Company: Freescale Semiconductor
Headquarters: Austin, Texas
2006 Estimated U.S. Booked Air Volume: $40 million ($19 million year to date)
Creating a travel program from scratch certainly has its challenges, but for Julie Thomte, global travel and business services manager at Freescale Semiconductor, which spun off from Motorola last year, the obstacles were especially great. Hired in the second quarter of last year, Thomte needed to implement airline, hotel, car rental and travel management programs by the end of 2005, otherwise Freescale would enter the new year with no supplier contracts or booking processes. She succeeded, establishing travel programs in 31 countries in three months using data-focused strategies generally reserved for procurement departments.
"Before you can get to the metrics, you have to go through the sourcing activities," said Thomte, whose procurement sensibilities stem from five years as senior manager of corporate travel at Dell Inc., reporting to the senior vice president of worldwide procurement.
Thomte's main obstacle in establishing Freescale's program was finding credible data on which to base air, hotel, car rental and agency requests for proposals. "The initial activity was collecting the data to do an analysis around the spend analytics on each of the areas to have an understanding of what the scope was and what we were looking at in terms of sourcing across all those different commodities," she said.
Complicating matters was the fact that Freescale's data was heavily embedded in pre-spinoff travel spend, making it difficult for Thomte to determine the company's travel patterns. She worked with a third party to decipher the data and develop spend analytics around those figures, first focusing on travel management company costs.
"Even for the agency, you have to have an understanding in terms of transactions for any given country or region of the world in order to effectively write the request for proposals and outline an accurate scope of work for the company to respond to your bid," she said. "That was challenging, because although I knew at a high level by region how much our air spend was, I didn't have an understanding of what the true division of that spend was by country."
Thomte decided to single-source Freescale's agency operations to Carlson Wagonlit Travel, a move she said goes against procurement's mindset since it doesn't create an air of competition, financial leverage or a back-up plan.
"In this particular case, based on the timeframe that we had to implement 31 countries and also just understanding travel and trying to create global consistency on service levels, we did choose a single-source strategy," Thomte said. "We implemented 31 countries with Carlson over the course of one month and by December, we had the entire globe implemented."
Next to conquer was air, more complex to source than agency given Thomte was working with one quarter's worth of data following Delta Air Lines' 2005 fare-reform initiative
(BTN, Jan. 17, 2005). Again using historical metrics derived from the spin off, Thomte worked to understand which pieces of the program could be globally sourced, regionally sourced or served by country-specific or low-cost carriers. She similarly used card data to source hotels, further examining where Freescale's largest facilities and customers were located to measure whether such suppliers matched the company's global footprint.
At the same time, Thomte began work on a new travel policy. Her team conducted telephone interviews with about 50 companies that centered on travel policies that drive price, such as advance purchases and approval processes. She also interviewed 50 of Freescale's roughly 7,000 travelers.
"We tried to get a really good cross-reference of travelers who had been with the company a long time, meaning they were with Motorola or had been hired at Freescale in the last year and tried to get representation across multiple countries," she said. "We had about 25 countries represented in the course of reviewing that and at the end, we could develop good recommendations of where we felt our policy was and where we felt that we had opportunities for improvement."
Thomte and her team also used the benchmarking exercise to measure opportunities for potential savings. "We recognized that the easiest way to save money is to reduce the overall number of trips," she said. "We quantified that to X dollars in cost avoidance and that was one category that comprised $10 million. Another category was a large percentage of our trips year-over-year were in international travel, and by international I don't mean inter-regional, I mean exit U.S. to Asia or Europe. We quantified to reduce that number as well."
Thomte created a dashboard to show how different units of the company performed to specific metrics. She found Freescale had too high a percentage of travelers purchasing tickets less than seven days before their flights. "I presented those results to the CEO and CFO of the company and we agreed upon an increased scrutiny of the metric," she said. "We also measured a number of international trips with increased policy around that." Freescale announced its new policy on Sept. 1, and two weeks later Thomte ran spend analytics and found the company improved its compliance in purchasing tickets more than 14 days in advance.
Recognizing her accomplishments in travel, Freescale recently handed Thomte responsibility for such additional procurement areas as human resources, marketing and finance. Thomte's next step is to globally align that team, which consists of 12 people across the globe.
"In procurement, that's a large part of your job—to make sure that you get the best return on investment for your company," Thomte said. "That doesn't always mean lowest cost. Specifically in managing travel, it's our job to deliver a balance between the best price and the human equation."