March 2016. I am Saad Hammad, CEO of Flybe and co-presenting with me today is our CFO Philip de Klerk
- I am going to kick us off with an introduction and then handover to Philip, who will walk you through the financial review of the year. I will then provide a business review and update before summarising and opening up for Q&A.
- 2015/16 was also a year in which we expanded and strengthened our network. We invested in additional frequencies on 47 routes and in 52 new routes We also established 2 new bases utilising E195 aircraft at Cardiff and Doncaster We signed new codeshares with Emirates and Virgin Atlantic to strengthen our One Stop to the World proposition for customers in the regions to access long-haul destinations through international hubs in the UK such as Manchester. We have continued to sign codeshare partners and since the year end we have signed Air India connecting 3 Flybe bases (EDI, GLA, BHD) to their daily flight at Birmingham to Delhi.
- Moving to our white label operations: we made sustained progress last year Our Brussels Airlines contract was extended by 2 years as of October 2015 with 2 Q400 aircraft Our SAS operations with two ATRs started in Stockholm successfully as planned in October Collective bargaining agreements were subsequently signed with pilot and cabin crew unions – enabling Flybe to scale the operation to five ATRs from May 2016 We believe the long term white label opportunity across Europe remains. However, we will be opportunistic in the short to medium term as the European market is immature compared to North America where the network carriers have outsourced 80-90% of their regional operations.