Synthetic Travel Consolidation Yields Real Savings

<B> Synthetic Travel Consolidation Yields Real Savings</B>

By Sarah Welt

<I>Chickamauga, Ga.</I> - Just six months into a new travel management program, Synthetic Industries already has opened an onsite agency, negotiated its first corporate card agreement, renegotiated its car rental deal and created a formal travel policy. The new travel program is credited with cutting its $1.5 million air travel spend by 20 percent.

The travel program comes as part of a companywide supply-chain initiative begun last fall to look at various purchasing options and identify cost savings opportunities--with travel being a top priority. As part of that project, the supplier of carpet backing and other textiles goods in January formed a travel committee and charged it with consolidating agencies to facilitate gathering travel spending data and negotiating with vendors. In June, it consolidated all travel purchasing with Omega World Travel of Fairfax, Va.

The committee included director of continuous improvement Frank Grebowski as team leader, travel manager Debbie Ellis, director of sourcing and procurement Larry Webb, as well as members of the sales team. After interviewing travelers and travel arrangers about the agencies they already were using, the committee sent out RFPs and received responses from 20 agencies. It narrowed the list to four finalists who were invited in for formal presentations.

"We wanted to submit this proposal to national agencies to see what they could offer us," said Ellis. Grebowski added that "switching from local to national agencies was not an easy thing to do, but we wanted to test the pros and cons of both national and local agencies."

Synthetic chose Omega partly because it was price competitive, but largely because of its service and acceptability to travelers, as well as the fit between the two corporate cultures. The company also wanted a technologically savvy agency partner. "We felt we needed an agency that understood the technology well and could help us over the coming years," Webb said. "We are not heavily into the technology aspect yet because we are still working on traveler acceptance, but it entered heavily into our final decision."

SI and Omega signed a management- fee contract, with 100 percent of commissions being returned and funding the onsite operation. If commissions continue to be reduced, however, the company hopes to fund the onsite through vendor discount agreements and reducing unnecessary travel.

To back up its consolidation, the company instituted its first travel policy, opting for a flexible, one-page policy and corresponding travel handbook to help employees make educated travel choices. "We decided to take the attitude that travelers are mature adults and professionals and act in the best interests of the company," Grebowski said. "The policy doesn't give them a bunch of do's and don'ts but rather guidelines we consider to be reasonable, and asks them to make the best decision between cost, convenience and routing."

SI also signed up for the American Express corporate card in August and began rolling it out to travelers in mid-October. For car rental, it was using Avis before the agency consolidation and added Hertz in September.

Airlines are another matter. Right now, SI does not have any negotiated discounts. "We have been advised by Omega that we need to accumulate at least six months worth of data before we approach the airlines," Ellis said. When it does, Webb added, "as director of sourcing and procurement, I will take a very active role in doing these negotiations in conjunction with Omega." The company at that point also will revisit its car rental program and begin choosing preferred hotels. It already has sent out a mass e-mail to travelers to get an idea of which properties they are using. Until it negotiates its own rates, it will use Omega's hotel program, which includes more than 5,000 properties.

On the technology front, SI has seen presentations on several automated expense reporting products, but will let the accounting department make the final decision. Automated booking, on the other hand, is not yet on the company's radar screen. "I think both of these are a little down the road," said Grebowski, noting that the company already has enough on its hands with the simultaneous rollouts of the agency and credit card programs. "It might have been better to stagger that a little bit," he acknowledged. "If we were to start to bring all of the technology in right now it would be too much change at once."

Next on the agenda at Synthetic is bringing its newest acquisition, Novocon Steel Fiber, into the travel infrastructure. Novocon had a travel program but not a travel manager.

For now, Ellis is focusing on working out the glitches in the consolidation and getting everything running smoothly. The biggest challenge has been "getting everyone to use the agency. It is difficult to give up a person you have been doing business with for 15 years that knows your travel habits and brings your tickets to the door," she said. "We knew that was something we would have to overcome, but we think travelers that are using us will see that although they may be based in another location, we can service them from our onsite office."

Added Grebowski, "The biggest challenge for us has been more the corporate credit card than the travel agency. It isn't something they are used to having and it isn't something they asked for." He noted that some travelers might lose their frequent flyer miles associated with Visa and "not everyone is an Amex fan."

Indeed, the travel program "turned out to be the most challenging of the four projects in the supply-chain initiative to implement, because travel is such an emotional issue for people," Grebowski said. "There are signs that this is potentially going to be a wonderful program. Right now we need patience and cooperation from our people. In another month or two we believe we will be flying well.