Case History
Airline Food Production

The global $15Bn. in-flight catering industry is a highly volatile and competitive sector. And when, in the wake of 9/11, passenger volume took a steep dive, many airline caterers were affected. Margins and numbers of in-flight meals dropped. Our client knew it would have to find ways to reduce both operational and food costs.

Acquire’s initial appraisal Our first action on being called in was to undertake a series of senior management interviews and financial extracts of the business. The initial diagnosis, speedily delivered, identified areas where the client could take immediate action and also recommended a number of further remedial actions that would drive up efficiency and restore margins.

We concluded that a key central issue was the very high number of suppliers buyers were required to chase weekly to “negotiate” best product price. Not only was this imposing a huge time constraint on the purchasing team, and driving up operating costs, but it also resulted in the accounts department having to process no fewer than 179 separate invoices each week.

Acquire’s longer term solutions The twin remedy lay in re-engineering the business processes between Sales and Operations to improve long term commodity demand forecasting, whilst simultaneously building our client’s standing with key suppliers as representing a profitable and secure business opportunity.

Taking fresh fruit and vegetables as the starting point, we worked closely with line managers to improve the data flow between departments, also drawing up new tender specifications to put to the market. At the same time, we also re-trained staff on how to assess deliveries against agreed specifications, thereby eliminating the high level of product returns.

Acquire commissioned to programme roll-out With evidence of margins being quickly restored in fresh fruit and vegetables, we were commissioned to roll out the programme to include all fresh meat and fish, dairy, grocery, frozen, beverages, disposables and chemicals. In other words, nearly the complete inventory of products our client needed to service its customers to customary high standards.

In each product category, the new supplier was asked to attend weekly meetings at the client’s premises to discuss any issues that had arisen or how the specifications could be improved. These became monthly meetings once the new contracts were running smoothly.

As a result of the new efficiencies we introduced into the buying process, and the new trust that developed between suppliers and the buying team, results were startling. Numbers of suppliers were reduced from 30 to 12 (-69%); invoices were reduced from 179 to just 17 a week (-89%) and, most important of all, the Company achieved an annual saving of 10.67% on commodity costs, thereby significantly boosting overall profitability.

Our client has commented. “In every respect Acquire has worked with us and not against us. They have made recommendations that touched every aspect of our procurement business and have consistently delivered their promises. Their professionalism has impressed not only my team, but all of our suppliers, both existing and new.”

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