Profiles In Travel Management - 2005-10-03
DuPont Advances Globally
Company: DuPont
Headquarters: Wilmington, Del.
2005 Worldwide T&E: $300 million
"If anyone had told me less than two years ago that we would have 50 countries all consolidated with the same travel management company, that we would have a global air deal implemented and a global hotel deal on the way, I would have accused them of not getting enough sleep." So said Susann Bell, global travel program manager for the science-based solutions giant DuPont. In fact, Bell and her colleague, global travel buyer Nadine Dewart, are the ones who are more likely to have missed out on their sleep because they have achieved all that since February 2004.
The global air agreements, signed in August 2005 and coming into effect this month, are notable for using two aids that are becoming increasingly prevalent in travel sourcing: the Six Sigma process and an electronic request for proposals. The hotel agreements are on track to be finalized by year-end.
What also has made these landmarks notable is that they have been achieved within a company with 55,000 employees that spends $300 million per year on travel and is extremely diverse both geographically and structurally—DuPont has more than 200 legal entities in Europe alone. DuPont has offices in more than 70 countries worldwide and its air expenditure is split 57 percent for the Americas, 27 percent for Europe, the Middle East and Africa and 16 percent for Asia/Pacific.
On top of all this, globalization of the travel program has to be achieved in a culture that does not favor rigid mandates, yet policy compliance in the United States is running at 93 percent.
Taking on a task of this magnitude and complexity requires broad experience and pragmatism, which is reflected in the complementary credentials of Dewart and Bell. Dewart, who also is president-elect of the Association of Corporate Travel Executives, is based in Mechelen, Belgium. She held travel management positions with such businesses as Toyota Europe and BMC Software before joining DuPont in January 2005. Bell, on the other hand, has spent more than two dozen years with the company and works at the global headquarters in Wilmington, Del. Bell has been responsible for U.S. travel for 10 years and global travel since January 2004.
Following a general DuPont principle of pairing a buyer with a contract manager, Bell's main brief is to manage the relationship with Business Travel International, to which DuPont has outsourced its travel program in 50 countries. Dewart is principally tasked with leading supplier sourcing. However, in practice, both are involved with TMC and supplier issues, with Bell taking the lead in North America and Dewart in Europe.
Aware of the challenges posed by its structural diversity, DuPont in recent years has introduced a strategic imperative called One DuPont, aimed at reaping the benefits of connecting its regions and functions. The first fruit of this philosophy for travel was the consolidation with BTI that started in February 2004. Bell and Dewart regard BTI as a fully outsourced handler of the DuPont travel program, ranging from trip booking and fulfillment to traveler communication and tracking. This latter service was put fully to the test by the recent hurricanes that struck the United States' Gulf Coast and the JetBlue aircraft emergency in Los Angeles.
"We have to outsource travel because we only have four full-time people for a spend of $300 million," said Bell. "I used to have one person in-house who did nothing but analyze our air data. BTI does all the legwork now and we depend on it for global data reporting. We set the strategy, but we do it in conjunction with our TMC." Dewart added that the collaboration with BTI even extends to preparing budgets together.
When DuPont put its travel management company contract out to bid, it stipulated that it wanted consulting to be yet another part of the outsourced service. WorldTravel BTI's Travel Procurement Solutions team was duly tasked by Bell and Dewart to analyze responses to the company's first-ever global air tender offer. DuPont is a follower of Six Sigma process methodology and the travel team was lent an in-house Six Sigma black belt to help with the air project.
The travel team started the task in May 2004, judging the time was right to take its supplier deals global. One reason was the momentum towards harmonization created by One DuPont. The other was the improved data from the TMC consolidation that had just got under way, complementing the management information the company already had from worldwide use of the American Express card.
Dewart, who had not used Six Sigma before joining DuPont, was impressed with how the process improved such tasks as data gathering and understanding the voice of the customer—in this case, the travelers.
"It definitely helped because this project was so big that it would have been easy to get lost," she said. "Everyone here is trained the same way, which creates common understanding of how to deal with projects like this."
The tender offer was conducted via an electronic RFP generated from DuPont's customized version of the Ariba online procurement system. Using Ariba for RFPs is company policy. Trying to conduct a tender for a complex service like air deals with a generic electronic RFP tool proved challenging, but Dewart saw the logic of the standardized approach. "The big benefit is that we have one source of contracting and a centralized database," she said.
The electronic RFP did not lead to an online auction, although suppliers did submit their first bids electronically. Travel Procurement Solutions analyst Annette Doherty and DuPont strategic sourcing buyer Dave Levering then went to work on the data, computing thousands of segment prices to determine the best combination of carriers. A couple of rounds of negotiations later and the team finalized a program consisting of deals with 28 airlines in 33 countries, with two carriers in the United States and two in Europe accounting for market share of 40 percent between them.
As the global agreements go into action, BTI agents are being trained to promote the new list of preferred suppliers to travelers. However, like many organizations, DuPont is wrestling with the dilemma of showing loyalty to preferred carrier deals and taking advantage of lower spot fares when booking. "If there is a cheaper price, travelers can go with another carrier," said Dewart. "We want them to use the preferred fares but there are certain business units where it would be wrong to stop them flying with low-cost carriers because they are a logical option."
Budget airlines also create a problem because they tempt travelers to book directly. However, compliance is generally excellent at DuPont despite that there is no mandate. Travel policy is strongly worded and exception reports are followed up with heads of business units to show them lost saving opportunities. Senior management backing has proved extremely influential. Top executives have involved themselves in disseminating information among leadership in their own markets. Meanwhile, the security imperative also has encouraged travelers to book through approved channels.
Dewart and Bell are putting the finishing touches on the company's global hotel program debut, which was negotiated largely at the chain level but also involved some dealings at the local level. The travel team also took great care to tap into local DuPont opinion as to which properties should and should not be featured in the program. The travel team has at least one contact at every company site around the world.
The next phase of the travel project is to analyze how the new deals are working and if there are any more opportunities for globalization. However, the team's pragmatism is such that there will be no globalization for its own sake. Car rental deals, for instance, are set to remain regional, and there will be a two-speed approach to self-service reservations.
In the United States, Bell is aiming to move online adoption of eligible reservations to 60 percent to 70 percent on its GetThere tool. In Europe, DuPont uses I:FAO's Cytric tool in Germany, Switzerland, Austria and Belgium. Adoption ranges between 20 percent and 35 percent, which Dewart deems too low to produce a return on investment. She will therefore attempt to raise adoption in these markets before extending self-booking to the rest of Europe.