Lexmark Tracks Travel Program Averages

<B>Lexmark Tracks Travel Program Averages</B>

By Megan Hjermstad

<I>Lexington, Ky. - </I>1999 was a year of change for Lexmark Corp.'s travelers and a year that travel manager Marge Gordon spent managing change. The global printer solutions company on March 1, 1999, brought Gordon onboard, introduced a new set of suppliers, brought on a new agency and mandated a new travel policy in one fell swoop.

"Before I came onboard, Lexmark didn't really manage the travel program as fully as they could because there was no one here that had my core competencies," Gordon said.

Over the past year, Gordon has measured savings on Lexmark's $13 million air volume by tracking average airfare year over year. "We do all the same things as everyone else. We say we save this amount from air, this amount from hotel. But the measurements that really matter to Lexmark are averages and that's where we can show the savings," said Gordon.

In 1999, compared with 1998, Lexmark reduced domestic airfare 17 percent, international airfare 12 percent, car rental rates 20 percent and hotel rates 18 percent. "The averages allow us to factor in market changes, allow for changes in our business and track consumption versus the unit price," said Gordon.

"This year, for example, we're traveling more than we did last year so our travel spend is up, and our travel savings should be up. But what's important here is how the averages are keeping in line with that. I don't think that telling someone a lump sum tells you anything about spending habits. I do display lump sums to management, but I think the most telling part of the story is what we did to the averages."

Gordon gets monthly reports with averages, total spend and total trips from her agency, Maritz Travel Co. "You can truly see how savings are achieved through policy," said Kathy Jacimini, manager of account development at Maritz. "I've been in the business for 15 to 18 years and it is the first company that I have seen ever really make a travel policy work. Everyone says that they have a policy, but how are they able to truly implement it?"

Following a competitive bid process, Maritz was selected as Lexmark's agency based on service, pricing, reporting and complementary corporate culture. "They're doing a good job for us in terms of performance," said Gordon. "I would say that the agency team is really doing the hard part in terms of enforcing policy."

Gordon said senior management also was instrumental in planning, implementing and enforcing policy. "Our executive vice president and CFO were, and still are, the executive sponsors of the program. The idea to even start looking at what the company was doing in terms of travel came from our executive vice president so it started at a very high level," said Gordon. "And they still are providing very vocal and very visible support."

Backed by senior management, Lexmark implemented a strict exception process to encourage travelers to take the lowest fare within policy and use the preferred suppliers.

"At the time of booking, if I want to book a ticket that's outside of policy, the agent says you can't and this is why. If I persist the agency says, fine we are sending an electronic approval form to your finance director," Gordon said.

The agent submits an exception report that includes the name of the traveler, the fare, the supplier, the amount of money the company is losing and why it's outside of policy, which then is approved or denied by the finance director. In the first 10 months of 1999, 60 exception reports were not approved; this year through mid-June, 25 reports were refused.

"We know they're changing their behavior because of this," said Gordon. "We know who they are, what divisions they're coming from, what we're losing because they're doing it and why they are doing it. It documents the choices travelers are making when they go outside of policy and lets them know that someone else is looking at it and someone who has the authority to say, 'no, you can't do this.' "

Gordon communicated the new policy through an electronic bulletin board, via the purchasing Web site, in memos to senior management and with travel seminars. Gordon prepares quarterly reviews for senior management and periodically sends out bulletin board notices to tell employees how the travel program is doing and what the company is saving. "Communication is an ongoing type of a thing," said Gordon. "This company really believes in communicating."

Lexmark has three preferred carriers in the policy, and has net-net agreements with two of them. "We've done a real good job in moving suppliers," said Gordon. "In 1998, we were using carrier A and that airline had 62 percent of our volume. By the end of last year, that carrier had 32 percent of our volume."

Lexmark also has moved 90 percent of car rental bookings to its two preferred car rental companies.

"We're really focusing on where the high dollar is, the airlines and car rental, and then we'll start working on hotels a little bit better," Gordon said.

Lexmark currently has 10 to 12 hotel properties in the program and Gordon is working on adding properties and increasing bookings through the agency to get a better handle on the data.

"My goals are to move forward on globalization, definitely evaluate online booking products, improve hotel compliance and find meaningful benchmarking tools," said Gordon. "I want to benchmark against companies that are similarly located, with similar travel patterns. I use very basic numbers that are available to everybody and that's the best I can do right now."

Although Lexmark has not yet researched online booking tools, by third quarter it will implement a Web-based automated expense reporting system. Lexmark's controller for the Americas sponsored the initiative and put together a committee to select the vendor. The committee, including travelers and people from the IS, finance and travel departments, worked together for at least half a year to try to determine who was the supplier with the product that would work best for Lexmark.

"The company is trying to make it easier for the travelers so the travelers can better serve our customers," Gordon said. "We're trying to streamline the process.