DaimlerChrysler Shifts Into Global Gear

Company: DaimlerChrysler

Headquarters: Stuttgart, Germany

2001 Total air spend: $325 million

2001 U.S. air spend: $55 million



When Daimler-Benz merged with Chrysler, the newly formed DaimlerChrysler travel management team for Europe and the "rest of the world"—which handles travel for everywhere except the Americas—replaced its entire program with a highly automated and strategically planned global travel management solution.

With the former Chrysler people in the United States handling the Americas, the Germany-based team adopted many of the procedures that are familiar to most companies that consolidate their programs, such as reducing the number of travel agents and choosing a corporate card. However, DaimlerChrysler went much further. Stemming from a mandate to save tens of millions of dollars worldwide on travel in three years, every step of the process from trip planning to expense reimbursement has been automated. As such, travel has been given the role of e-process trailblazer within DaimlerChrysler.

"What we have now is a real e-business solution," said Bernd Burkhardt, head of travel management Europe and the rest of the world. "Travel is the ice-breaker in the company for employee self-service."

The new travel program in December 2001 was rolled out in Germany, which accounts for approximately 85 percent of the company's non-Americas spend. Some of the initial results already are proving spectacular in both purchasing and process savings. The complete travel process is now paperless. Cash advances, which used to amount to €7.5 million annually in the Stuttgart area alone, have been reduced by 80 percent. Usage of net fares has risen to 75 percent in 2002, from 34 percent in 2000, while electronic ticket usage in Germany has rocketed to 80 percent, from 30 percent, over the same period. Most importantly, DaimlerChrysler has gained the upperhand in supplier relations.

Last July, two airlines quoted the company net fares on the same route that were €1,000 apart. When the airline demanding the higher fare refused to come down, DaimlerChrysler used its consolidated power through its consolidated travel service center in Stuttgart to switch off 90 percent of its business in one week. A few days later, the airline requested a meeting to renegotiate. "This was the first time we showed we can match words with action," Burkhardt said. "Now we are really able to shift marketshare."

The combined DaimlerChrysler has 370,000 employees worldwide, of which 191,000 are in Germany and an estimated 35,000 are travelers. Annual travel spend in Germany is €180 million, while in the rest of the world outside of the Americas it is an estimated €25 million to €30 million.

Burkhardt, who has been with the company for 20 years in different management positions, became involved in travel after overseeing the consolidation of the sales departments in the merger, which happened in 1998, and the new DaimlerChrysler started hunting for more economies of scale. As one of the largest controllable expenses, the spotlight quickly landed on travel. "The company said travel was now a strategic issue. Before, it was more or less a sales promotion activity, with anyone who bought Mercedes winning our business," Burkhardt said.

Burkhardt assembled a project team to assess travel expenditure and formulate a strategy following a benchmarking and consultative exercise with other companies. At the time, each of DaimlerChrysler's 13 plants had its own travel processes and systems and used 70 different agencies. Now there is one process, one system and one agency, producing a far more efficient program that has been optimized through shared services and automation. "Every step has been reengineered, from planning to reimbursement and accounting," Burkhardt said, resulting in the elimination not only of cash advances but other such inefficiencies as trip approval and centralized travel expenses.

DaimlerChrysler restructured its program through what it describes as two "strategic partnerships," one with TQ3 Travel Solutions, its consolidated travel agency choice, and SAP, which has provided its Amadeus-partnered online booking and expense management solution. Such phrases as "strategic partnership" are bandied around all too easily in corporate life, but Burkhardt insisted that the relationship with TQ3 is much more than simply one of service supplier and customer. "We were not interested in changing our agency," he said. "We wanted to find a partner that would look companywide at the business travel value chain. There must be economies of scale, but we expect qualitative as well as quantitative aspects. In return, we will help TQ3 roll out a new way of doing business."

TQ3 has seen its share of DaimlerChrysler's business rise to 95 percent, from 25 percent in December 2001. One of its central functions is as guardian of the travel policy, making sure that its centralized system in the single center in Stuttgart only permits preferred suppliers to be used. For example, travelers only are allowed to use the rental car category to which they are assigned. Previously, they chose more or less any vehicle they wanted. Compliance has improved enormously as a consequence.

Centralization through the single center has produced several other innovations from TQ3, such as a complaint recording system, called Mea Culpa. This has enabled DaimlerChrysler to track patterns in traveler grievances for the first time and has produced real change. Mea Culpa logged numerous complaints about passengers from Chicago to Stuttgart consistently losing baggage in transit at Amsterdam. KLM was alerted, agreed the transfer time was too short and accordingly lengthened the connection by 20 minutes in its most recent timetable change.

Mea Culpa is a small example of the benefits DaimlerChrysler is reaping through automation, most of which is powered by its other strategic travel partner, SAP. Burkhardt said the German enterprise resource planning system provider was chosen because it offered an integrated booking and expense management tool that allows travelers to input data only once. DaimlerChrysler uses SAP as a standalone accounting system in some parts of the organization, but it is not widespread.

As well as the efficiencies of being paperless, Burkhardt wanted an Internet-based travel system because that allows it to be used by employees worldwide. Before consolidation, DaimlerChrysler previously operated 16 different systems for managing expenses. Even signatures are added electronically. Travel data also are integrated into the company's internal human resources system.

Online bookings stand at 200 per day, a penetration rate of around 25 percent. Burkhardt is pleased with the figure because he has not yet promoted the online channel heavily. However, he aims to drive the figure up to 35 percent this year and particularly wants to see growth on the company's main city pairs. One method of encouragement will be making the internal transaction fee cheaper for booking online than via a live agent. Automated expense management also is going well, with €1.8 million being reimbursed electronically each week.

Burkhardt made no bones about the fact that the travel management revolution he introduced has not been universally popular. "At the beginning, it caused a huge problem. Now, the employees are more comfortable with it, especially the younger ones," he said. His cause is being helped by the benefits for travelers becoming more apparent, such as reimbursement taking one week instead of up to three months, as previously was the case. The number of calls to the TQ3 support team has dropped to 300, from 800 daily when the program was launched.

The travel management team had a long discussion over whether to introduce its new program gradually or in one fell swoop. "We decided to do the big bang because we realized we would only have the attention of the company once," Burkhardt said. "It was the right thing to do. We did have problems, but if we had done it step by step, we would have had problems with every step."

Nevertheless, there are several things Burkhardt would have done differently with the benefit of hindsight, including better educating the secretaries, whose influence he had not appreciated sufficiently. In his communications, he also would have placed the travel revolution more fully in the context of a wholesale adoption of e-business strategy by the company.

While Burkhardt works on rolling out the travel program to the rest of the world in 2003—starting with South Africa, the team's second-largest market in their territory—some personnel issues remain unresolved. Germany has strong worker representation and unions are expressing concerns over the implications of online booking on delineation of duties and transfer of work to the employee. The debate is a reflection of the pioneering role that travel is playing in DaimlerChrysler's internal strategy restructure.