Aetna Inc. chief procurement officer Joseph Black in April shared his views on travel policies, sourcing and value creation in procurement during the Institute for Supply Management-Global Business Travel Association Travel & Meetings Summit in New Orleans. An ISM board member, Black oversees Aetna's $4 billion purchasing program, including supply management, accounts payable, supplier diversity, travel and meetings. What follows is an edited excerpt of his presentation.
Value measured today is not just on the savings side. Good travel managers in the way they run and administer programs help drive down costs, but that's what's expected today. The real value is to what degree travel managers help the enterprise understand how its travel assets are being used and where their people are. Anyone from a procurement or travel management perspective has to recognize that this commodity is a little different than other commodities. It has a very high relationship base to it, a very high emotional base to it. It's incumbent upon us to understand that and then understand how to balance the right degree of policy, structure and cost diligence in making sure the end user has an excellent experience when they travel. If I can do that, I'm going to be successful in whatever else I do. If I get that relationship piece wrong, all the policies in the world won't help you with the backlog and flood of opposition. For me, it's just a natural piece of balancing out that equation so the whole comes across the way you intend it.
Get Adoption Wisely
When I first came back to Aetna and took on the role of CPO, one of the first significant things I handled with our executives was around travel policy. They were armed to fight. I came in and explained our policy. They were speechless. I thought maybe they weren't interested. It turns out that I had undercut all their arguments. My policy is, I don't do stupid stuff. You can get adoption without a lot of pushback, but you have to do things wisely.
[PULL_1]There's a whole list of stupid stuff. The technical definition is anything that the ordinary thinking, rational person wouldn't do. For example, one had to deal with how we use our corporate jet. We had a 'no-first-class policy,' so we had a whole bunch of executives politicking the CEO to use the corporate jet. That's thousands of dollars per trip. But because of the no-first-class policy, they didn't want to travel in economy. There are some legitimate reasons to travel first class at times. For example, when you're working on a merger or acquisition and need to do work on the plane with some privacy beyond the screens on the side of a laptop. There are times when it makes sense to travel first class. One of the first things I did is killed that [first-class ban], when it makes sense for the right population, in the right circumstances, to drive down costs.
Metrics That Matter
Our entire air spend is only about $11 million, so it's not a huge program, but we are heavily automated, with very high compliance--our online booking is north of 93 percent--and we have a great set of dashboards that I now take to all our executive briefings. I host executive briefings with our top brass twice a year. Part of that briefing is on travel metrics that tell their online adoption, hotel adoption and compliance, car compliance, etc., down to the person. It makes it real effective when I can show not only where people are failing, but pinpoint it to the individual.
We didn't build that dashboard internally at Aetna. With an outside service provider, I was able to go from zero to 100 with a very strong dashboard and good analytics around data, which allows me to manage my costs. I would be hard-pressed to think that any organization today is looking to expand its internal operations to expand something like travel, and not look to how it can leverage external service providers.
Value Lies In Supply Chain
I'm not going to grow my internal team if I don't have to. Part of managing my cost structure is optimizing my internal team. So I'm going to leverage external supply as much as I possibly can. In a model like that, you have to rely on very strong supplier partners to drive the value that you're ultimately trying to get to.
Value creation is my biggest focus and is going to be in supplier relationship management. To what degree can we drive that to another level? It helps us with a myriad of things and one of those is compliance. In travel, we've got a really tight program, so I use that as a role model for what I want to see happen in other areas.