Procurement Practices 2009: Managing Change And Demand

This third annual Business Travel News examination of the application of procurement practices to travel management again measures the expectations that travel and procurement professionals have about their companies' plans for travel and travel spending, and this year, unlike the past two, it shows a marked decrease in both.

A severe drop in corporate travel demand is making this year unlike any other for business travel buyers, regardless of whether they come from procurement, travel, finance or other departments. Previous-year data, relied on by so many for judgments about what to expect for this year's volume, is much less of an indicator this time. While it is not clear to many companies how much they will spend on travel this year, it is clear to almost every senior management executive and corporate traveler how important it is for them to reduce their travel spending. As companies restrict spending, they are giving travel and procurement managers more latitude to implement policies and procedures that are more likely to be followed than ever.

BTN appreciates the participation of its readers, American Express procurement customers and Institute for Supply Management members in providing data, Equation Research for processing it and American Express Business Travel for supporting this effort to measure the application of procurement practices to business travel management.

Download a PDF of the full study here, including all data, charts, stories and a roundtable discussion of four practitioners fluent in marrying procurement with travel.

Click the headlines below to read each article online.

Measures For Maintaining Discipline
The use of procurement practices to manage business travel spending is getting a real test this year as measurements at most companies show declines in such spending of some magnitude.

Demanding Pre-Trip Management
Once firmly in the business of facilitating travel, corporate travel buyers and procurement professionals increasingly are finding themselves deploying methods to curb it. Whether companies are dialing down trips that don't generate revenue and bolstering pre-trip mechanisms to measure the value of travel or offering remote conferencing options as alternatives to getting on a plane, the procurement practice of demand management has taken a front seat in the management of corporate travel.

Expanding The Use Of Travel Metrics
As procurement departments expand their sway over travel management, supplier performance measurement using such procurement-based tactics as key performance indicators, scorecard analysis and service-level agreements have become a central part of that process at many corporations. In the past several years, companies have expanded the use of these strategies to more travel supplier categories, often providing more granular analysis and better accuracy for use in negotiations and internal program value assessment.

Outsourcing Levels Holding Steady
Balancing the need for an in-house travel management staff to help guide a comprehensive strategy with the temptation to limit costs by outsourcing some or all of a corporate travel program is tricky in the best of economic times. When a recession pushes increasingly desperate corporations to slash operational costs far beyond any recent precedent and tighten the management and procurement of corporate travel, the equilibrium becomes that much more difficult to maintain.

Gauging Corporate Travel's Downturn
The economic downturn spurred a dramatic shift in 2009 corporate travel budgets and forecasts. Business Travel News' Procurement Practices survey shows the gulf in attitudes toward corporate travel in 2009 compared with previous years.

Procurement Practitioners Managing Change, Demand
AllianceBernstein chief procurement officer Joanna Martinez, Ernst & Young manager of procurement operations Susan O'Rourke, Merck & Co. global sourcing manager of card and travel Cynthia Teufel and Philips International global supply market manager of travel John Guarneri recently met with several Business Travel News editors and discussed demand management, balanced scorecards, outsourcing and other applications of procurement practices to travel management.