The discipline of
supplier relationship management can run the gamut from formalized processes
and data-driven performance assessments to periodic meetings and shared user
feedback. Number-crunching on key performance indicators and service-level
agreements can help organizations determine if they are maximizing value, while
such strategic activities as joint product development and participation on
advisory boards—as well as simple, open dialogue—often are more important
elements.
Please click here to view a pdf of Travel Procurement's supplier
relationship management survey.
Travel buyers want good
service and value for their dollar. Sellers want as much of the buyers'
business as they can get. But successful and collaborative enterprisewide
relationships go further to include engagement from individual travelers up to
the C-suite. They may involve fostering responsible corporate practices,
reducing risk, sharing goals and driving innovation.
"The challenge for
procurement departments in organizations has been the balancing act between the
traditional role of negotiating the most beneficial form of commercial
agreement, whilst also facing the challenge of maintaining a trusting
partnership," according to Kirsten Schipper and Thomas Dahm, authors of a
segment within a Capgemnini Consulting research report, Supplier Relationship
Management Research 2012-2013. "Many 'old school' procurement
professionals have been struggling with the balance of negotiating with a
supplier, and being the manager of a partnership with that same supplier. ...
Today's challenge is to set up structures to successfully measure and manage
suppliers and build processes and procedures to intervene if KPIs are not met."
Many of the key tenets
of any good supplier relationship are foundations for the most successful ones
with travel suppliers. "It's transparency; having a very open and honest
and clear relationship," said Gordon Wilson, president and CEO of
Travelport, which provides technology to managed travel programs, travel
agencies and other travel suppliers. "If there is a misunderstanding or
distrust, or people aren't getting the full information, that's a problem. The
other thing is related to data. Every corporate I speak to—every single
one—complains about data: lack of data, inconsistency of data, the form it
comes in, the possibility of reconciling it. That's a key area that relationships
increasingly pivot on but actually is poorly served."
Of course, it's a
two-way street. To pursue meaningful relationships with their suppliers, buyers
need a clear strategy and well-defined goals. The best clients "task us at
being better at what we do," said Balboa Travel president and CEO Denise
Jackson. "They push us to be innovative."
Inside The Numbers
To explore how travel
and meetings procurement professionals measure, interact and collaborate with
their suppliers, Travel Procurement
and Meetings & Conventions
surveyed 236 of them.
While 32 percent of
respondents indicated their organizations have a formal SRM team (38 percent
among respondents representing organizations that spend more than $1 million
annually on T&E), seven in 10 indicated they engage in SRM with hotels, a
higher response rate than for any other supplier category (see charts).
That's likely due to the large number of properties—including those local to
headquarters or other office locations—used by many organizations. Second in
that regard is travel management companies (56 percent of all respondents, and
more than three-quarters of the $1 million-plus crowd), which is not
surprising, given how engrained TMCs are within many managed travel programs.
More than half of all respondents also indicated SRM activities with airlines
and car rental firms.
Unsurprisingly,
companies with more than $1 million in T&E spending were more likely than
those with less to engage in each formal SRM technique listed. Review meetings,
service-level agreements and key performance indicators were most cited.
Meanwhile, with few
exceptions, the aggregate level of importance placed on eight components of
preferred relationships with the 11 listed supplier segments was greater than
the level of satisfaction reported by survey respondents.
What's most important?
Of the seven measures garnering an overall importance score above 5.5 points on
a six-point scale, four were for quality of service. Also rating highly were
favorable pricing from hotels and the value of relationships with travel
management companies.
Who does well?
Satisfaction levels for five of the eight categories were highest for
audiovisual companies.
Whose performance falls
short, comparatively speaking? Airlines received the lowest satisfaction levels
in four categories. Meanwhile, across all findings are eight instances of the
aggregate level of satisfaction falling below a 4 on the six-point scale. Half
were for expense management tool providers and, overall, half were in the area
of product and process improvement.
When supplier
performance falls short, some organizations levy penalties. Among represented
companies in the Travel Procurement and Meetings & Conventions survey,
nearly three in 10 indicated that penalties are applied when TMCs miss
agreed-upon service-level agreement targets. Among the $1 million-plus T&E
crowd, more than one in three said as much.
When monitoring
contractual performance by airlines, hotels and car rental companies,
represented organizations are much less likely to use penalties than they are
with TMCs, and for those supplier segments are more likely to use rewards for
performance that meets or exceeds expectations.
A key part of SRM can be
sharing with suppliers feedback from travelers and/or meeting attendees. More
than eight in 10 survey respondents said they do so, including more than nine
in 10 among those representing organizations that spend more than $1 million
annually on T&E. Across the survey base, informal feedback and
post-trip/post-meeting surveys are the most popular means.
Reciprocity also can be
a key component in instances when an organization's supplier also is a
customer. About a quarter of respondents indicated such relationships with
airlines and hotels, and fewer with car rental companies (14 percent) and
travel management companies (13 percent).
Methodology & Respondent Demographics
Travel Procurement and Meetings
& Conventions invited subscribers to participate in this joint
research and editorial effort. In June and September 2013, 236 qualified
corporate travel and meetings buyers answered an online questionnaire.
Three-quarters of
respondents confirmed that they are involved in managing corporate travel
and/or meetings costs. More than half indicated they are involved in setting
corporate travel and/or meetings policies; negotiating rates for transient
travelers and/or meetings; and/or selecting or recommending business travel
suppliers and/or meeting facilities and destinations. About 40 percent said
they manage outsourced corporate travel and/or meetings management suppliers.
Represented T&E
spending slanted toward small and midsize enterprises, with 37 percent
indicating annual 2012 volume under $1 million. Another 19 percent had T&E
up to $3 million, and 9 percent more to $5 million. Nineteen percent said their
organizations spent between $5 million and $25 million on 2012 T&E, and 13
percent indicated their organizations spent more than $50 million.
About one in five
respondents to the survey works in procurement or meetings departments.
Seventeen percent indicated they work for senior management, followed by the
travel department (13 percent of respondents) and marketing or sales (12
percent).
In terms of travel
management structure, 45 percent of all respondents—including 62 percent of
those representing organizations with more than $1 million in annual T&E
spending—reported a centralized travel program. Another 9 percent (of both the
total and the $1 million-plus subset) indicated they now are centralizing. Most
of the remainder said travel spending is managed but not centralized, with
small minorities reporting unmanaged travel spending.
Third-party analytics
firm Equation Research tabulated all results.
This report originally appeared in the May 2014
edition of Travel Procurement.