U.K. Firm Consolidates Global Travel With Rosenbluth

<I>Surrey, U.K.</I> - The BOC Group has consolidated its global travel spend of more than $60 million with U.S. agency Rosenbluth International, cutting out between 100 and 200 travel agents after completing a bid process that the agency cited as exemplary.

Rosenbluth executive director Ron DiLeo, who led the Philadelphia-based agency's bid for the account, nominated BOC, a U.K.-based manufacturing and distribution multinational, to his company's consulting services group for the best tendering process of 1996. "BOC won the award hands down," he said.

Travel managers can learn two lessons from the BOC approach, DiLeo said: preparation and structure.

Both qualities were apparent when the Rosenbluth team made its presentation last year at BOC's world headquarters in Windlesham, Surrey. It found that the entire BOC travel task force had been fully versed in the intricacies of travel procurement and operations, even though only the team leader was a full-time travel expert. Furthermore, the team was pulled together from different divisions of BOC and from several countries, including the United States, South Africa, Australia and Hong Kong.

The firm's travel manager, Pam Koles, "had taken the trouble to educate them and take the flash and fizzle out of the travel industry," DiLeo said. "They all knew exactly what was going on."

DiLeo was equally impressed with the way BOC structured its presentation.

To judge the three short-listed travel agencies, the travel team used an assessment model devised by BOC's supply management department. Called Supplier Evaluation, Selection and Performance Appraisal (SESPA), the system aims to improve selection procedures by weighing purchasing requirements and measuring the response of suppliers in a rigorous, numerical manner.

Criteria on which contenders were assessed included the ability to capture information, global coverage, control over operations and attitudes toward training.

"It takes any individual influence or bias out of the process and also helps to streamline it," Koles said. "Without SESPA, it would have taken us at least a year just to get everyone to talk." Instead, it took nine months between the time that BOC put out its request for information and the first transfer of its business to Rosenbluth over the summer.

"BOC put 10 or 11 competencies in front of us," DiLeo said. "That enabled us to tell a story that we cannot tell through a series of disjointed questions."

As a result, BOC is on the path with Rosenbluth--which already held the account in the United States, Venezuela, Canada and part of South Africa--toward consolidating its travel in the 60 countries where it has factories. In addition to those countries and the United Kingdom, Rosenbluth has taken over in Hong Kong and is in the process of implementing Singapore, Japan, Belgium and France.

Although BOC is in many ways a classic story of globalization, the company has some unusual characteristics. One is that although BOC is a British company, its turnover is greater in the Americas and the Far East than in Europe.

Furthermore, the United States accounts for 40 percent of the air spend, with the United Kingdom accounting for another 40 percent. Most of the balance is in the Far East, where BOC expects to see its travel requirements expand far more quickly than in the rest of the world over the next few years.

BOC's major priority is not to obtain the best price from suppliers, even though Koles hopes to save a minimum of 10 percent once she has finished reengineering all her travel supplier relationships. She regards service as more important.

"We wouldn't put our people on ValuJet, even though the price is good," Koles said. "There is no point in saving a lot of money if travelers are inconvenienced. We tend to take care of our employees, and those of them who do travel, travel a lot."

The impetus for the agency consolidation came from a strategic rethinking in 1994, when BOC launched an initiative to reduce its annual purchasing spend of $2 billion in the face of rapid globalization of the business. The cornerstone of the new strategy was to team up with key suppliers to work on a global scale, and the company chose travel as one of the first areas to tackle, along with courier services and personal computer purchasing. "BOC decided that travel was large enough and common enough throughout its businesses for it to be a good area to tackle," Koles said.

Once Koles started work on the task, everything happened with remarkable speed for such a large company. The BOC global travel team met to decide on its request for information in November 1995, and Rosenbluth took on its first new country, the United Kingdom, on Aug. 1.

Koles attributes the consolidation's success to two factors: First, she had a clear mandate from the most senior level of management; second, she involved personnel from throughout the world in the decision-making process.

"Having a person from the head office waving a big stick would not be appropriate," she said. "It is much better that people buy in and feel a part of this. No matter how good corporate citizens our employees are, if they had not been involved, they would have thought, 'gee, I wish someone had asked me for my opinion.' "

Koles also quickly discovered that she could learn from a global team. For instance, when the time came to develop an RFI for car rental, she could not understand why no information on rental spend was available in the Far East. The answer, she learned from her Hong Kong colleague, was that corporate car hire barely exists; in the Far East, custom dictates that executives are chauffeur-driven.

"It could have been seen as very arrogant if we had not thought of that," said Koles, an American who believes she is helping to decentralize the internal corporate image by working out of BOC's U.S. headquarters in New Jersey rather than in the United Kingdom.

With a global agency tucked under her belt, Koles now is setting about consolidating her other travel suppliers, starting with airlines. Signing global air deals is now the holy grail for most worldwide travel managers. It has proved elusive for nearly all of them, but Koles thinks she can crack it by the end of the year.

"We have already established strong credibility with carriers through bilateral deals to show them that we can move market share," she said. "Airlines have been one of the slowest industries to reengineer, but now that they are going global themselves, they want global customers. They will have to put systems in place, but we can help them with that because this will be a partnership."

RFIs went out to airlines and car rental vendors last August, and Koles expects to sew up deals within the next few months.

She also will shortly start testing Rosenbluth's E-Res electronic reservations system with a small group of travelers in the United States. If the pilot goes well, it will be extended to more U.S. regions and then to other countries in the BOC empire.