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As procurement personnel take a more prominent role in corporate travel sourcing, conventional wisdom says that both they and traditional travel management professionals should work cooperatively as part of a holistic strategy, at least at firms that can internally fund both disciplines. Executives from large multinational corporations speaking here last week at the National Business Travel Association's Corporate Travel Buyer Think Tank agreed that such internal teamwork is logical, but suggested areas where each function should lead.
"Travel is a commodity to buy, but it is not a commodity to deliver," said Nick Hurrell, Hogg Robinson Group director of corporate sales support, summing up the complications many organizations encounter. "The vast majority of firms, both in the U.K. and globally, still do not have an enforceable mandate for their travel policy. So how can a procurement team be sure to deliver?"
Hurrell suggested three options, noting that "all have been done with varying success." Companies can train their travel managers to buy, broaden procurement activities to include delivery or outsource all or part of the travel program to travel management companies or other consultants.
Wyeth selected the first option. As a travel manager with the pharmaceutical company, Barbara Kelly said she questioned certain sourcing techniques applied to the corporate travel program and was surprised when the company's finance director later asked her to head up U.K. strategic sourcing. "I said to him that I had absolutely no experience in this at all. I am the wrong person for the wrong job," Kelly explained. "He said, 'No you are wrong. You have challenged travel ... and we want you to do more of the same throughout the company.' "
Kelly said Wyeth travel management retains responsibility for policies, operations and strategy, but "moving forward, we have a travel procurement team, so it is very clear as to what the tender process is going to be. We truly believe that the way forward is to work as a team."
Eli Lilly took a different approach in naming Richard Darley, previously in U.K. procurement, as European travel manager. Consequently, the company determined that travel procurement should assume demand management and supplier relationship management--"the process by which added value is extracted," Darley said. Regarding demand management, "procurement has a role to make management aware of something like a self-booking tool," he explained. "It is a step change that reduces cost for the TMC and for the client. Therefore, I would argue for an ongoing procurement relationship with the TMC and not a shut-off relationship, as soon as the tender has been completed."
Travel at Eli Lilly is considered a complex spend component rather than a simple commodity, Darley said. "It is demanding and difficult to find suppliers who can meet all our needs. It is about moving beyond typical purchasing into category management, where people with a deep understanding of that particular spend area can look over the horizon to see what is coming and can look for innovation."
Speakers and some of the more than 100 audience members suggested other areas in which procurement thinking can provide value without pre-conceived perceptions of certain suppliers: benchmarking, tender management and negotiating service-level agreements.
"The strengths of a travel manager are not specific qualities to travel managers. They are skills that a procurement professional can possess, and do possess," suggested one attendee, as part of a discussion on such "soft" travel management skills as communicating with travelers and building relationships with suppliers. "Are the procurement skills as easily transferrable?" he asked, noting the sophistication needed for membership in such buying groups as the Chartered Institute of Purchasing & Supply. "I would suggest they are not."
"Isn't the problem that travel managers only have soft skills?" asked another attendee. "Shouldn't they be trained in procurement?"
To that point, HRG's Hurrell said "very few" travel managers have a pure travel function with no other areas of responsibility. Panelists suggested that travel management departments are more suited to handle safety and security initiatives; evaluate specific travel products; foster policy compliance and credibility with employees; decipher changes in travel distribution and their long-term cost consequences; research industry trends; communicate with all stake-holders and optimize program management.
"Certain tasks are not for procurement," Darley said. Eight-one percent of buyers in attendance agreed with that, according to the results of an electronic poll.
"If I have to come down in favor of one side or the other, it will have to be the travel management side," Wyeth's Kelly said, "because they are dealing with the TMC, communicating with so many end users, dealing with the secretaries who do some of the booking" and providing significant input during the tender process.
All agreed that a collaborative approach is best. "The issue, when the rubber meets the road, is when there can be only one person or one department, when companies are looking at head count," said consultant John Caldwell of Caldwell Associates. "I think procurement is winning out in that general debate. When someone has to be eliminated, often it is travel."
In some scenarios, companies choose to outsource all or much of the program management to TMCs, though panelists did not advocate a complete handoff of responsibilities to an external entity. "There is a need for in-depth knowledge of a company's culture to make it work," said Hurrell.
Added Caldwell, "Eliminating the travel management function in favor of either exclusive use of procurement or outsourcing travel management fully is a model that just has not worked effectively for most companies."
Related resource: Procurement.travelwhite paper on travel procurement
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