Today we have part two of a profile of “friend of the site,” Jean Cloutier, Senior Director of Strategic Procurement at Air Transat. Part one is here.

In 2002, Air Transat’s procurement department was still very tactical in its approach and delivery, but with a new CEO, a culture of cost management was quickly established within the company. The procurement department was overhauled and centralized, new policies were established, and a strong mandate from the CEO was set. Despite this mandate, Jean likes to point out that when his team “manages a sourcing activity, we don’t make the final decisions, we present the decisions by building a business case and letting  the budget owners give final approval.” No matter who determined the final decision, one thing is clear – the results were fantastic.

Now, nine years after starting at ground zero in procurement, the team is very mature and very progressive – it needs to be. As Jean says today, while his team “still gets great feedback, the low-hanging fruit has been picked. In the early days, many of the best opportunities for cost savings were to run traditional sourcing projects. That is changing. Today, many of the best opportunities for savings will require us to work more closely with our suppliers and help them control their costs.”

As part of the new procurement strategies and policies that Jean’s team developed, a “matrix-approach”, which eliminates the human element, to evaluate and award supplier contracts for each category was established. The “matrix approach” to bid evaluation at Air Transat brought constituents from finance and operations onto the sourcing teams along with the budget stakeholders and procurement. The result has been an evolution from cost as the primary criterion to awarding contracts based upon supplier capabilities. “We will pay more for superior, innovative, and interesting suppliers; and, we will never enter into a supplier relationship that is not a ‘win-win.’ If suppliers aren’t healthy over the long-term, it will cost you.” [Sidebar: The CEO must approve the contracts that do not go to the lowest -cost supplier).

Since Air Transat is a “full service” airline where service, not cost is king, Jean’s team takes a very interesting and innovative approach to its sourcing projects. When it successfully lowers the price on a new contract, the team tries to work with the supplier to give some of the savings back in exchange for an improvement in quality. “The more we reduce our costs, the higher quality we can get,” says Jean. An additional benefit is that this approach helps engage suppliers early on with all of the opportunities for collaboration with Air Transat. It is a powerful strategy.

From an operational standpoint, it is worth noting that the five top corporate priorities at Air Transat are (1) safety, (2) maintaining a competitive cost structure, (3) “sustainable tourism,” (4) customer service, and (5) people each require significant support and input from procurement. Jean is also a member of the Customer Service and Innovation Councils, Jean rightly notes that “We’re involved in everything. Procurement will move the business.”

Procurement at Air Transat has moved the business on the cost side; they also moved the business on the revenue side by identifying suppliers to participate in several cross-promotional initiatives. Moving the business is one reason why Jean Cloutier is a “CPO on the Rise.”

We would like to thank Jean for his time and support

Tagged in: Case Study, CEO, Chief Procurement Officer, CPO, CPOs on the Rise