Profiles In Travel Management - 2005-09-05

Co.'s Overhaul Spurs Travel Mgmt.
Company: Cardinal Health
Headquarters: Dublin, Ohio
U.S. Booked Air Volume: $35 million

In late 2004, Dublin, Ohio-based health care products and services provider Cardinal Health embarked on a corporate philosophy overhaul that profoundly impacted the company's corporate travel division, said global travel director Cotton Tarr. The restructuring, dubbed "Operation One Cardinal Health" and aimed at long-term, year-over-year savings, enabled Tarr to pursue new partnerships and cost-management strategies, including online booking and meetings technology implementation, program globalization and an aggressive approach to hotel program compliance.

According to company financial reports, Cardinal Health improved its cost structure by roughly $132 million in the past fiscal year, exceeding its 2005 goal of $125 million.

"Everybody within our organization gets the One Cardinal Health philosophy. Yes, there were questions and initial pushback, but overall, the buy-in was there," said Tarr, who added that the travel program he found upon his arrival at Cardinal Health six years ago was largely unmanaged with "no single policy or agency, no focus on consolidating spend, and no real preferred-vendor program."

"Most of our business units operated pretty autonomously. Our philosophy was, continue to operate, you know what you're doing, but there was a cultural change there and those changes were difficult," Tarr said of the program consolidation he began implementing upon joining the company. "Once we'd gotten that senior management buy-in, it was about getting the business units to understand what we were trying to accomplish," a feat, he added, that ended up being more challenging than getting C-level support for the consolidation strategy now so integral to the One Cardinal Health vision.

Cardinal for the past three years has classified travel as a division of strategic sourcing, which has allowed Tarr to more aggressively implement online booking and meetings management technology to drive cost savings.

"It's allowed us to be able to talk about overall vision or overall philosophy, and prove why we need to provide the reporting we've been able to provide," Tarr said, adding that the company last year migrated to Outtask's Cliqbook with agency partner WorldTravel BTI.

Cardinal Health, which has 55,000 employees and maintains 20,000 active traveler profiles, does not mandate use of the approved online booking tool and was nearing 80 percent adoption among the total number of passenger name records prior to the Cliqbook migration.

"Through a very effective migration process between Cardinal Health and WorldTravel BTI, we did a complete, single-day migration. We did not do a phased approach. We just flipped the switch," Tarr said. "By the end of the first day, we were at 72 percent adoption and by the end of the first week, we were back up to 80 percent."

Tarr added that, if not for the inclusion of all meetings activity, the company's online adoption rates likely would be even higher.

"It's been mostly the last year and a half that we've really wanted to look at meetings spend," he said. While the company does not have a consolidated meetings program, it does route all meeting planning through the travel center. "We have purchased (WorldTravel Meetings & Incentives') Plan2Attend, so we're trying to utilize that technology. Anywhere from 15 to 25 percent of our spend is meetings. We're probably looking at 18 to 20 percent. That's what we don't know. We know through some spend visibility, but now we're really trying to dive into that."

Cardinal Health also partnered with WorldTravel to address hotel spend. Prior to outsourcing hotel program management to WorldTravel BTI's consulting group in 2002, the company's hotel compliance rate hovered around 40 percent.

"WorldTravel BTI was very helpful in allowing us to understand the kind of hotel booking leakage we had out there. Once we saw that, we said if the travelers did not book their hotel through the company-provided vendor, they were not going to get reimbursed. Right now, we're at 99 percent compliance," said Tarr. "We said that even if you're standing in the hotel lobby and don't have a reservation, you need to call the travel center and have us book it right there. The amount of hotel spend that we were capturing through BTI went up 110 percent and that now allows the hotel consulting group to go to market with more value and leverage. We get a tremendous return on investment with that group."

During the last fiscal year, he added, hotel savings totaled roughly $4 million. "From what we were measuring, that savings number almost tripled." Still, said Tarr jokingly, "Moving forward, of course, it's 'What have you done for me lately?' "

With the momentum achieved through its proven online booking and hotel programs, Tarr said that he will apply what he's learned of late about corporate travel management to other countries.

Though only about 10 percent of the company's travel to date is international, Tarr has implemented a consolidated travel program with WorldTravel BTI in Singapore, France, Belgium and the United Kingdom, and plans to roll out to another four countries by this October.

"We've announced to Wall Street that the majority of our future growth will be outside of the United States. Our goal is to get the infrastructure laid down, so that as acquisitions take place, we can just plug them into the system," Tarr said. "Travel was the first One Cardinal Health initiative that was implemented across Europe. The three countries that are up and running in Europe today are on a single European policy and using the traditional process, but we're looking at a BTI tool in the U.K. Everybody's sort of getting in the same sandbox to play together."

The emphasis on savings-driven collaboration and innovation promoted by the corporate culture overhaul has undoubtedly encouraged the travel team to "think outside the box" and expanded Tarr's ability to demonstrate the value of a managed travel program.

"My goal is really just to adapt quicker, faster and better so I can keep providing great service at the lowest cost," Tarr said. "I look at my role as that of a leader of organizational change, I just happen to do it in the area of travel. We've got a lot of change happening in the marketplace, and I'm charged with developing innovative solutions and capturing the imaginations of the people I work with."