Contracts in Finnair. Ville Halonen

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1 Contracts in Finnair Ville Halonen

2 Content Who am I Contract Definition Scope of Contracts in Finnair Specialties in Airline Business Procurement Categories, Spend & Suppliers Objectives for Supplier Relationship Management & Contracts Typical Contract Structure Questions & Answers 2

3 Ville Halonen VP Procurement & Facilities Master of Science, Engineering 1998 Manager roles in IT & Engineering in Valmet Paper ltd ERP and PDM implementations Manager of Project Management in Metso Paper ltd Over 100 projects worth 3,0...25,0M New way for Project delivery follow-up & estimation Various outsourcing cases Several Global Manager & Director roles in Group Procurement in Metso Plc Managed annual spend over 700M Over 50M global savings and +100 contracts Making procurement as valued business partner VP Procurement & Facilities Finnair Plc 2014 Managing spend of 1.500M

4 Sopimus Sopimus eli välipuhe on kahden tai useamman tahon välinen toimi, jolla luodaan tai muutetaan velvoitteita. Sopimus voidaan tehdä suullisesti tai kirjallisesti. Molemmat ovat yhtä päteviä, mutta kirjallinen muoto helpottaa todistelua sopimuksen sisällöstä. Tietyissä erityistapauksissa, esimerkiksi kiinteistön kaupassa, sopimus on pätevä vain kirjallisena. Sopimusosapuolia voivat olla erilaiset oikeussubjektit, kuten ihmiset, yritykset ja julkisyhteisöt. Sopimuksen tekeminen edellyttää, että sopijapuolet ovat oikeustoimikelpoisia ja oikeuskelpoisia. 4

5 Scope of Contracts in Finnair Procurement contracts Sales contracts with travel agents and corporate customers, GDS Agreements with authorities Airline alliances Leasing agreements CLAs and employments 5 GDS = Global Distribution Service CLA = Työehtosopimus

6 Specialties in Airline business and their effect to stakeholders and contracts Global, but very regulated Employee skills vary remarkably (London vs. Havanna) Global standard terms, acronyms and common authority requests (IATA*) English as common language Lots of mono/duopolies and government owned suppliers at airports Limited negotiation power Possibilities for governmental support B2B and B2C business logics Both processes and rules on place Airline is responsible for everything to customer 6 IATA = International Air Transport Association

7 Procurement categories & spend 7 Procurement category Number of suppliers Fuels 57 Technical Maintenance Catering And Customer Service Ground Handling 368 General Procurement And Facilities Hotels And Transportations IT 409 Logistics And Ground Equipment 146 Marketing 686 Total 5070 Marketing Hotels And Transportations Spend by categories 1,5Bn Logistics It Ground Handling Technical Maintenance General Procurement & Facilities Catering And Customer Service Fuels

8 Objectives for Supplier Management & Contracts 1. Cost competitiveness Managing spend (TCO) 2. Customer experience Managing brand (product and services) 3. Operational excellence Managing productivity 4. Accordance with laws and regulations Managing sustainability Through partners

9 Typical contract structure 9 Frame agreement 1. Definitions 2. Object of the Contract 3. Contract Documents 4. Pricing Principles 5. Terms of Payment 6. Responsibilities of the Supplier 7. Responsibilities of the Purchaser 8. Change control 9. Company Contacts 10. Deliveries 11. Delays in Deliveries 12. Privacy and Data Protection 13. Continuous Improvement 14. Warranty 15. Liabilities 16. Transfer of Risk and Ownership 17. Special Stipulations 18. General Conditions 19. Severability 20. Waiver 21. Completeness 22. Applicable Law, Settlement of Disputes 23. Duration, Expiration, terminations 24. Transferring of the Contract, Amendments 25. Signatures Annexes Code of conduct General terms IT Systems and software Service Level Agreement (SLA) - KPI s - Sanctions & Bonuses Non Disclosure Agreement (NDA) Termination assistance Contact persons Personnel & Training Pricing

10 Thank you!