Reporting to procurement is new for many travel management professionals who find themselves trying to navigate in unfamiliar confines. But others, such as On Semiconductor strategic sourcing manager Colleen Guhin, have spent their entire careers managing travel as part of procurement--and found it to be a great fit.
Guhin is mystified by reports that travel reporting into procurement is a "big deal," major change or impossibility. Following are her views on this and other procurement and travel trends:
"People don't like change. For people who haven't been part of procurement, they've always been able to manage travel on their own without much exposure to anybody. Now they're seeing some of the procurement rules brought to the table that are a lot more structured than probably what they've dealt with before.
Suppliers don't like it because they do bring more pressure, more skill, more experience to negotiating than what a travel manager would have, but this all depends on the level of the travel manager to start with. If it's an admin who happens to handle travel for a small company, she's going to be in culture shock. If it's somebody who has a well-managed program, they probably won't find too many differences in the way they've been doing things. If they're good at negotiations, go out for bid on a regular basis, manage the relationships, but watch the costs as well, things won't be all that different under procurement
I prefer to be part of procurement. I've been applying procurement strategies to travel my whole career--at Texas Instruments, Motorola and here at On Semiconductor. At TI, we called travel a 'commodity.' The travel agency was appalled that we would consider travel a commodity, but we showed them there isn't that much difference: If you're managing your procurement from a strategic sourcing perspective, you're looking at more than just price. You're looking at the relationships and services. You're asking how well are your travelers being serviced by the suppliers? It's not just about the bottom line. And if you're doing that in your procurement for all your commodities, managing travel that way won't be any different. But if you're trying to squeeze every penny out of your suppliers at all costs, travel is going to have a problem.
For a short period of time at a previous company, I reported into finance people, who were only looking at the bottom line. They weren't worried about the relationships or repercussions of what they were trying to do price-wise. As I was leaving that company, management was talking about splitting travel apart, giving the contracts for air, hotel and car to procurement, but leaving the rest of it, including the agency relationship, in finance. It took a lot to get them to understand what they would do if they were to split it up. It was like going back 20 years as to how travel used to be managed.
[PULL_1]At On Semiconductor, I had a blank sheet of paper to craft the travel program when I first started. I still pay a lot of attention to travel and manage all the contracts. We're constantly reviewing the policy to make sure it reflects what we want to do from a business perspective. Also, we've recently made some acquisitions. Trying to integrate two different companies' programs brings everything to the surface. You have to look at both programs and take the best of both. Every little detail gets looked at. It's a good wake-up call to make sure you have everything in place that works for everybody.
Negotiation and contract skills are really critical for travel managers today, to the point where it's almost legal skills. I'm not a lawyer, but I have experience and I've interfaced with legal enough that they trust me. I don't have to run contracts by them any longer because I've proven that I know what I'm talking about.
If you're going to be aligned with procurement, those skills would be very beneficial. Knowing what to ask for and what to delete from contracts is important. Most of the contracts are supplier contracts. It's up to me to pick and choose what I accept and what I don't, and to change accordingly. If they don't offer something, I've got to know to ask for it. If I don't know to ask for it, I'm not going to get it. That's where experience comes in handy. You have to know what's missing, and that is not easy to do."
Colleen Guhin joined Phoenix-based On Semiconductor in 2000 to manage the company's global travel spend--comprised of about $3.5 million in U.S. booked air volume and $5 million globally--as well as multiple other indirect service categories. She reports to the director of corporate services procurement.