Profiles In Travel Management: Rapidly Globalizing Co. Consolidates Vendors - 2007-05-21

In efforts to reach his goal of consolidating 95 percent of the Johnson Controls travel program by 2008, global travel manager Mike Hall has reduced the number of preferred suppliers, driven down costs through integrated reporting tools and delivered online booking solutions on a market-specific basis to efficiently manage the corporation's 20,000 travelers.

As Johnson Controls' operations have become more global, supplier consolidation has driven increased cost savings. Negotiated airline program savings have increased by $4.8 million since 2003, according to Hall, and U.S. air spend is 75 percent of what it was in 1998, when Hall joined the company.

"Where we used to have a country-specific contract with an airline, we've gone to regional and where we used to have a regional contract with an airline group, we've gone global," he said. "That's where the reduction comes from."

Hall also has begun to implement similar changes in the hotel and car rental programs, he said. By focusing on a small number of hotel chains, more volume can be directed to preferred properties. From 2004 to 2006, consolidated hotel sourcing has improved negotiated discounts by a cumulative $3 million, according to Hall. "If you have a traveler in China, a traveler in Portugal and a traveler in the United States all going to Germany for a meeting, chances are they are going to use the same hotel and the same car rental because they all can subscribe to the same program and quite likely they can be able to use the same airline partnership."

Driving for data consolidation is one of Hall's key components to yielding savings, something he has been able to do via Carlson Wagonlit Travel's online reporting tools, which have been integrated into the recently launched CWT Program Management Center.

"I can more quickly drive the standard reporting system to stakeholders," according to Hall. "The number-one driver of cost is visibility."

"The ultimate of where you are trying to go is to get all the data together because that is where you can drive visibility within the organization to your suppliers to show what you are spending," he said. "An airline is not going to give you a discount unless you can prove to them that you are increasing your spend with them and that you are using the discounts."

Implementing a strong policy to increase the percentage of bookings made more than seven days in advance has saved Johnson Controls a cumulative $2.5 million since 2003, which Hall attributed to better reporting.

"We started to be able to measure our advance bookings in a far more granular area. Within a few minutes of someone booking a trip more than seven days out and losing money as a result, you can have that visibility on their e-mail and on their boss' e-mail," he said. "That visibility five years ago used to come to us a month after the fact in a report, but now it's immediate. It took the company years, through visibility and then showing senior management the seven-figure differences in cost they were achieving by driving up advance purchase. Obviously, you cannot go seven-day advance purchase across the board because things change on a daily basis, but what you are doing here is getting people to recognize the value it brings."

With plans to add KDS into the Johnson Controls online booking tool portfolio, Hall said he plans to continue to "cater more to the local market" even if that means not encouraging any online booking tool usage in markets including Canada, where a heavy emphasis still is placed on high-touch service.

"In pushing an online program, I am always very cognizant of the value an agent can bring to a transaction," he said. "The value that they add, especially in more complex trips and international markets, I still put a deep demand of value on. I am very wary about going online across the board, compared to most companies. I am always going to weigh the value that an offline agent can bring to the transaction. A travel agent is not just an order taker. They have a very important value proposition and you have to be able to define where that value proposition is and hope to try and steer business in that direction too. The human element is still very important."

Hall began consolidation initiatives in 2003 with travel management company Navigant and has stepped up efforts following Navigant's integration into Carlson Wagonlit Travel. Initial consolidation occurred in the U.S., U.K., German and French markets, which at the time represented 75 percent of the company's travel spend and now represent 60 percent of spend due to Johnson Controls' global expansion. In addition to the growth of the company's operations to 70 countries, Hall faces other obstacles on the way to completing consolidation by 2008.

"The savings that we've achieved mainly come from internal processes," Hall said. "Building those processes in other countries becomes difficult. Having a travel management company like Carlson obviously helps, but you are still going in and trying to change peoples' behaviors that they've built up over a long time. It takes a long time to put those new processes in place, to get people to buy into them."