A result of the CEO's "zero overhead growth" initiative begun three years ago, ConAgra Food's success in delivering savings by better managing and controlling travel spend has at its foundation a new, mandated travel policy, buttressed by new technology, management support and reporting.
The initiative forced travel, as well as all procurement at the company, to rethink policies, contracts and spending, according to Amanda Prochaska, ConAgra procurement category manager for travel, the corporate card program and information technology. Prochaska and ConAgra finance manager Judi Thallas in June detailed on an Association of Corporate Travel Executives webcast their recipe for success.
Ingredients of the travel program included a new online booking tool, supplier agreements, integration of corporate card expenses into an existing expense reporting system and management reports that provide visibility to spending, savings opportunities and policy violators. But the main pillar of the program is a mandated policy that requires employees who spend more than $500 a year on travel to use the company-issued credit card for all expenses possible, book online all trips of three or fewer stops and book others through the designated travel management company, and reconcile expenses quickly in the online expense tool.
"We tried to make our policy very black and white to make it easier for travelers to understand" and managers to oversee, Prochaska said. As mandates were added for the first time, travel procurement recognized the need for training and communications. "We communicated early and often," she said. "Instrumental in our change management" was "a cross-functional team, to build and edit the policy." The team, which included executive admins and frequent travelers, garnered co-sponsorship from the CFO and executive vice president of human resources, she added, "because we not only wanted to focus on cost controls but also the benefits we brought to our employees."
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In 2007, ConAgra switched to Rearden Commerce's online booking tool, supported by corporate travel management company Travel & Transport. "We moved from 11 percent online adoption to 83 percent currently," Prochaska said. "This has had a huge impact on our program. It's not just about the reduction in transaction fees. By highlighting our preferred hotels in the tool, we went from 30 percent compliance to our hotel program to more than 60 percent."
The booking tool also allows ConAgra to better manage its airline "marketshare commitments by city pair" and policy compliance on advance purchase and nonrefundable ticket purchases, Prochaska added. Visual guilt also works, she said, as ConAgra in the first few months realized "more than a 10 percent decrease in average ticket prices when tickets were booked online."
Travel procurement next tackled supplier sourcing. Procurement has "completed two or more RFPs in our airline, car and hotel programs since 2007," Prochaska said. "One of our key goals with the last round of negotiations was to look at our volume commitments to ensure they align with our travel footprint today. We wanted to lower our overall commitment, while keeping, if not increasing discounts."
To capture data, travelers are directed to book through the Rearden online tool or the agency. "We removed all our third-party reservation sites so we could have one location through our TMC to look at our total supplier relationships" and monitor bookings on preferred vendors. Those who book higher-priced airfares or hotels, Prochaska said, receive a "fare buster" communication that encourages them to rebook lower-cost options.
ConAgra also simplified the reconciliation process for travelers by prepopulating in its Concur Expense system all purchases made on the US Bank commercial card. To further ease the process, ConAgra configured the system to automatically audit expenses. The system flags such policy violations as hotel expenditures that were not charged on the corporate card (as mandated) or nonreimbursable expenditures charged to the card. "The visual guilt caused by the appearance of these audit rules, along with" policy flags "has been a big factor in increased compliance," Thallas said.
ConAgra also requires employees to file reports within 60 days and automatically sends notifications based on charge card feeds for expenses not reconciled. At 60 days, it suspends charging privileges. Instead of 200-300 monthly suspensions, Thallas said, there are typically now only 22. "It ensures that we have accurate expenses for financial reports," she said.
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"Our next major initiative is optimizing demand management, and the way we're starting is by elevating executive visibility," Prochaska said. "We built a dashboard reporting tool for our execs to review quarterly focusing on four different compliance areas," including: offline versus online booking, payment not charged to the US Bank corporate card, advance purchase and use of first class domestic business travel, which is against policy.
Beyond the dashboard, the travel team provides to the CFO and supply chain executives a monthly report on travel spending, savings from negotiations, compliance and demand management, which "helps them forecast the budget on a monthly basis and provides visibility on the progress we're making," Prochaska said.
ConAgra's CEO in a presentation this year reported overall supply chain savings of $750 million since the beginning of 2007, including more than $250 million in fiscal year 2009. "Zero overhead growth" and other initiatives are projected to deliver $225 million in savings in 2010, he told analysts.
The team continues to seek new savings opportunities. Working with its TMC and card provider, ConAgra has begun to analyze "booked versus billed information" and identify bookings made outside the preferred channels, Prochaska said. "This is the next frontier for compliance."
Additionally, ConAgra this year launched a meetings policy that requires employees to register all events with a budget of more than $5,000 and use Travel & Transport to source offsite locations. "We've already tripled our return for what we're paying T&T," Prochaska said, "so it's been a good process.