3M Consolidates In 23 Countries
<H1> 3M Consolidates In 23 Countries</H1> By Amon Cohen
"Choosing one agency is the foundation of the house of travel," said Gwynn Evans. If his analogy is right, then Evans, manager of purchased services-Europe for 3M, has just built one of the largest condos on the block.
He was responsible for consolidating 3M's $30 million travel spend in Europe and the Middle East by selecting Carlson Wagonlit to handle the company's business in 23 countries.
The contract, which started in January but has kicked into gear only over the past few months, replaces 3M deals across the territory with 29 different agencies. It represents the first major achievement in Evans' strategy, which reads like a model case study for any company rationalizing a previously uncontrolled travel expenditure across national boundaries.
Although it is too early to measure results, Evans said he expects the consolidation to save 3M at least 10 percent on travel within the next year. He is pleased with the company's progress, particularly in terms of the quality of management information he is receiving. Such information is of vital importance for his next mission, which is to negotiate pan-European deals with airlines.
Evans' 37-year career at 3M has been spent mostly in purchasing, which prepared him for travel management. In 1986, when he was given the job of coordinating raw materials purchasing across Europe, the company-which makes everything from Post-It notes to abrasives to masking tape-was moving from a national to a regional focus, assessing its business on a pan-European basis rather than country by country. In 1994, Evans was asked to do the same job of pan-Europeanizing services, including not only travel but other non-traditional purchasing areas such as advertising, cleaning and hire of temporary staff.
He found travel the most formidable area to tackle because staff took it much more personally than other services and was not accustomed to intervention by professional purchasers. "This was a totally new area for purchasing at 3M," he said. "Travel was previously handled by different areas of the business, including finance and office services. The approach we took was to say: 'purchasing is here, we have strong negotiating abilities, let us be part of your team.' "
Evans started by conducting an audit of the company's agency and airline arrangements throughout the region. When he discovered that 3M was using 29 agencies in his region and sometimes several in one country, he decided that his most important task was to consolidate to a single supplier. "Having so many suppliers was not helping us to understand our business, leverage our spend or maximize our savings," he said.
Despite the proliferation of agencies, Evans found that each 3M territory was doing a good job with its travel locally and had good deals with suppliers. That made his job more difficult because he had to convince local managers that what he could negotiate was ultimately better for the company than the sound arrangements already in place. Some managers were reluctant to be pried from agency relationships that stretched back many years.
Two factors helped him convince the locals. Most crucially, he had a full and explicit mandate to consolidate from the very highest levels of 3M on both sides of the Atlantic. Secondly, he was helped by the strength of the company identity.
"Even though we are different cultures and different nations across Europe, we are one corporation," Evans said. "If I pick up the phone and speak to a colleague in Norway, I know they are going to be just as positive about 3M. I had no trouble convincing people that we had to go to one agency, but I did have trouble convincing some of them which one we should use."
In the final selection process, four contenders-Carlson Wagonlit, American Express, Business Travel International and Global Travel Management-visited 3M offices in almost every country. Most countries were allowed to scrutinize the tender proposals, enhancing their feeling of being involved in the process.
Carlson won the business on the strength of its management information systems, its commitment to savings and previous track record with 3M in four European territories. The contract is for only one year, with a one-year extension.
Once the decision was made, events moved quickly. Toby Joseph, Carlson Wagonlit's director of multinational sales for Europe, underwent a whirwind tour of 20 countries to establish requirements and set up the transition. Evans accompanied him on 10 of these trips. "There was a good level of buy-in from 3M in each territory," said Joseph, who is now U.K. director of development and marketing.
Evans has appointed fellow 3M purchaser Piet Stokman, who is based in the Netherlands, as European travel purchasing manager. Carlson Wagonlit, meanwhile, has dedicated a manager to the 3M European account. He is based in Brussels, where 3M's European headquarters are located.
One of Evans' next goals is air consolidation. Eighty percent of 3M Europe's travel is within Europe, and the balance is to the United States. The company uses more than 50 carriers, a number that Evans wants to reduce drastically. "I see no reason why we should use more than 10 major airlines for the bulk of our traffic," he said.
Like many travel managers before him, Evans is finding it difficult to crack multinational aviation deals. He believes it is more a case of "won't do" than "can't do" on the part of the airlines.
Evans, meanwhile, wants to tidy up some loose ends on the agency front. The initial agreement with Carlson Wagonlit is largely the old-fashioned commission and rebate system, which the two sides went with because it was quickest to install. However, a more progressive form of remuneration is likely to be introduced before too long.
"The objective is to move all the markets to a management fee, but in some cases we need to get data from the first year's volume to calculate this properly," Joseph said.