Profiles In Travel Management - 2005-12-05

Rapid TMC, Card Rollout
Company: JT International
Headquarters: Geneva, Switzerland
Worldwide Air Volume: $50 million
JT International switched to American Express as both its travel management company and card provider in 40 countries, including locations as diverse as the United States, Lebanon, Hong Kong, Estonia and Brazil, in the space of just four months. What would be a rapid consolidation for any company is even more noteworthy for JTI: The world's third-largest international tobacco company, with such brands as Camel, Mild Seven, Salem and Winston, is not a rigidly centralized business. All its divisions, such as product manufacturing or sales and marketing, are highly autonomous.

"Managing travel across 40 markets is very difficult. Managing travel in several organizations across 40 markets is even more difficult," said Calin Schiau, the company's global service procurement manager. He attributed successful completion of the project to meticulous preparation, a willing corporate culture, global participation in the request-for-information process and downright hard work. "During the implementation, our group worked many extra hours," Schiau said.

JTI has 12,000 employees who make and sell cigarettes in 120 markets worldwide. When Schiau arrived in November 2002, the travel program was well-organized in pockets, especially at JTI headquarters in Geneva, which accounts for half of the spending, but was largely local. Still, Carlson Wagonlit Travel managed its reservations in 12 markets. Card spend was either fragmented or nonexistent.

Schiau decided his first task should be a comprehensive, country-by-country survey of the business' travel operation, including its travel management company and main suppliers. He found a lack of international coordination. One exception was a consortium car rental initiative in five countries with a group of other multinational companies.

Survey results showed management of the company's travel expenditure split between procurement, finance and human resources departments in different countries and lead responsibility spread from secretaries to general managers.

Schiau concluded JTI needed consistent internal travel ownership, a travel management company consolidation and a card consolidation to bring the company's travel purchasing and processing costs under control. Schiau obtained backing for his plan from senior management, but before creating the requests for proposals, he sought as wide a consensus for his work as possible. "I started to build a cross-functional and cross-regional team, because I knew I would need the support of all of them," he said.

The regional CFO appointed the implementation team and Schiau recruited functional representatives from financial control, information technology and legal departments—because he sent out legal agreements alongside the RFPs. Once assembled, each team member participated in framing the RFPs, weighting each response category, such as cost. Members were required to sign an endorsement of the RFPs.

During the travel management company RFP process, Schiau invited American Express, Carlson Wagonlit and TQ3 Travel Solutions to participate. All three were invited to a launch meeting, where they were given the documentation to read and invited to ask any questions they had about the tender in front of their competitors. They then were given two weeks to study the document in depth and ask more questions, the answers to which again were communicated to all the participants.

Although Schiau staged the card and TMC RFPs separately, Amex emerged as the most impressive contender in both. Schiau asked Amex to merge its bids at this stage but it refused, citing a need to keep its two businesses at arm's length.

Still, synergies have emerged. Most important is a single, integrated management information platform that allows JTI to compare booked and billed data. Amex committed itself to producing savings using its buying power, consulting services and special fares unit to find fares that were lower than JTI's existing net deals. When none existed, Amex benchmarked against public restricted fares.

Generally, Schiau has been pleased with Amex's performance. Implementation was not as seamless as he had hoped, however, with significant gaps in some markets between the global vision and the local reality. Local franchises were not always up to standard, with several countries simply not following the implementation plan and intermittent-at-best communication between the travel management company and card businesses. Worried that the project might be in jeopardy, Schiau complained to Amex at a senior level, which upgraded JTI to Amex's elite Global Business Partnership account management group, usually reserved for its top 50 multinational clients.

"The Global Business Partnership has a much greater ability to manage and inform across markets," Schiau said. "It has totally changed our lives. Integration is much better."

American Express also offered several service innovations to win the business. One example was in Turkey, where it usually issues a U.S.-dollar-based payment card. JTI requested and received a local-currency-based card.

Schiau attributed much of the success to JTI's commitment. "We decided JTI would be represented in the implementation at the executive level by the general manager, the human resources manager, the CFO and the leader of the implementation," he said. "They committed to it because they could see it would achieve a significant reduction in the cost of our business processes."

With the TMC and card fully embedded, Schiau expects to see major benefits next year when he can use the consolidated data as evidence of ability to deliver on supplier deals. Schiau already used the first few months' data to negotiate JTI's 2006 hotel program, and, despite the hotel seller's market, secured rates that are the same or lower than 2005 in almost every city other than Moscow.