Direct Corp. Purchasing Is Not The Future...It's Now

<B>Direct Corp. Purchasing Is Not The Future...It's Now</B>

The mission of the corporate travel manager as I have seen it for the past six years is to "focus on the purchase of travel elements at the best possible price without compromising the comfort, care or security of our travelers." That statement does not contain anything about methods and I see direct airline purchasing as nothing more than just another method for making the purchases.

From the time we started, first as a full-service travel agency and then as a Corporate Travel Department, we have been able to establish significant relationships with front-line vendors. The result has been a direct reduction in our ongoing unit costs for the purchase of travel. Every hotel room, rental car, airline ticket and limousine that can be booked without commissions is booked without commissions. We don't chase overrides or incentives or back-end programs. We want the best possible price in exchange for our commitment of delivery of revenue. It's very simple.

The cost to generate the service we provide is simple too. We could outsource any or all of the elements of production, however, we prefer to keep it in house. It is the cost. Is our cost higher than other company's costs for managing travel? Could be, but I doubt it. What I do know is that after all our costs are measured, we contribute over $3 million per year to the bottom line of the company. With about $25 million in net air volume, that is a pretty good return on investment.

The methods we use are the best we can find. We use automated booking engines and run over 45 percent of our volume online. We have integrated electronic expense reporting into our res system and have a method of monitoring purchases. We have implemented systems that serve the primary tasks of our mission and enable a more positive management of the travel purchasing process.

Direct purchasing is just one more method that will allow us to improve our cost benefit in purchasing travel. It also will enhance the vendor relationships. I do not mind that our vendors are cost-conscious and profit-motivated. Somehow, I do not believe there is a conspiracy to take advantage of corporations. I have always been able to secure fair contracts in exchange for a fair commitment of our volume. Vendors respond very positively to actions that we have taken in a directed manner and with respect of the contract. They give us a discount, we give them passengers. Still pretty simple to me.

There is a tradeoff in that I may not have all the elements of a passenger reservation in the same system and I may not be able to gather and analyze data with the same facility that I have before. I can manage through that, however, given the significance of the rewards gained by direct booking.

The bottom line is that I can only manage those pieces over which I have control. If booking directly gives me better pricing and a strengthened relationship with a preferred vendor, I am going to do it. It only enhances the "quid pro quo."

<I>Bob Grant is manager of corporate travel for Charles Schwab & Co., based in San Francisco.