Northrop Grumman's Chang Is BTN's 2008 Travel Mgr. Of The Year
Business Travel News last month named Northrop Grumman corporate director of travel, meetings and special events planning Janice Chang as its 2008 Travel Manager of the Year.
BTN editor-in-chief David Meyer cited Chang "for leading the improvement of the internal hotel request-for-proposals process and the development of an automated tool that streamlines hotel negotiations, improves negotiated rate accuracy, expedites auditing, helps consolidate suppliers and supplier data and has reshaped the industry's standard hotel RFP template."
While the internal hotel RFP tool has been in development at the Los Angeles-based aerospace manufacturing firm since 2003, it proved its mettle in the past year as Chang and the Northrop Grumman travel team of four wielded it to significantly shorten the hotel negotiating season, facilitate all negotiated rate loading by Oct. 1, reduce its preferred property base below 1,000, considerably surpass industry hotel compliance benchmarks and yield considerable savings, as 85 percent of hotel bookings come in at or under the federal government's per diem rate.
In addition, the tool enables the travel team to conduct its own rate audits, and through the improved RFP collection and rate-loading process, rate accuracy has surpassed 80 percent.
The process not only has made life easier for the travel team and travel councils across the company, but also has increased efficiency for hotels answering RFPs and enabled hotels to instantly load as many properties as they want into the system.
"This facilitates the process of conducting quarterly self-audits of 860 domestic hotels," said Chang, who has managed travel for 12 of her 35 years at Northrop. "We're constantly concerned that hotel rates are accurately reflected in the system. At last count, we had an 86 percent accuracy rate. The accuracy of a rate is essential to achieving savings. A low rate of accuracy would further decrease our opportunity for savings."
Northrop's success has garnered interest from other travel buyers and hoteliers, which has sparked internal consideration of selling the tool. In addition, a unique Northrop alteration to its RFP forms—county designations for hotels in order to adhere to federal per diem rates, which are a necessity for such government contractors as Northrop—was adopted as a new field in the National Business Travel Association Hotel Committee's modular hotel RFP.
Those rates are evaluated from October to October, and Northrop last year used the tool to change the RFP process, collecting negotiated rate offers for that timeframe instead of for the traditional calendar year.
The tool's development began in 2003, when the Northrop travel team decided to scrap out-of-the-box solutions and worked with its technology department to develop its own tool. Nine months later, the company had developed a tool that enabled hoteliers to submit RFP responses instantaneously, sort submissions for Northrop travel administrators, customize NBTA's modular hotel RFP for Northrop and send out submissions for its travel council to consider.
In the tool's first year, Northrop collected 2,700 bids. In 2007, the company collected 2,100 RFPs and now has 968 preferred hotels in its program. While NBTA's hotel RFP has 862 fields, Northrop's required fields total only 80 to 90.
"Across the industry we hear all the time, 'I hate RFP season,' " said travel program administrator Rene Cruz, who handles Northrop's hotel directory. "I love RFP season. I never worry about it, because we built the system so that you can get the data for us, spit out whatever we need and change it for the way we want it to work."
"We want to make sure that everyone is engaged in what we are doing across the enterprise," Cruz said. "All travel managers in each sector can go into our database and vote for the hotels they want. We tally that up and send it back to our online supplier and American Express, who can load our rates in by Oct. 1."
The hotel efforts have paid off in policy compliance. While buyers traditionally have struggled to drive preferred hotel compliance—some of the more successful ones have reached about a 60 percent rate—Northrop leveraged its GetThere online booking tool to achieve a 77 percent preferred hotel program compliance rate by 2006.
Northrop has a massive program with 55,000 travelers. Projected 2008 expenditures based on first-quarter totals are $400 million in T&E, including $162 million in air, $108 million in hotel and $28 million in rental car. The company uses preferred airlines 84 percent of the time, and annual domestic cost per mile last year decreased 3.1 percent while international cost per mile declined 6.7 percent.
Chang and her team also have focused on online booking adoption, which as of May is at 87 percent. Associated transaction fees are 77 percent less expensive than Northrop's offline bookings, and adoption has helped the firm reduce service fees an additional $4.7 million in 2007. "If we didn't work as a team, we would not have been able to achieve these savings," Chang said.
Most U.S. transactions have moved online with a 90 percent touchless rate. Chang is leading the transition of the company's executives from the full-service offline travel service desk to its online booking tool. Executives are no strangers to Chang's travel management shop.
"Senior management is always a key element," she said. "Their support is essential to the corporate travel council with members from all seven of our sectors," according to Chang. "It's their commitment and our staff's commitment with onsite development and development of all training tools."
Stakeholders across Northrop have supported the travel program and facilitated its successes. "This is a complicated process, but all these steps are necessary if you want to achieve results," Chang said. "You need that buy-in and need to demonstrate that you can create the cost savings that you feel are potentially there."
BTN's Travel Managers Of The Year
2008: Janice Chang, Northrop Grumman
2007: Donna Kelliher, Dominion
2006: Duane Futch, Wal-Mart
2005: Richard Wooten, Lockheed Martin
2004: Susan Finkbeiner, Goldman Sachs
2003: Ellen Hanzl, Computer Associates
2002: Kevin Iwamoto, Hewlett-Packard
2001: Mick Lee, CSFB
2000: Cindy Heston, Thomson Consumer Electronics
1999: Andrew Menkes, Republic National Bank
1998: Bob Grant, Charles Schwab
1997: Koos van der Berg, World Bank
1996: Colleen Guhin, Texas Instruments
1995: Fred Swaffer, Hewlett-Packard
1994: Joyce Flinn, Digital Equipment Corp.
1993: Joe Monaghan, Dr. Pepper/Seven Up Cos.
1992: Denise Ryan, Citibank
1991: Peter Buchheit, Black & Decker
1990: Carol Salcito, United Technologies
1989: Eileen Wingate, Harvard University
1988: Carol Duerr, United Bank of Colorado
1987: Kathleen Franger, Applied Materials
1986: Loretta Martin, Gates Rubber
1985: John Bacon, Tenneco