Since rolling out an online booking tool in late 1999, Parker Hannifin Corp. has slashed ticket prices and headcount, enhanced productivity and found more leverage with suppliers—achieving and maintaining an 85 percent adoption rate without a mandate.
More than four years after launching its booking tool program, corporate travel manager Judy Weber continues to see new benefits from it. However, as an early adopter of Sabre BTS—the company since has migrated to GetThere—Parker Hannifin faced the problems of bolstering the new tool's adoption and had few peers to turn to for advice. "When we first started out using the system, we had about a 15 percent adoption rate, which was too low to validate whether this type of tool was right for Parker," Cleveland-based Weber said. "Because we were early, we didn't have any companies that we could truly benchmark against."
Determined to boost adoption and incorporate the tool into the company's culture, Weber went to senior management for support, which she said was pivotal in gaining traction. "I started with one group president," she said. "We tried it out for about a month and started to see the increase of bookings, and we did some guesstimates on where we could be and where we could go. Eventually, we approached the other group presidents." After gaining the backing of Parker Hannifin's eight group presidents and the company's CEO, Weber worked to adapt the tool to fit the corporate culture, adopting in 2000 an online booking policy for travelers. Weber has been able to deepen the tool's penetration without rattling Parker Hannifin's mandate-free culture.
The strategy has been one of constant education. Agreeing that travelers want to do what's best for the company, Weber and her travel department constantly inform them of online booking's value to the company's bottom line. Weber often has to show travelers "the savings, as well as the lost savings." While keeping one eye on travelers, Weber has the other locked on monitoring the tool's efficiency and costs. "We measure and countermeasure every month, because we want to make sure that we continue to stay focused, since the industry is always changing," she said of keeping tabs on adoption rates, average transaction times and overall savings.
Weber said Parker Hannifin—which spent $21 million in U.S. booked air volume in 2003—in the past two years has reduced an average 18-minute cycle time—from the initial reservation to getting it out the door—to six minutes. She also has slashed $9 in average transaction costs from 2002.
Meanwhile, productivity has spiked as headcount fell. As Parker Hannifin grows through acquisitions and new business, the travel department has met increasing demands with fewer people. "We continue to grow, but we cannot add to the travel department," Weber said. "In fact, we've been able to improve productivity by 18 percent—that's a year-over-year measurement that we're using. We went from about 30 folks in the travel department down to 13." Through the reduced headcount and heightened productivity, Weber said the travel department has achieved significant cost reductions. "Basically, our operating costs have been reduced by about $500,000 a year. That's with salary and benefits."
High adoption on the tool also has helped Parker Hannifin to drive marketshare to preferred vendors, with significantly more leverage in contract talks.
In 2000, Parker Hannifin negotiated a larger discount with two airlines when tickets were purchased through the booking tool rather than by a travel agent. Parker Hannifin went from four to three preferred carriers and used the tool to drive bookings to those preferred vendors
(BTN, Jan. 15, 2001).Weber has used a similar technique for the company's car supplier. "We were recognized by our exclusive car vendor for being able to turn marketshare within 30 days," she said. "We went from one program to another, and we were able to move that marketshare. They recognized that, and in the past I don't think we could have moved this quickly.
"I'm not sure if other companies that don't have such a high adoption rate could achieve this kind of savings and that movement of marketshare," Weber continued. "I'm not sure what the benchmark is, but I would think it would have to be between 50 percent and 70 percent to see some of this movement. Yet, certainly our average ticket price has dropped, and we've been able to stay below the industry average."
Weber now is determined to replicate in Europe the success her travel department has had with the tool in the United States. "We brought the U.K. onboard," she said. "We beta tested back in September of 2003 and rolled it out into the rest of the U.K. in January. We continue to see improvement month over month." Weber last week met with colleagues in France, Germany and Italy to get the tool off the ground in those countries. "We would like to have most of our European volume onboard by the end of this calendar year, but one foot is on the break," she said. "We want to make sure when we roll it out that we roll it out right."