Profiles In Travel Management: CVS Fills Prescription For Caremark Travel Integration - 2008-10-06
Company: CVS Caremark
Headquarters: Woonsocket, R.I.
2007 Air Volume: $20 million
No stranger to merger and acquisition activity and the subsequent effects on its travel program, the CVS travel team in 2007 once again was tasked with integrating a large company into its travel portfolio, when the pharmaceutical retailer merged with Nashville, Tenn.-based pharmacy benefits manager Caremark Rx in a $26.5 billion deal. CVS's strategic sourcing and travel organizations embarked on an aggressive integration project that doubled the combined firm's air volume to $20 million and required renegotiation of vendor agreements and a reevaluation of travel management company services.
Within 30 days of the merger, CVS director of strategic procurement Lori Perron and supervisor of travel services Rosette Levesque led the rollout of a combined travel policy, renegotiated contracts and migrated the Caremark travel program into CVS's Expedia Corporate Travel—now Egencia—online booking environment.
In post-merger sourcing efforts, of paramount concern was "maintaining the history of strong online adoption, accurate consolidated reporting and additional savings opportunities and synergies by consolidating contracts," said Perron.
While CVS has been using Egencia for about two years, Caremark handled offline reservations primarily through a regional agency. Caremark had an online adoption rate of less than 30 percent, and did not use the preferred travel management company as much as CVS did.
To ease the transition, the CVS travel team—comprised of Levesque, a meetings manager, a coordinator for non-CVS travelers and a strategic sourcing group—held onsite training, online seminars and visited Caremark offices.
"There was so much other change, we wanted to make sure that it was an easy transition for Caremark employees and make sure the adoption rate wasn't lost because they were used to calling an agent," said Perron.
Through senior-management-endorsed communications, a mandate to use Egencia and multiple training programs, the combined firm achieved an 82 percent online adoption rate within a month, which now stands at 86 percent. CVS Caremark also surpassed Egencia's 84 percent customer satisfaction benchmark with a 91 percent rate, determined through an annual survey.
Although faced with rising airfares and a difficult negotiating environment, CVS Caremark's combined negotiating efforts and increase in preferred vendor compliance yielded an 11 percent average ticket price decrease in 2007. Additionally, a new lowest-logical-airfare policy will generate further savings, Perron said.
Now, more than 10,000 CVS Caremark profiles, including 8,000 travelers, are housed in Egencia. Nearly all of the company's travel is domestic and travelers are required to book most trips online. Some executive bookings are handled through Egencia's VIP agents, and if travelers cannot find preferred hotel rates in a particular location, they may call an agent.
CVS—which previously acquired several pharmacy chains, including Eckerd, Osco Drug and Sav-On Drugs—transitioned to the then-Expedia Corporate Travel from a traditional TMC two years ago, Perron said. It made the move because the pharmacy chain's highly automated and mobile culture, with many employees working virtually, reduces the need for online agent services in lieu of a more Web-based platform.
Meanwhile, Perron and Levesque plan to implement an online meetings procurement solution. As in many companies, travel was down in the third quarter of 2008, but Perron expects trips to increase in the fourth.