Ford Drives Global Compliance

Dearborn, Mich. - Reporting directly to the executive suite after 15 years in purchasing, the travel department at Ford Motor Co. in the past 18 months has transformed its program by generating local buy-in to globalize travel.

The company now is using a single agency, American Express, for more than 90 percent of travel worldwide. Backed by mandates enforced with the threat of non-reimbursement, Ford managed to break up many travelers' loyalties to preferred agencies and other suppliers even in such regions as Asia/Pacific and Latin America.

Ford's latest mandate, a Feb. 1 ruling that travelers must use the Corporate Travel Online booking tool, produced within six weeks 83 percent usage on domestic tickets and 54 percent on international. "There was a lot of pushback," said Robert Magnus, Ford director of travel and events. "This is a business with personal feelings, old relationships, internal politics and people using a boutique agency to make travel comfortable. With these fiefdoms, the agency picked by the company is a target of criticism for those who want to bend the rules. I put American Express in South America twice before, but now travelers there are taking direction from our shop, meaning huge savings through the agency in terms of policy compliance."

Ford generated the juice to revamp its international travel management as an outgrowth of a mid-1990s global restructuring effort. Ford's travel department took the initiative to sell senior management on the idea of globalizing travel through a regional approach. Magnus credited his elevated position within Ford's hierarchy for the additional visibility. He now reports to chief of staff and secretary John Rintamaki, who reports to CEO William Ford.

Ford hired newly empowered travel managers to handle each region, with help from Dearborn-based travel manager Thomas Herritage on the consolidations. Ford folded in a handful of new European divisions into the Amex program and consolidated with Amex in Latin America from 11 agencies and in Asia/Pacific from 15. All the regional heads report to Magnus. "Regional is global if you report in," Magnus said. Truly managing travel for the first time in Latin America generated 35 percent in annual savings on air spend, he said.

Using agency reporting, warehoused by McLean, Va.-based TRX Data Services, Ford also has demonstrated to suppliers that "we're serious, committed and can deliver what we promise," said Antonio Henrique Sala, regional travel manager for Mexico and South America, based in Brazil.

As it moved away from rebates to transaction fees and net fares even in developing countries, Ford's new policy teeth gnashed over an airline industry that hadn't caught up. With airlines, Ford travel officials said, global negotiating is a misnomer at best. "We have a process in which our regions talk to the airlines globally," Magnus said. "In Europe, we talk to North America about the impact of our airline deals on both sides. It helps suppliers understand you'll enforce it."

"We're looking for longer-term partnerships, but some airlines are doubtful about how far we can go," said England-based corporate travel manager Chris Philpott, noting that does not mean working only with such major players as Ford's top carrier, Northwest Airlines. "People's minds are changing about low-cost carriers," he said, adding that 20 percent of Ford's $113 million air spend goes to low-cost airlines.

Selecting the agency, while no easier, was more technically global. "We bid for all of the regions, then negotiated worldwide with one agency," Sala said. According to Ford, Amex's global restructuring (BTN, Jan 21) provided the glue that holds together Ford's massive, $310 million-a-year T&E program. "We have two meetings a year with all the points of contact," Magnus said. "Amex is now less interested in local performance and they're looking at the big picture, the overall program with Ford rather than country by country."

"The most unique thing about the program would be Ford's approach to globalization," said Shane Berry, vice president of Global Business Partnerships, an Amex unit that handles 50 of its biggest multinational corporate card, travel and purchasing card customers. "They started with regionalization, and were very organized in their approach. We see many organizations try to do things top-down and try to impose a U.S. mandate on international business, but typically that meets with lots of opposition. Also, it's not often that you see travel managers reporting to someone that high in the organization—you really do need that senior-level approach. When you have travel as an agenda item, where you start to create a sense of competition among business units, that offers positive momentum for a travel management program." Berry characterized the near-total global consolidation with a single agency as a limited phenomenon, though not a new one.

The Amex relationship helps Ford carry out the ultimate dictum: If you don't comply with company policy, you are subject to not being reimbursed. Nevertheless, Ford also partners with third parties to keep Amex honest.

In North America, Ford supplements the work of Amex onsite counselors by sending all reservations to Portland, Ore.-based Topaz International for sample auditing. Travelers caught not complying with policy receive a note from senior management. Data warehousing with TRX also has enabled Ford to identify pricing flaws and subtle instances of noncompliance, such as using a premium class that the airline calls "coach."

Philpott intends to bring CTO to Europe by the fourth quarter, with a plan to include reservations on Ford's own aircraft, which carry 130,000 people a year.

"We're one beta test away from having CTO for meetings and conventions," Magnus said. Ford's meetings program now is estimated at more than $350 million in North America, following a mandate to consolidate what originally was thought to be $150 million. The mandate requires that all meetings be held at Ford's site (BTN, Dec. 3, 2001), if it's available; if it's not, approval is required to use other locations. Ford estimated that it has saved $20 million on meetings. Savings of 22 percent on hotel spend was derived by reducing by one-third the number of properties with which the company does business and by using more low-cost hotels.

Seeking to improve its tracking of paid data, Ford later this year plans to implement a global card program; it uses Visa in North America. "We really want to get our arms around reporting in places like Asia/Pacific," Herritage said. The company is talking to several suppliers of both card and expense management services.

Having completed "in two years what we should have done in 15," Magnus said, senior management these days wants to hear about "progress on all the activity we have done. We've been really busy making changes and implementing cost-savings programs and dealing with compliance. Senior management is not looking for spending reports so much as procedure, policy and implementation of the rules."