Jean Cloutier, Senior Director of Strategic Procurement at Air Transat, is our latest “CPO on the Rise in 2011” who helped build a procurement department and then develop its strategy and successfully execute it. Air Transat is Canada’s leading holiday travel airline. Every year, it carries some 3 million passengers to nearly 60 destinations in 25 countries aboard its fleet of 21 Airbus wide-body jets. The company employs approximately 2,500 people. Air Transat is a business unit of Transat A.T. Inc. (TSX Ticker: TRZ.B TRZ.A), an integrated international tour operator that distributes products in over 50 countries and offers more than 60 destination countries.

After a career that included work in international trade, Jean joined Air Transat in 2001 to find a less than ideal starting situation with a fully decentralized and highly tactical procurement operation. Fortunately for Jean, a new CEO, who was a champion of cost control, was named in 2002. A plan was quickly hatched to centralize procurement operations and make it mandatory that every dollar spent had to go through procurement. Jean and his team immediately began their work…. and their analysis.

The Early Days

In those early days a concerted effort to identify the top people within the procurement function and a systematic process was hatched to centralize and improve the department. As part of the transformation effort, Jean focused his recruiting efforts on candidates with backgrounds in general business management or sales (a practice he continues today). Jean and his team also developed a plan of attack towards enterprise spend, including new category RFP and contracting strategies (which Jean admits were fairly similar across all the different categories) that became a large part of the completely rewritten procurement policies. Jean also made a significant personal investment of time to directly engage the different internal budget holders to (1) update them on his department’s progress and (2) sell them on the value of working with procurement.

When Jean joined Air Transat, Procurement reported to the CFO and experienced many of the challenges that CPOs face when working with finance, but the new CEO called for the change and now Air Transat ‘s Procurement department reports to the CEO (Today Jean’s team works closely with Finance).

Those early days bore great fruit and drove millions of dollars in savings. Today, Air Transat is a highly competitive operation in no small part to its ‘cost per available seat mile’ performance benchmarks and procurement has played a major role in driving that number down. But, while the cost savings that Jean and his team have delivered is significant, as we’ll see next time, it’s not all about costs at Air Transat.

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