One week before the pandemic struck, Air Canada used SAP technology to implement a fully integrated suite of procurement solutions, enabling employees to seamlessly and efficiently begin working from home.
Given its enviable record in generating less atmospheric carbon, water waste and noise, Air Canada has attempted to export its forward-looking philosophy to all aspects of the company.
Yet, when the airline suggested shifting its procurement system away from the tried, but familiar, manual processes, there was a fair amount of internal pushback.
“The biggest challenge was moving people to the digital world,” conceded Pamela Zaravinos, the airline’s senior manager of procurement operations. “Some people are very easy to convince. And then, there are those who still don’t want to change. So you have to put yourself in their shoes and show them the benefits of moving forward.”
The truth was that Air Canada needed to take the opportunity to transform. Because of the manual tasks required, procurement processes were disconnected. For example, determining whether to pay an invoice meant engaging in a tedious routine that involved matching the purchase order, receipt and invoice. In order to gather internal signatures, documents had to be mailed out and sent back.
“We didn’t have visibility,” Gilles Neron explained, the airline’s VP of strategic procurement and corporate real estate. “Data is gold and if we can’t measure, we can’t improve.”
The airline realized that it needed to move all its procurement information to a central location. But no one imagined that the plan would be realized just as the world was facing the COVID pandemic – and one of the most difficult periods in aviation history was about to begin.
Agility in a time of disruption
The Montreal-based airline is the country’s largest carrier and provider of passenger services.
Before the world shut down, Air Canada was ferrying 51 million passengers annually to close to 220 destinations on six continents.
By the time the procurement transformation was launched, Air Canada had already replaced its global invoicing software with a next-generation system. But the goal was to implement a fully integrated suite of procurement solutions for all Canadian operations.
The end purpose was both augmenting animation and gaining a consolidated view of spend and other processes.
By sheer circumstance, the platform happened to be just as the company was forced to pivot in ways it never had before.
When the pandemic was declared and travel restrictions imposed, Air Canada’s revenues plummeted. “We had to readjust our sizing and cost structure,” said Coralyn Ah-Moy, Air Canada’s senior director for strategic procurement transformation. “We expanded into the cargo business, which was new to us.
“We needed to be much more agile as a business to make quicker decisions and be able to change our network.”
Despite this daunting task, Ah-Moy and her team were remarkably prepared.
Two years prior to the pandemic, Air Canada made the decision to introduce e-procurement and supply chain solutions, through SAP’s Ariba network. By 2020, many of the airline’s suppliers had also transitioned.
In early March, the new platform was officially launched – literally days before the World Health pandemic Organization (WHO) made its announcement. “We celebrated our go launch date in person,” Zaravinos said. “The week after, we were told to take home our laptops and start working remotely.
“I have to say, there was basically no change for us when it came to our day-to-day jobs. There was no blackout period. We could exchange and transfer files seamlessly. We were still able to do what we needed to do.”
A lesson in resilience
Statistically, the visibility tied to Air Canada’s digital transformation had a swift, impact.
With procurement employees working in the cloud on a shared system, the cycle time from purchase requisition to purchase order was shortened to about two days – while, in a single quarter, the average process time of non-purchasing order invoices was reduced by 33 percent .
Then, there are the incalculable results: less human error and – in keeping with the company’s environmental agenda – paper use.
This year, the transformation earned Air Canada a winner’s trophy at the SAP Innovation Awards, an honor given to organizations utilizing SAP products to metamorphose both business and society.
“There was a lot we learned along the way, especially about ourselves,” Neron recalled. “All in all, it’s been a great journey.”
And as that excursion continues, the airline has pledged to capitalize on the transformation when new opportunities arise. “In this data age, innovation is going to be faster and faster,” Ah-Moy observed. “New things are going to be pushed and, if we didn’t have that first layer, we would lag behind in ways that at some point would become insurmountable.”
You can read all about Air Canada’s remarkable digital transformation in their SAP Innovation Awards pitch deck.