24. 11. 2005 - CSA shows significant savings on purchasing of materials and services
Prague, 24 November 2005
The application of new principles for the purchasing of materials and services has brought Czech Airlines a cost savings of over 140 million CZK. This is the result of the first phase of a CSA strategic project entitled “Transformation of the Purchasing System”. Over several months, the organizational structure has been completely overhauled, a Central Procurement department has been established, and completely new purchasing rules have been introduced. In 2006, in the final phase of the project, CSA should save 3-5% (i.e., up to 300 million CZK) of those costs which can be influenced.
The newly introduced rules are based on careful market research, the unambiguous definition of tender subjects, aggressive price negotiations, and the application of modern purchasing methods, for example electronic auctions. For example, when selecting a security agency CSA saved more than 21 million CZK per year. Similarly, the company succeeded in reducing costs of other products and services, e.g., office supplies, information technology products and real estate administration.
“The structure of our supplier base did not correspond with the power and importance of CSA. We have not only discontinued some non-standard contractual relations, but we have also enhanced, especially, the transparency and effectiveness of the entire purchase system,“ said Jaroslav Tvrdík, the President of CSA.
In addition to direct and marked price benefits, all purchase-related activities will be optimized at the end of the transformation process. The number of CSA suppliers should be reduced from 6 500 to approximately 2 000. At the same time, the number of invoices per supplier should also be reduced by one third and a significant drop in stock reserves is also an aim.
“Proper implementation of working procedures saved us an unexpected amount, more than 140 million CZK this year, and has improved our economic results. I expect the 200-million-crown cost-reduction plan for the next year to be exceeded by up to fifty per cent,“ added Mr. Tvrdík.