10 things every travel manager should know about procurement€¦ · 10 things every travel manager...
TRANSCRIPT
LABTA Educational Session
10 Things Every Travel Manager Should Know About Procurement
Proxima Group March 2013
What will you get from this session?
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How to harness the benefits of procurement to maximize your total travel program effectiveness
Practical leadership tips that will help elevate the results of travel procurement projects
How to be more innovative in your thinking around travel cost management
1. Know what “Good” procurement looks like?
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I don’t have experience of that specific
service
Why don’t we hold off until
the contract is up for
renewal
Is that the lowest cost
bid?
We need to follow the company sourcing process
I’m running a bid at the
moment so won’t have
time to help
I’ll “google” the supplier
before we meet
It’s ok I am trained in
negotiation
2. Bring procurement in early and keep them involved throughout the contract period
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Determine Need Sourcing Purchase &Receipt
SupplierRelationshipManagement
Capability
Typical sourcing process
Conventional procurement focus
Redefined procurement teams
Low
High
3. Successful sourcing projects include a team of people that all have an important role or function in the process
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Agree on project details& kick-off
initiative Sign-off on approach
Sign-off on implementation plan
and savings realization
Evaluate performance & conclude project
What is the business case for the initiative?
• Propose project outcome/value and timeline
• Present findings, analysis, and strategy/approach for project execution
• Secure (BU) participation
• Propose implementation plan
• Present refined costs/ benefits
• Propose savings methodology
• Present implementation results / status
• Escalate unresolved compliance issues
Does the business case demonstrate value to continue the initiative?
• Identify roadblocks & propose mitigation Identify appropriate project stakeholders & facilitate communications
• Approve project for development
• Evaluate strategy & approve project for execution
• Facilitate / conduct communications to relevant stakeholders
• Evaluate & approve implementation plan
• Sign-off on savings realization methodology
• Facilitate/ conduct communications to relevant stakeholders
• Help define & execute mitigation plan for non-compliance issues
• Escalate unresolved issues to leadership
Do I support the initiative for the business?
• Informed of approved initiatives
• Informed of project status
• Communicate expectations for compliance to end-users
• Support non-compliance requests through communications & reinforcement
Category Team
Council
Leadership
Travel mngr. Category lead Sourcing mngr. Finance mgr. Regional buyers Traveler/Arranger
Procurement Lead Finance Director Travel Director
CFO VP Shared Services
4. It is important to differentiate between lowest price and lowest cost
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Total Cost
of
Ownership
Travel
Hotel Cost
Agency Cost
Air Ticket Cost
• Emergency Travel Services
• Change Requests Support
Management Fees • Online Booking
• Agent Assisted Booking
• Client Negotiated Airfare
Transaction Fee
Rental Car Cost
Airfare Cost
Nightly Room Rate
Misc. Charges • Internet
• Parking
• Fitness Center
Misc. Charges
Fuel
Daily Rate
• Mileage Charge
• Vehicle Fees
• GPS
• Concession Fee Recovery
• Self fill
• Fuel and Service Charges
• Fuel Purchase Options
Price
Procurement
Process
Labor Costs • Time to register new online users
on Cliqbook
• Time to train new online users
• Air Ticket Cost
• Taxes
• Room Rate
• Taxes
• Daily Rate
• Taxes
Travel Policy
• Policy Enforcement
• Advance Booking
• Preferred Suppliers
• Upgrade Fees
• Energy Surcharge
Ancillary Fees • Baggage Fees, Early Check - in
• Change Fees, Preferred Seating
5. Procurement can be the catalyst build trust with the stakeholder community
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Trust
Intimacy Credibility Reliability
=
X
X
“Understand
stakeholders’
challenges”
“Deep
expertise &
insights”
“Deliver what’s
agreed, and
on-time”
Self orientation
“Know that you care about
serving our interests”
6. Procurement practices have evolved – just like travel management has
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Area Conventional Procurement
involved
Redefined Procurement
involved
Defining needs/team members
No Yes
Setting up decision criteria Yes Yes
Supplier analysis Yes Yes
Total cost evaluation Limited Yes
Cost Management & Audits No Yes
Compliance Reporting No Yes
Managing KPI’s/Reporting Limited Yes
7. With access to current thinking and market knowledge procurement can bring support for better decisions
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Look to the ancillary fees and traveler behavior to find the proper balance of room night price vs. ancillary fees
Inputs Action
Compliance Reporting
Procurement has the POV to do a thorough evaluation of T&E spend to determine most cost effective policy
Supplier Commitments
Restructured Policy
Outputs
Artist Title Sales (#) Spend (£)
AdSales(£/#)
Inc. sales (#)
CPU (£/#)
TAKE THAT PROGRESS 1,825,458 463,064 0.29 254,301 1.82
WANTED THE WANTED 220,763 196,865 0.91 65,988 2.98
ELLIE GOULDING LIGHTS 153,480 110,504 0.72 50,023 2.21
BLACK EYED PEAS THE BEGINNING 259,403 224,801 0.90 74,803 3.01
CHERYL COLE MESSY LITTLE RAINDROPS 318,963 269,646 0.89 80,405 3.35
EMINEM RECOVERY 89,419 4,146 0.05 646 6.42
SATURDAYS HEADLINES 56,299 57,792 1.06 5,546 10.42
DUFFY ENDLESSLY 155,722 142,378 1.05 42,404 3.36
NELLY FURTADO THE BEST OF 22,129 2,637 0.14 2,046 1.29
Artist Title Sales (#) Spend (£)
AdSales(£/#)
Inc. sales (#)
CPU (£/#)
TAKE THAT PROGRESS 1,825,458 463,064 0.29 254,301 1.82
WANTED THE WANTED 220,763 196,865 0.91 65,988 2.98
ELLIE GOULDING LIGHTS 153,480 110,504 0.72 50,023 2.21
BLACK EYED PEAS THE BEGINNING 259,403 224,801 0.90 74,803 3.01
CHERYL COLE MESSY LITTLE RAINDROPS 318,963 269,646 0.89 80,405 3.35
EMINEM RECOVERY 89,419 4,146 0.05 646 6.42
SATURDAYS HEADLINES 56,299 57,792 1.06 5,546 10.42
DUFFY ENDLESSLY 155,722 142,378 1.05 42,404 3.36
NELLY FURTADO THE BEST OF 22,129 2,637 0.14 2,046 1.29
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Card Data
8. The negotiation strategy should be formalized
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Be Ready - Never forget to prep the suppliers BEFORE you meet for negotiations
Design The Outcome - Review and set the roles and negotiation strategy
Educate the Suppliers -Tell them why they want your company as a preferred customer
9. Align category strategies with corporate travel priorities
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Market driven
competitive bidding
Policy Compliance
Utilization of
Preferred Travel Agency
Optimize traveler
experience
Contribute to growth
of Company
Measures Of Success
Optimize travel spend by reducing Total Cost of Ownership (TCO)
• Reduce TCO •Increased competition and volume leverage • Utilization of preferred suppliers •Leverage & build key supplier relationships
Influence traveler decisions thru a) appropriate booking tool content and b) compliance
• Reduce TCO • Utilization of Travel Agency •Utilization of preferred suppliers •Policy Compliance • Improve key performance indicators
Utilizing appropriate procurement channels
•Travelers booking thru Travel Agency •Policy Compliance • Aligning process with business needs
Traveler communication and training
• Utilization of Travel Agency •Policy Compliance •Improve key performance indicators
Corporate Travel Priorities
Ca
teg
or
y S
tra
teg
ies
10. Harnessing procurement thought leadership can bring understanding to the category lifecycle
Example: Agency
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Defining needs
Agency selection
Contracting
Buying Reviews Effectiveness measurement
Cost management &
audit
On-going benchmarking
A quick recap…have we shown you how to:
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…by creating a procurement team that can build trusted relationships, not just be good at sourcing
Get a deeper and up-to-date understanding of the market…
…by using knowledgeable specialists who invest time in understanding the market on an on-going basis
Be more innovative in your thinking around cost management…
…by investing in experts who can deliver solutions that meet business needs, not just cost control
How to harness the benefits of procurement to maximize your total travel program cost
Q&A Thank you