Profiles In Travel Management: McKesson's Messaging Menaces Noncompliant Travel - Business Travel News

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Profiles In Travel Management: McKesson's Messaging Menaces Noncompliant Travel

July 12, 2010 - 04:25 PM ET

By David Meyer

Healthcare and information services provider McKesson has reaped rewards in the past year from making creative use of dynamic messaging and other efforts to drive compliance, enhance reporting and wield data during negotiations.

McKesson's recent focus on demand management gave the travel program the opportunity to flex its muscles through policy and automation, with the support of its travel management company, Travelocity Business, and its GetThere online booking tool, said procurement travel manager Yoichi Miyazaki.

"The best savings is to talk people out of travel, and the best way we can do that through an online booking tool is through dynamic messaging," Miyazaki said. "That's something we have worked on for a little over a year. When hotel choices are listed, we have a message that says, 'Please do not stay there,' when it is a hotel that is outside our list of preferred hotels. In one city alone, it increased the bookings of preferred hotels by as much as 10 percent."

Another example of dynamic messaging, Miyazaki noted, involves booking in advance, a practice from which he said the company finds valuable savings. For those who are booking within seven days of departure, he said, there is a message that asks, "Why are you not booking in advance?" The messaging prompts a dropdown menu of reason codes that are reportable and alert managers, he said.

Miyazaki said McKesson has had a seven-day advance purchase requirement for three years, and that the dynamic messaging made it more visible in the past year.

McKesson, which has a growing sustainability program, also is using dynamic messaging to promote green practices. "Not traveling is the best green option," said Miyazaki, who also said the company, a launch customer for Cisco's TelePresence, uses the high-definition videoconferencing technology in four major locations and one dozen smaller ones across North America.

In addition to applying directional dynamic messaging for air and car rental suppliers, Miyazaki said McKesson two years ago began exploring the idea of creating online supplier merchandizing. Since then, he has seen that placing banner ads for specific preferred vendors on the search screen has helped drive marketshare, particularly for a new preferred car rental supplier. Miyazaki credited merchandizing on the site for driving use of that supplier "from zero to 50 percent within three months."

He also put it to use in driving compliance to McKesson's preferred airlines. "Because of the coverage that our travelers need, we need a lot of carrier contracts," Miyazaki said, "but 70 percent of our spend is with preferred carriers. The banner is a really important tool to manage that. There has been a double-digit increase to 78 percent in the use of preferred carriers in recent years."

He said that he also has made great use of the data the online tool provides. "In this past round of airline negotiations," he said, "I was able to determine each carrier's net effective discount, which was a great thing to have."

To raise compliance, Miyazaki has held monthly webcasts to educate employees and get their buy-in for corporate procurement goals, initiatives and policies.

McKesson spent $43 million in U.S. booked air volume in 2009 and has 32,000 employees. While it has a global travel policy in place, its individual business units can and in some cases do have stricter policies. "Each business unit has a compliance champion with their own goals," Miyazaki said, "and we work with them to make sure that they get the reporting they need to address it."

McKesson has a policy of using lowest logical nonrefundable fares, with which 93 percent of its tickets are in compliance. About 92 percent of its tickets are booked online, of which 95 percent are handled without manual intervention through fulfillment.

Miyazaki said another benefit of the tool has been a rise in the reuse of nonrefundable tickets. Today, he said, "71 percent of all nonrefundables are reused. Before we started using the Travelocity/GetThere tool for that, we were doing 50 percent or so." While happy with the progress, he saw room for improvement. "I think we can do better," he said.

While using nonrefundables provides overall savings of about 10 percent of McKesson's air spending, including any penalties for change fees, Miyazaki said that for tickets booked online, use of nonrefundables provides a savings of 28 percent versus refundables. "We have taken this information internally to promote great use of online nonrefundables," he said.

Miyazaki said that McKesson recently focused on automating non-profile travelers, and 100 percent of recruitment prospects are going through Travelocity Business. He said this created internal savings because for those without changes, "no one has to touch them anymore."

At the beginning of last year, McKesson also consolidated its two sizable divisions in Canada with Travelocity Business, which from day one showed 95 percent compliance. Miyazaki said the move produced "transaction fee savings of 70 percent and the consolidated buyer power resulted in 3 percent more in discounts for local carriers."

This story was originally published in the July 12, 2010, edition of Business Travel News.

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