ICI this year is continuing a decade-long effort to consolidate much of its travel management, payment and expense reporting programs by focusing on a strategic meetings procurement program targeting a 15 percent reduction in spending.
Often viewed as a natural follow-up to travel management optimization, meeting management can represent one of the last cost-cutting opportunities for mature travel programs.
ICI already has established unified travel agency and corporate card programs with preferred partner American Express, covering operations on three continents.
Before ICI brought in senior vice president of procurement and IT global supply chain Shakeel Mozaffar nine years ago, "travel was not on anyone's agenda," said director of global procurement Lee Ann Murphy, who joined Mozaffar in early 1999. "Everyone did whatever they wanted, and the best they could, if they were focused on it at all. When Shakeel came in, travel got on the board's agenda. It allowed everyone to see the value of a managed program for travel and the value and strength of consolidation and leveraging our volume to reduce overall cost."
[PROFILE_1]Even today, ICI has no internal travel professionals, as travel is part of the company's global procurement group. Instead, Murphy--who oversees a variety of procurement activities and reports to Mozaffar--is tasked with negotiating global travel contracts and making them stick.
During a speech at the May Association of Corporate Travel Executives conference, Mozaffar said that for "real" strategic sourcing, "we shift the conversation from price increases and volume growth, which has been the typical focus of most sales and procurement discussions historically, to value creation." If a supplier declines to subscribe to ICI's precise definition of value creation, Mozaffar said, "We don't fire them, but tell them they are basically just a transactional relationship. Joint value creation is about trust and risk sharing. Partnership in any other context is a misnomer."
Evidently subscribing to ICI's philosophy, American Express serves as the foundation for the company's ongoing travel consolidation and handles essentially all global transient spend. At the beginning of 2006, ICI aggregated all travel reservations in China via Amex's local partner, China International Travel Service.
"We have deployed the entire travel management strategy over there, with preferred airlines, car rental companies and hotels, and, like we do in the United States, advanced booking," Murphy explained. "It is very green over there in terms of understanding why they have to manage travel, so we are trying to push that education."
American Express also supplies ICI with consolidated T&E and purchasing card programs--a far cry from the 20 different payment systems ICI used in the 1990s. The global card programs brought savings (5 percent in the first two years after deployment), consistency and the aggregated data that is crucial to vendor negotiations.
Murphy noted that 30 percent to 40 percent of hotel bookings do not go through Amex Business Travel Services. "In some countries, hotels cannot provide good data, even if you did book through the agency," she said. "In the past eight years, the only way we have been able to negotiate with hotels is with corporate card data."
Meanwhile, ICI now is rolling out a global expense reporting system furnished by IBM that, according to Murphy, would ultimately cover "about 95 percent" of the global T&E spend.
ICI used its roughly $115 million in T&E spend and heavy transatlantic demand to craft preferred deals with other travel vendors, including airlines. "Suppliers want both sides of the water," Murphy explained. "We have so much going back and forth that it allows us to leverage that key business, whether originating in Europe or the United States. That then allows us to drive down our cost domestically and on intra-European routes."
Murphy said ICI's airline agreements--just like deals covering all other travel categories and non-travel commodities--are never negotiated for only Europe or for only North America.
[PULL_1]"If you have a high degree of process standardization but every division wants to do its own thing, guess what? The supplier has an easier task of extracting value from you," Mozaffar explained. "If you have the highest degree of standardization and a single voice to the supplier--usually achieved by mandate, though 'mandate' is an illusion in my life--it is very difficult for the supplier to extract value from you."
As part of its supplier management, ICI uses scoring systems to measure the global, regional and local effectiveness of preferred contracts, including savings targets, service-level metrics and peer-company benchmarks.
ICI now is ready to tackle meetings and aims to implement new processes and standardized policies by year-end, first in the United States, followed by the United Kingdom and China.
"We do not have a lot of big, big events," Murphy explained. "But we do have a fair number of mid- to low-level meetings that we really want to get our hands around."
ICI thus far has relied on benchmarks to assess the size of its meetings spend. "We really have no idea, like most companies, because executive assistants handle meeting planning, use different payment mechanisms, etc.," Murphy acknowledged. "But we believe it is a nice piece of spend, and the goal is to save 15 percent on whatever goes through our meetings program."
By neither managing every aspect of every meeting nor taking away meeting planning responsibilities from those who traditionally handle that function, ICI allows executive assistants to choose whether to plan their own events or outsource the work. "They do not have to outsource the meeting planning, only the meeting procurement piece," said Murphy.
ICI this year also is focused on improving adoption of its online booking tool. The company uses GetThere through American Express, which links to an online purchasing portal that also includes card program data and connections to many other procurement support services. ICI officials hope an updated graphical user interface for the online booking system will help boost adoption within its non-mandated culture.
"You will find that 2 percent of the folks in an organization actually make things happen and 33 percent resist--those who resist overtly and those who resist covertly," Mozaffar said. "You have to be watchful of both. The remainder will watch, sit on the fence and wait, or will wonder, 'What the hell just happened?' If you are not able to distinguish this constituency early on in the game, your credibility declines."
To educate travelers, ICI plans to conduct webinars and engage department heads and administrative assistants. The company seeks to encourage advance bookings and automated reservations, and present travelers with data, "making sure they really are getting more value from the trip they need to take," Murphy said.
"I am ultimately responsible for [ensuring] individuals comply with those [preferred supplier] deals, but I don't necessarily run around the world educating all our travelers as a travel manager would do," she continued. "There really isn't anyone in our organization who has that role. So perhaps doing this education and allowing people to talk with someone if they are having issues will help get us through to the next level of compliance."
Mozaffar suggested that attaining acceptable levels of compliance is strictly an internal task. "Put out a request for proposals to McKinsey, Accenture and all the others not on transformation, but for help in getting compliance internally," he said to ACTE conference attendees. "Nobody will accept that mission. You are on your own."