London - British
American Tobacco expects by October to complete a 64-country consolidation to a
single travel management company, Carlson Wagonlit Travel. Implementation began
in February 2011. Each market opted to join the consolidation despite the option
to remain with incumbents.
With a projected 2012 travel spend of £120 million, up from £110 million
last year, BAT has an unusual travel management structure. The company sources
most non-industry-specific materials and services through the Agrega shared
services joint venture. The world's largest brewer, Anheuser-Busch InBev, is
the other partner in Agrega. Created in 2001 to leverage the volumes and procurement
expertise of the Brazilian subsidiaries of both BAT and AB InBev, Agrega's
sourcing work has been extended around the world.
BAT's global travel interests therefore are represented by three people:
a global category manager for travel and a global sourcing manager, who are both
employees of Agrega, and BAT global procurement account manager Linda Woodley. "I
am the conduit between the business and Agrega," Woodley told BTN here at BAT headquarters. She also
manages for BAT such other categories as utilities, fleet and human resources.
Magdalena Huss, until recently the travel category manager at Agrega,
considers Woodley's role vital. "I wouldn't have known who to talk to at
BAT or what the company's priorities were without her," said Huss, who
subsequently has moved to a non-travel role with BAT. She described her own
former role as covering strategy, innovation and "understanding the
maturity of the category and what the value levers are, such as sustainability
and security," as global sourcing manager Carel Aucamp fills the role of negotiating
with suppliers—described by Huss as "standardization- and process-driven."
When it deals with suppliers, Agrega may represent the interests of both
or only one of its joint-venture partners. It reaps the advantages of
consolidating BAT's and AB InBev's spend when their requirements are similar,
but undertakes separate vendor negotiations when they are incompatible. An
example of the latter is hotels, given that the two companies' travel policies allow
different accommodation standards.
AB InBev shares the strategic goal of multinational TMC consolidation,
but BAT is much farther ahead. Although it operates in 180 countries, BAT two
years ago applied the 80/20 rule to select 64 of those markets for
consolidation. At the time, those 64 countries were served by 27 different TMCs.
Each market was managed individually by a
TMC, even when that TMC served BAT in more than one country
Woodley and Huss cited numerous reasons for the decision to consolidate.
Top of the list was improved data quality. "Previously, we would ask the
same question in 15 different markets and get the answer in 15 different
formats and three different languages," said Huss. "It would take
three months to clean it up."
Other motives included more consistent service, especially in applying and
monitoring travel policy. "We now communicate to travelers in a much more
consistent way," Woodley said. That is a key achievement, given how widely
BAT's travel is dispersed. Its three highest-spending travel markets–the United
Kingdom, South Africa and Brazil—are on three different continents.
Agrega staged the TMC request for proposals in two waves. The first
consisted of Western Europe, Eastern Europe and the Middle East/Africa. The
second covered Asia/Pacific and the Americas. Selection criteria included not
only price but also such factors as data integration and security, and an
ability to meet local business requirements.
Once CWT was chosen, Woodley and Aucamp needed to sell the selection
internally. "Each market had the option to stay with its current TMC, so
we had to present to every one of them," said Woodley. They were won over
by being made to realize that Agrega was taking a great deal of work off their
hands in terms of travel management in general and TMC relationship management
in particular. The opportunity to benchmark data was dangled as an additional
incentive.
Once countries opted into the CWT agreement, they were scheduled into
the global implementation program. Each country went through a 90-day
implementation period overseen by BAT managers and a local CWT manager. Woodley
and Aucamp experienced significantly different reactions as local
implementations were accomplished. "In some markets we didn't receive a
single call during the three months except to say they had completed the task,"
said Huss. "In others, we had to walk them through every step of the
process." Countries with a high percentage of online bookings or where the
incumbent TMC had not been in place for a long time generally were easier to
switch. Another important determinant was whether BAT could identify a local
champion who understood and engaged in the program.
Asked what advice she would give to other travel managers contemplating
global TMC consolidation, Woodley said: "Make sure you have a robust
strategy. Know what you want to do and be prepared to justify every change you
want to make. Communications are very important too. We had our strategy
summarized on a single slide, and we never assumed people understood what we
were doing until they told us they did."
The consolidation has brought benefits to both internal and external
relationships. Internally, the visible success of the first implementation
created a third wave of countries—including Morocco, Malta, Cyprus, Indonesia,
Ivory Coast and Jordan—that initially were not included in the program but volunteered
to join. Externally, the improved data has given a boost to supplier relations.
"We are more confident now in our negotiations with airlines," Huss
said, "and we have been able to issue global hotel RFPs for the first time."