2023 GLOBAL SRM RESEARCH REPORT
CASE STUDY: AIRSERVICES AUSTRALIA
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“I am relationship- driven in business and always have been. I’m leveraging market expertise to maintain our core business and remain current and on top of trends.” Fleur Edgerton , Airservices’ Head of Procurement and Commercial Services.
Established in 1995, Airservices is wholly owned by the Australian Government and is accountable to the Minister for Infrastructure, Transport, Regional Development and Local Government. As such it aligns to the Commonwealth Procurement Rules that govern public-sector organisations. These are designed to ensure competition and transparency. If Airservices wishes to co-develop with a supplier, it is mindful to maintain a competitive landscape. “It’s my role as a business leader to partner and engage across the market to connect industries and the business. I draw upon my experience to manage large-scale strategic relationships to ensure Airservices adheres to procurement guidelines and rules, and maintains the value and delivery of long-term sustainable business outcomes,” says Fleur Edgerton, Airservices’ Head of Procurement and Commercial Services. Central support Edgerton, who joined the organisation two-and-a-half years ago, consolidated procurement and commercial services from four separate units into one function and put a new operating model in place, centralising the team and then structuring it across portfolios that cover infrastructure and corporate services; technology and digital; and governance enablement, which includes a centre of excellence. The team also has a procurement and commercial services transformation lead and a business revenue and commercialisation lead, because - unusually for a procurement department - it is responsible for some chargeable services. These include contracted air traffic control and aviation rescue firefighting services, engineering support and maintenance services and data commercialisation activities, that together generate more than AUS$20m a year in revenue.
Mission critical
“This gives the function a unique insight and ability to optimise how it manages its supplier and customer relationships on both sides of the commercial landscape,” says Edgerton. “This includes being able to apply learnings about how it approaches the market with how this might be perceived by potential suppliers by leveraging the experience of the revenue- generating side of the function.” Procurement and Commercial Services also supports Airservices through relevant change programmes, such as current work to transform air traffic management in Australia, replacing two systems with a single advanced system. Meanwhile, a commercial strategy team looks into what’s happening in the market and considers how it can leverage the market to execute Airservices’ strategic and organisational outcomes. Building relationships Airservices used to operate a traditional ‘build, own, operate’ delivery model but has since pivoted to a service-oriented environment. As such, it is procurement’s role to deliver value for money outcomes through all third-party engagements during the lifecycle of any deal or partnership. “This,” says Edgerton, “requires a focus on supplier
management to extract value, and to ensure ongoing value throughout the lifetime of a contract”. “Without supplier relationship management (SRM), you can lose a massive percentage of the value of the original deal within 18 months of it going live, so we really focus on making sure suppliers deliver our desired organisational outcomes and benefits.” Relationships are crucial at Airservices because a significant percentage of its annual spend is with a small number of suppliers that deliver mission critical systems. “Our top six suppliers account for nearly half of our AUS$533 million annual spend,” says Edgerton. A total of 80% of yearly spend is with 60 key suppliers, while the rest sits in the tail.” Geographical location is another key consideration. When building relationships with strategic suppliers, Airservices’ commercial team is mindful of the location of the supplier’s global P&L and works hard to engage leaders from overseas as well as the local team. “Big tip,” says Edgerton, “ensure you understand who owns the P&L within the supply base and make sure you have executive engagement. Spend time meeting them and understanding where the constraints
Fleur Edgerton on the importance of SRM at Airservices Australia, and how to make suppliers part of your ecosystem. Airservices Australia is the Federal Government-owned organisation responsible for the safe and efficient management of 11 per cent of the world’s airspace and the provision of aviation rescue fire fighting services at 29 of Australia’s busiest airports. It connects people with their world safely - linking family and friends, generating economic activity, creating jobs and facilitating trade and tourism. It occupies a unique position in the Australian aviation ecosystem, working with everyone from recreational to international pilots; unmanned and remotely piloted aircraft users; customers; the community; and industry. It is tasked with supporting the sustainable growth of aviation - balancing industry efficiency with community interests and operational performance.
Photo supplied by Airservices Australia
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