<B>... As Well As In Europe</B>
By Amon Cohen
That strange beast known as travel management can find itself stabled in many different parts of a corporation. Last year's BTN Travel Manager Salary & Attitudes survey (BTN, July 31, 2000) suggested the finance department as its most likely home in the United States.
There are no comparable figures for Europe, but there are two plausible opinions as to which way the trend is going. With British Airways preparing for zero travel agency commission in the United Kingdom starting April 1, BAE Systems travel procurement manager Ray Wooldridge is convinced the zeitgeist lies within procurement. "Zero commission means we will move away from being profit centers to cost centers," he said. "Now we have to analyze travel management in terms of cost, so it will sit much better within procurement."
Compelling as this argument sounds, Association of Corporate Travel Executives director for Europe, the Middle East and Africa Herman Mensink has noted the first signs of a swing back toward human resources, one of the more traditional homes of travel management. "There is a tremendous shortage in parts of the labor force, so the position of HR is getting stronger," said Mensink. "People are job-hopping, not only for money but also for secondary benefits. Some companies have told me they are attracting people because their policy is to fly business class."
BTN spoke with a range of European travel management executives based in their companies' procurement or purchasing departments. All of them acknowledged the need for HR considerations but equally were convinced they were in the best place to do their job effectively from the buying perspective.
"A lot depends on the type of organization you work for," said Tony Archer, manager of global procurement travel services for U.K.-based Imperial Chemical Industries. "In ours, procurement has a very high profile. There are clear global procurement policies and a strong, top-down requirement for compliance, which really gives us the opportunity to drive things."
Archer identified three basic related elements to his work. The first is the push for savings through leveraged supplier programs. Next is performance, both of chosen vendors and of ICI itself in delivering deals. That leads to the last watchword: compliance. "That is the key to it all, establishing whether the company is willing and able to deliver against a supplier program," he said.
All this, Archer said, is delivered more effectively by a procurement department. "The perspective is different," he said. "If you are based in HR, you may not be driven by savings but by delivering low levels of hassle and high levels of passenger satisfaction. In procurement, you also can take a more strategic approach to handling travel--by standing back and identifying from data analysis where your areas of expenditure lie."
Archer also believes that it is easier to deliver a global program through procurement. "From our experience, there is not much evidence of global HR programs," he said. "They are often fragmented as a result of acquisitions and divestments. Procurement is easier to coordinate globally--at least, it is in our company."
Another advocate for procurement, albeit from a very different corporate culture, is Nora Byusschaert, global procurement manager in Europe for Merck Sharp & Dohme. Byusschaert, based in Brussels, is responsible for buying all non-production materials for her company and devotes much of her time to building sites and plants. She spends no more than 10 percent of her time on travel but cannot do more because Merck has a philosophy of not mandating, leaving her little latitude to hammer out deals with suppliers.
"Nowadays, you need a mandate to move business toward non-national carriers, but our managers do not want to do this because travel is not their core activity," said Byusschaert. "What they want is to increase sales for the company. It is really difficult to convince them to look at the issue, but I am hoping the disappearance of commission will change their minds."
Yet, whereas ICI is focused culturally on costs and Merck on sales, the paradox is that Byusschaert can approach travel management through procurement even though entering via a different door. "Travel is directly linked to the company's profitability," Merck's Byusschaert said. "Sales brings profit to the company and procurement is profit before sales, so if my boss sends me to the other side of the world, it is to bring profit back. Travel should be regarded as an investment and my role is to negotiate deals that everyone wants to use."
In her culture of non-compulsion, Byusschaert defines her savings on the basis of converting employees to the deals she has negotiated. She then measures those savings against the amount she spends on travel and as a result she has calculated that she personally produces a return on investment of 5 percent.
"I told my boss I was going to test the effectiveness of my travel," she said. "I abstained from traveling around selling deals to our subsidiaries for two months. During that time, the return dropped to 1.5 percent. The conclusion is that one-to-one marketing is the right strategy."
Byusschaert believes that only the procurement department is able to make such measurements. "In general services, you cannot measure what the return is," she said. Objective assessment is also uppermost in the mind of BAE Systems' Wooldridge: "In procurement, we analyze costs more, so you also have to be more IT-literate."
One of the benefits of this analytical approach, according to Ans Oosterman, purchase manager, travel at Dutch telecommunications company Royal KPN, is that "by having travel within the purchasing department, it is easier to exclude emotion. I have colleagues buying many different services, such as cleaning and temporary personnel, but also products like telephones and it is all bought without emotion," she said.
However, Oosterman is the first to acknowledge that in reality a purchasing perspective merely limits emotion rather than excludes it altogether. Her earlier experience within the company as a travel booker was enough to teach her that. Byusschaert believes a compromise can be found by factoring emotion into her decision-making process. "I take emotion into account when building my matrices," she said. "You can measure it through customer satisfaction and convenience."
Travel, therefore, is different than other areas of procurement, a point not even cost-savers like Archer and Wooldridge would deny. "If you only worried about cutting costs and sent your travelers on awful airlines to stay at awful hotels, you would very soon find all your personnel leaving," said Archer. "It is very important you don't lose sight of HR."
Travel also can affect how well employees do their jobs, Oosterman said. "The only disadvantage of being in purchasing is that sometimes I have to fight for awareness that travel is not as black and white as with other purchases," she said. "If you can buy a cheap flight from the Netherlands to San Francisco but you have to change aircraft three times, what do you lose?"
It has been said that travel is slowly becoming a commodity--making it truly the property of the procurement department--but it is these seemingly inescapable human factors that prevent commoditization in the pure sense.
"Travel is not like a product you buy and then simply discuss what the discount is with the supplier," said Francoise Chevalier, European purchasing manager for Swiss laboratory instrument manufacturer Beckman Coulter. "You need experience of travel. It is not like buying test tubes or chocolates."
It is for all these reasons that all the procurement people spoken to by BTN ensure that they maintain contact with other departments at their companies.
There is also a greater need with travel to establish two-way communications with other stakeholders within the business. "We have to involve employees more, telling them what the potential cost savings are and why we are making them," Chevalier said. Archer agreed: "There must be a clear interface with customers and individual businesses."
Meanwhile, there is one final, psychological reason for basing travel within procurement. Noone, it seems, messes with the buying department. "The reason I have the words 'purchase manager, travel' on my card is that it helps in supplier negotiations," said Oosterman. "When I go to meet a supplier, they know I am going to be a more formidable neogtiator.