nordic business travel supplier of the year - nbta€¦ · procurement as-is & to-be process...
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Nordic Business Travel Lunch & Seminar 15.10.2009
Nordic Business Travel Supplier of the Year
Jan BorgVP, ReseGeometri Nordic
The Winner:Singapore Airlines
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Nordic Business Travel Lunch & Seminar 15.10.2009
Business Travel Procurement
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Mirja KivimaaCo-chair, FBTA Travel Management CommitteeTravel Manager, Outokumpu Oyj
Nordic Business Travel Lunch & Seminar 15.10.2009
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Ann Cleveland-Oey
30 years of experience from travel industry and procurement:
Global Sourcing Director, Indirect materials and services, Konecranes PLC, 2008-Category manager, Indirect procurement and Global Travel Wartsila Corporation, 2005 - 2008Global Travel Manager, Wartsila Corporation, 1999 - 2005Production Director, Member of Board,Toolo Travel 1985 - 1999Hotel InterContinental, Helsinki, 1979 - 1985
Education:
eMBA, TAMK 2009ADP London Business School 2006Reach, Wartsila Mgt Programme 2000Iteronomi, Helia Porvoo 1983High school graduate 1979
NBTLS October 15, 2009
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NBTLS October 15, 2009
Global macro economic procurement trends
centralised 1960-70de centralised 1980 globally centralised and categorised 1990
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NBTLS October 15, 2009
Global macro economic procurement trends
Procurement today is easier to handle across country boarders due to technological development and has become more global, yet leaving needs for both local and regional procurement as well
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NBTLS October 15, 2009
Global macro economic procurement trends
Supply chain optimisation and product savings.
Where does travel fit in this and why is this done?
What are the benefits??
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WHY??
Strategic effectConcentrate
Make clear policy
Standard process
Follow up
LogicGet better price
Get people to understand
Easy to follow, safe and effective
Make necessary changes
ResultCost savings
Follow policy automatically
Time saving // no redundancy // cost effective
Change with need, develop,Feedback
Cause - Effect ResultsStrategy -
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Category driven sourcingStrategic suppliers enable company growth and profitabilityOne corporate voice towards suppliers
Harmonized key processes in procurement e.g. Supplier Base Mgmt
Professional people network to leverage business volume, knowledge and resources
Local tactical execution of own suppliers - little leverage.Fragmented supplier base of thousands of suppliers
No common way to co-operate with suppliersLittle process development
Fragmented local responsibilities
Strategy and Sourcing
Procurement as-is & to-be
Process
Governance
To-beAs-Is
Common spend analysis toolsGlobal contract database
Individual target setting based on common KPIsScorecard based monthly reportingRegular feedback to suppliers
Independent local solutions
No common KPIs and transparency of supplier performance. Little individual targets and measuring
Procurement IT
KPIs and Target setting
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GSD, Mechanics
GSD, Parts Subcontracting
GSD, Electrics
GSD, Indirect Mat. & Services
Typical Procurement organisational chart
ProcurementDevelopment
CPOProcurementBoard Executive Assistant
HR
GSD, Steel and Structures
5
4
3
2
1
SupplierDevelopment LegalProcurement
Controller
GSD, Service Parts & Services6
President / CEO
CapacityManagement
RSD = Regional Sourcing DirectorGSD = Global Sourcing DirectorCPO = Chief Procurement Officer
GSD, Logistics7
RSD, EMEA RSD, Americas RSD, NEA RSD, SEA Program Sourcing
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Typical Indirect Categories
Indirect Categories
Distribution
Sea
Air
Marketing
Marketing materials
Marketing agency
IT
Hardware
Software
Services
Fixed
Mobile
Travel
Airlines
Train
Hotels
Car rentals
Cars
Leased cars
Maintenance
External Labor
Temps
Sub-contractors
Facilities
Catering
Rent
Utilities
Cleaning
Office
Furniture
Supplies
Capex
Packaging Equipment
Buildings
Production Equipment
Operating Services
Insurance
Consulting
HR
Data
Road
Courier
Postage
Other
Agencies
Exhibitions & events
Restaurants & representation
Tax & Audit
LegalAdvertising
Equipment
MRO materials and services
Energy
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NBTLS October 15, 2009
Special in indirect
The volume in Euros is normally between 25-60% of company purchasing volumeThe transactional volume of indirect is 80-90% of the company transactions (Barry, 2005)The administration of indirect is heavy; process needs to be defined and effective, tools need to be in place
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NBTLS October 15, 2009
Possibilities
Outsource the whole business process of indirect globally (IT, people, process and knowledge)Build a category organisations into the company and do everything by yourselfTake a mix, do both; some locally, some regionally, some globally
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NBTLS October 15, 2009
What does it mean for TRAVEL category??
Outsource the whole business process of indirect globally (IT, people, process and knowledge)Build a category organisations into the company and do everything by yourselfTake a mix, do both; some locally, some regionally, some globally
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NBTLS October 15, 2009
How to make agreements??Corporate with suppliers?Join a consortium, who buys for many?Outsource to Travel management company?Outsource to third party company?Use a global IT-platform, with ready negotiated deals in it?Go for the best best price of the day?
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Jouni Malmivaara+ 30 years of experience from Sourcing and Finance in Pulp/Paper/Engineering industry:
Managing director of Nordic Source Purchasing consortium since March 2009Vice Presindent of Sourcing in UPM-Kymmene Corporation since February 1996CFO of UPM Woodworking and Joinery industry since 1990CFO of Rauma-Repola Forest industry since 1987Sourcing Director of Rauma-Repola since 1985Purchasing Manager of Kajaani Oy since 1974
Education:
- B. Sc in Economics (Turku School of Economics)- Several Leadership and Management courses (Rauma-Repola, UPM)- Several International seminars and courses in Sourcing and Procurement
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JM/NBTLS October 15, 2009
World Class Procurementtoday
Jouni MalmivaaraChairman of the Procurement Forum of Finnish
Association of Purchasing and LogisticsManaging Director, Nordic Source
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From . . . To . . .
Cost Focus
Buyer
Local and Regional
Functional approach
Low Integration level
Value Focus
Supply Manager
Global and regional
Supply Chain Integrator
Business Partner (Innovation with Suppliers)
Highly Integrated Corporation
Trends
JM/NBTLS October 15, 2009 18
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Changed Agenda for Procurement
Value
Cost Risk
Value Improvement:-‐Business orientation-‐Improving customer value proposition-‐Providing total service solutions-‐Exclusive solutions-‐Alliance mgt
Materials Cost reduction:-‐Purchasing savings-‐Doing more with less-‐Aggressive sourcing-‐e-‐Auctions-‐Contract mgt
Risk Mgt:-‐Single vs multiple sourcing-‐Performance based contr.-‐Buyer dependence-‐Supplier dependence-‐Financial position-‐Proprietary knowledge
Buying Supply Chain Mgt
Value ChainMgt
19JM/NBTLS October 15, 2009
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JM/NBTLS October 15, 2009 20
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JM/NBTLS October 15, 2009
Harmonised Sourcing Process
Engage stakeholders
Sourcing DirectorSourcing ManagerBack Office
Cross-functional team Regional/local staff
Supply analysisBuild fact base
GenerateIdeas
Generate Sourcing Strategy
ContractingImplement &Measure impact
1.
21
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JM/NBTLS October 15, 2009 22
Purchasing Process is in Place; Whatever we buy, we follow the
processInternal Customer demandPerformance expected
= Technology, R&D, Supply
(challenge the demand) Supplier / product Selection
Through RFQ, Selection Criteria, Trials, Contracts
Fact Base / Cross-functional team
knowledge management, be upstream
Supplier development
to pave the way for better cost and better value in the future
Strategy built and communicated
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Strategic Sourcing Strategies and Tactics
JM/NBTLS October 15, 2009
SourcingStrategies
Product Specif.
Improvement
Joint Process
ImprovementRelationship
Restructuring
Best PriceEvaluation
VolumeConcentration
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Global, RegionalSourcing
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Importance of Building Best Practice Strategic Sourcing Capabilities
JM/NBTLS October 15, 2009
Setting Strategic Vision/Plan
OrganisationCoDe
TCO, Supplier economics
Category strategies
SRM Strat. IT Global Supply base
NegotiatingManaging proposals
Demand Mgt
Transactional Processes & Systems Support
Vision
Strategic
Tactical
Transact.
24
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Buyer-evolution
JM/NBTLS October 15, 2009
Partnerships!
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World Class Excellence Model
INTEGRATED, ALIGNED AND GLOBAL
InsourcingOutsourcing
Develop CommodityStrategies
Establish world-classSupply Base
Develop, ManageSupplier relations
Integrate SuppliersInto Product/Processprocessing
Integrate SuppliersInto Order Fulfillment
Supplier Dev.And Quality Mgt
Manage CostsStrategically acrossSupply Chain
26JM/NBTLS October 15, 2009
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World Class Excellence (enabling processes)
INTEGRATED, ALIGNED AND GLOBAL
Develop Org. AndTeaming strategies
Deploy Globalization
Develop purchasing,Supply chain KPIs
Develop and implementIS/IT systems
Establish HR develop.And Training
Establish globallyIntegrated, aligned,Sourcing Strategiesand Plans
27JM/NBTLS October 15, 2009
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Category Strategy Development:a Five Step Approach
28
1. Strategy evaluation 2. Data
Analysis
3. Goalsetting4. Strategy
definition
5. Implementationplan Continuous process
JM/NBTLS October 15, 2009
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Main characteristics of world-class sourcing organisation
High aspirations
Advantaged fact base
Strategic focus
Top talent
Supplier network
Enabling technology
Rigorous target setting in TCO reduction and continuous improvement schemes
Thorough knowledge of supply market, supplier economics and category TCO elements
Category sourcing strategies based on profound fact base and is done by best available cross-functional experts
Cross functional sourcing teams staffed by the "best and brightest"
A world-class supplier network with a few demanding partnerships that can truly contribute to competitive advantageTechnology enables and accelerates the journey to world-class procurement supporting better decision making and integration of suppliers
JM/NBTLS October 15, 2009 29
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JM/NBTLS October 15, 2009
Strategic Sourcing Positioning needs to be done for each spend category
L
H
L H
Supply risknumber of potential suppliersavailability of substitutes
Businessimpact
SpendQuality
PulpingWet-end
Spares
Cons
Coat +Lamin.
Maint Services
SparesChemicals
Raw materials
Investments
Othercoat
Packaging IT
Travel
Marketing
Office
FacilityAdmin
PalletsRollServ.
Addit
Leverage Strategic
Non-critical Bottleneck
Bundle andcreate
competition
Minimize TCO and long termdevelopment
Outsourcing& eTools
Mitigate risk and ensureavailability
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Supplier cost structure Our company TCO
Additional valueProductQualityStability
Production flexibility
Service value proposition
Time
Customer TCO
Total Cost of Ownership (TCO)The breakdown of spend shows costs across all
the product life cycle
CapexLaborRaw materials
Utilities Pur-chase cost
Trans-port
Inven-torycarryingcosts
Profit Qualitycheck-ing
Reve-nue
TCO
External Internal Joint
JM/NBTLS October 15, 2009 31
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JM/NBTLS October 15, 2009
Global SourcingSourcing Tools (E-sourcing, Sievo, E-
procurement)SpendAnalysis Market Analysis
Supplier Analysis
CategorySourcingStrategy &Aspirations
RFx processReverseAuction
SupplierSelection
ContractNegotiation
ContractManagement
ComplianceFollow-up
SupplierDevelopment &PerformanceManagement
Global SourcingDashboard
32
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Typical Indirect Categories
Indirect Categories
Distribution
Sea
Air
Marketing
Marketing materials
Marketing agency
IT
Hardware
Software
Services
Fixed
Mobile
Travel
Airlines
Train
Hotels
Car rentals
Cars
Leased cars
Maintenance
External Labor
Temps
Sub-contractors
Facilities
Catering
Rent
Utilities
Cleaning
Office
Furniture
Supplies
Capex
Packaging Equipment
Buildings
Production Equipment
Operating Services
Insurance
Consulting
HR
Data
Road
Courier
Postage
Other
Agencies
Exhibitions & events
Restaurants & representation
Tax & Audit
LegalAdvertising
Equipment
MRO materials and services
Energy
JM/NBTLS October 15, 2009
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Thank You!
Success in Strategic Sourcing is a must today!
34JM/NBTLS October 15, 2009
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Miia Haakana+ 10 years of experience from travel industry:
International Travel Manager since Jan 2008 Rautaruukkiworking in corporate sourcing department, responsible for international travel category
Sales Manager KalevaTravel, Finland Travel Bureaubusiness travel agency experience, including also travel management consultation projects
Sales Manager - PalaceKämp Group, Hotelzonselling Hotelzon hotel booking tool and Palace Kämp hotel-, meeting- and restaurant services for the corporations, tour operators and travel agencies.
Airport Service Agent Scandinavian Airlines SASmaking travel arrangements in the airport ticket counter, transit hall desk and business lounge
Education:
The Institute of Marketing - Diploma in Travel Management Haaga Institute Polytechnic - B.Sc in tourism management
NBTLS October 15, 2009
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NBTLS October 15, 2009
How to upgrade meeting &
your company?
Rautaruukki OyjMiia Haakana
International travel manager
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AgendaFew words about Rautaruukki
TOP 5 hints how to get Senior management interested
Possible challenges
Summarize Strategic Development Frame
NBTLS October 15, 2009
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Ruukki in nutshellProcessingSales and serviceSteel production
Net sales in 2008 3.9 billion
Operating profit in 2008 568 million
Personnel 13,460 in 26 countries
Metal-based solutions for construction andengineering customers
Standard and specialsteel productsStrong foothold in Nordic countries Focus of growth in CEE,Russia andUkraineThe company's share is quoted on NASDAQ OMX HelsinkiThe Corporation uses the marketing name Ruukki
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1. Find your main stakeholders
NBTLS October 15, 2009
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Reporting for internal stakeholders
President & CEO
Finance /CFO- Risk management
Business Development- Corporate Sourcing
- International TravelLegal
Human Resources
Information Technology
Communication & IR
Marketing
Technology
Eastern & CentralEastern Europe
North Europe &Infrastructure Construction
Operations
Finance
Lifting HandlingTransportation
Energy andOffshore, Marina,Paper
Steel & Parts
Finance
Sales
Operations
SCM
Finance
Ruukki Construction
Ruukki Engineering
Ruukki Metals
Corporate Functions
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International Travel Management organization
International
Travel
Manager
Travel
Coordinator
Finland
Travel
Coordinator
Hungary
Travel
Coordinator
Russia
Travel
Coordinator
Poland
Travel
Coordinator
Norway
Travel
Coordinator
Sweden
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2. Analyze your current situation
NBTLS October 15, 2009
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Evaluate your current situation, make gap analysis and find out development targets
Situation in 2 Q 2008:
Travel costs + 14 %
TMC purchases + 44 %
No consolidated data
No clear corporate travel policy
No centralized sourcing:
300 hotels
35 airlines
Lot of add hoc travelling45 % of trips booked < 7 D
Average rates too high+ 20 % in air
+ 31 % in hotel
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Define the scope
89 %
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3. Make the business case and sell it
NBTLS October 15, 2009
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The Buyer is also the Seller
Sell your development ideas
for senior management!
=> target is to get the mandate for
your projects
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Corporate Travel Policy
Corporate Clarity for employeesMandates the use of preferred suppliers
Current situation
5 %
Travel Program Consolidation- Business Case
Centralize sourcing
Air average prices are apx 20 % too highHotel average rates are apx 31 % too high
Decreasing the number of air and hotel suppliersNegotiating contracts with corporate volumes
Live meeting implementation
Active use in Finland, others notpoor usage due poor implementation
Easy to use for internal meetingsSaving potential can be more
One TMCAt least 14 different local TMC sPoor policy steering and reporting
Consolidated dataPolicy steeringBetter security, SLA
One credit card company
Local credit card solutions Extra invoicing and voucher costs
Consolidated data and automated inflow to TEM systemNo invoicing and voucher service charges
Total Saving potential
22 % of total costs
Benefits Potential SavingsScopeProposals
5 %
7 %
1 %
Corporate
Corporate
Corporate/ regional
Corporate/ regional
One travel expense
management system
Own TEM tools in FI,SE,NOOther countries manual processes
Consolidated data and automated inflow to TEM systemless manual work, labour and time savings
4 %Corporate/ regional
No clear travel policy defined in corp. levelPolicy gives possibility for presumptions
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Benefits from the developmentTravel policy mandates to plan business trips better and make cost efficient travel arrangements Better cost transparency, steering and monitoringBetter service and securityBetter contract rates via centralized sourcing and active negotiationsBetter control over the supplier base by centralizing processesIndirect process cost savings from automation and centralization
Saving potential 17 % of total travel costs millions of euros!
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Aug Sep Oct Nov Dec Jan Feb MarJun Apr MayJul
Centralize SourcingExpected Savings
X M
Corporate Travel PolicyExpected Savings
X M
Live Meeting ImplementationExpected Savings X M
Naming local key responsible persons for implementation
Roll-out travel policy
Formulate travel policy
2008 2009
Make a realistic schedule
TMC consolidationExpected Savings X MCorporate credit card solution
One travel expense management system
Expected Savings
X M
Gather the project group together/planning
Launch
Air & HotelRFP process
Implement
Steering and monitoring
Send RFP Evaluation and select the partner
Steering and monitoring
Send RFPEvaluation and select the partner
Implement
RFP and evaluations
Agreement and CCC policy
Gather the project group
1 year project + impl
1 year project + impl
6 month project + impl
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Background was ready for the change..
Strong business growth until end of 20083 Q 2008 Operational excellence programme Boost launch 1 Q 2009 huge change in market conditions
was easy for the cost saving projects!
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4. Communication is a must
NBTLS October 15, 2009
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Let people hear about you & communicate
Your best buddy is
Internal Communication
Department !
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5. Analyze & report about the results Follow up
NBTLS October 15, 2009
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Active follow up & reporting
Weekly cost savings report to VP Corporate sourcingMonthly travel cost report to CFOQuarterly report for Senior management levelQuarterly report for International travel team about the country situation
Senior management is interested to hear about the success stories!
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Main metricsKPI´s Statistics
2008 H 1 Statistics 2009 H 1
BenchmarkFI (Source:
Kaleva Travel)Travel costs (Corporate) + 23 % - 37% NA
Average flight rates Dom / Int(Finland)
+ 7 % / - 2 % - 15 % / - 24 % - 9 % / - 20 %
Average hotel rates Dom / Int(Finland)
+ 2 % / 0 % - 9 % / - 25 % - 5 % / - 9 %
Advance purchases Dom / Int (Finland. % of total bookings done less than 7 days before departure date, target max 15 %)
49 % / 40 % 49 % / 33 % 47 % / 31 %
Live Meeting usage(Corporate)
13544 + 181 % (38075)Savings 8 %
NA
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Challenges
NBTLS October 15, 2009
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Challenges in global development
Change the local purchasing to international sourcingFind the right people Cultural differences
Implementation of new rolesFew people are used to international working
Communication especially to travelersSecure proper implementation of corporate contractsGet resources for development:
Matrix organization > you need some supervisor skills to make the team work
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Summarize
NBTLS October 15, 2009
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Strategic development frameINPUT
Stakeholder meetings - Interviews, Data analysis, Define best practice models and development areas, Identify quick hits, Communicate
INTERNATIONAL TRAVEL DEVELOPMENT PROGRAM Centralize sourcing, Consolidate processes, Set the target,
Communicate about decisions
OUTCOMEReport about achievements cost savings, process efficiency etc.
Follow up - travel policy compliance,
Communicate about the results
FIND
NEW
OPPORTUNITIES
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Panel discussion
NBTLS October 15, 2009
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Nordic Business Travel Lunch & Seminar October 15, 2009
Mika Kiljunen+ 20 years of experience from travel industry:
Managing Director of Kaleva Travel Invest as of April 2006Managing Director of KohdematkatKaleva Managing Director of Kohdematkat GroupManaging Director of Kohdematkat Travel; prev. Marketing Dir, Vice MDManaging Director of Travek Travel Agency; prev. sales rep, sales managerSales Representative & Travel Agent of Finland Travel BureauSales Clerk in Browns Bay Cellars, NZ
Education:
High school graduate 1983Graduate from Malmi commercial college 1987
Hobbies: Basketball, running, golf
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Nordic Business Travel Lunch & Seminar October 15, 2009
Jouni Malmivaara+ 30 years of experience from Sourcing and Finance in Pulp/Paper/Engineering industry:
Managing director of Nordic Source Purchasing consortium since March 2009Vice Presindent of Sourcing in UPM-Kymmene Corporation since February 1996CFO of UPM Woodworking and Joinery industry since 1990CFO of Rauma-Repola Forest industry since 1987Sourcing Director of Rauma-Repola since 1985Purchasing Manager of Kajaani Oy since 1974
Education:
- B. Sc in Economics (Turku School of Economics)- Several Leadership and Management courses (Rauma-Repola, UPM)- Several International seminars and courses in Sourcing and Procurement
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Nordic Business Travel Lunch & Seminar October 15, 2009
Petra Metsola+ 18 years of experience from travel industry:
Category Manager Travel since 2008; Wärtsilä Corporationoversees and develops travel management across all Wärtsilä Group companies in 70 countriesresponsibility covers travel related acquisitions, contract negotiations, processes and technologies globally in Wärtsilä Group
Category Manager for HR and Finance, including the duties of Global Travel Manager; Itella CorporationCorporate travel management companies with different positions
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Nordic Business Travel Lunch & Seminar October 15, 2009
Taina Saarikoski+10 years of experience from travel industry:
Exec.Ass. & Travel Manager, Tekla Corporation (2003-)Administrative Manager (incl. Creation of Travel Mgmt practices), Moom Solutions Tour Guide, Iloiset Seuramatkat (Paris, London)10 years abroad (USA, South America, Spain, England)Lecturer, collaborator in seminars, schools, venues related to travel management topics
Education:
Master of Economic Sciences/ Turku School of Economics
Hobbies: Singing (lied, solo & choir), sports, all sorts of cultural interests
Photo
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Nordic Business Travel Lunch & Seminar October 15, 2009
Jarkko Härmälä10 years of experience in travel industry :
Currently Director of Sales & Marketing; Scandic Hotels
2008 - 2009 Area Vice President, Sales2005 - 2008 Sales Director, France - Based in Paris2002 - 2005 Sales Director, Thailand, SEA and Australia, based in Bangkok2001 - 2002 Sales Director, Far East operations (and Project ManagerHong Kong route)2000 Client Manager Helsinki1999 Client Manager, Central region Finland
Education:
Ms Econ, Helsinki School of Economics
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Nordic Business Travel Lunch & Seminar October 15, 2009
Mikko Turtiainen10 years of experience from travel industry:
Sales Director Finland, FinnairSales Director North America Business Development Manager USASales Director Far East (situated in Finland)Client Manager Sales Unit Finland
Education:BA International Business, UK
Hobbies: Basketball, tennis. At the moment I enjoy spendingmy time outside of work with my three children, theycreate new hobbies for me!
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Nordic Business Travel Lunch & Seminar October 15, 2009
M O T T O S
Send text message questions to +358 50 548 2444
Mika KiljunenManaging DirectorKaleval Travel Invest
Mikko TurtiainenSales Director, Finnair
win-
Jarkko HärmäläDirector of Sales & MarketingScandic Hotels
Taina SaarikoskiExec. Assistant, Travel ManagerTekla
the complete travelmanagement process is alsothe key to directing purchases.
Jouni MalmivaaraManaging DirectorNordic Source Purchasing consortium
incharge of the RIGHT price leveland optimed Costs-
Petra MetsolaCategory Manager Travel, Wärtsilä
what you always did,you will always get
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NBTLS October 15, 2009
CONCLUSIONCompanies can outsource the work, but
not the knowledge and understanding
Travel is still a process no matter where it sits in the organisation and the value comes from the total process which needs to be measured as efficiency factor as well
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NBTLS October 15, 2009
CONCLUSIONTo whom the travel process will be
outsourced might change in the futureThe outsourcing model might include more
IT and total process but agreements as wellConsortiums local, regional and global as
well as third party companies offer another choice for all, small, midsize and big companies
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NBTLS October 15, 2009
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NBTLS October 15, 2009
CONCLUSIONAND the most important thing to know
and understand This is not difficult! World is filled with
possibilities for all different size companies through many different value chains, you just need to decide which way to go!!
THANK YOU!!
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Next Nordic Business Travel Lunch and Seminarwill be hosted by
The Danish Business Travel Association DBTA
NBTLS October 15, 2009