Reader's Digest Association in the past year has changed much of its travel management and procurement approach: The global, multibrand media and marketing company implemented a single travel management company and online booking tool throughout the United States and has made progress in aggregating its spend and cutting travel supplier rosters.
Hired last September after RDA was purchased by an investor group led by Ripplewood Holdings, director of corporate purchasing Joe Siciliano--half of a two-person indirect purchasing team--was tasked with pulling together the indirect spend (encompassing travel and many other commodities) of the company's numerous businesses and brands. Siciliano began by first gathering data, showing the various divisional CFOs how "disaggregated" it was, and then pursuing what he termed "nonmandated mandates."
"Each piece of the business was doing its own thing, as best they could within their spend structure," Siciliano said. "Pulling that together in the travel space was a challenge because each different piece of the business had its own travel agent and its own travel tools, if they had tools at all."
Within the first six months of Siciliano taking the job--he previously spent eight years as a purchasing director at Avaya--the company issued a TMC request for proposals, selected and implemented a single agency covering all U.S. locations and "saved a significant amount of money in agency alone," he said. "Multiple travel agencies itself is problematic."
Siciliano said agency selection was based partly on whether "they would be in the scrum with me, going after the different pieces of the business. I can't get myself to Austin, Seattle, Milwaukee and so on as easily as they could, so I wanted them to meet with some key people and take ownership." During the selection, Siciliano also considered pricing and an ability to provide support for other travel vendor negotiations.
Key to the selection of one booking tool for deployment across the United States was an ability to "have everything in one itinerary," including limousine bookings and dining. Siciliano is not sure how many travelers will use the tool for finding restaurants near their hotels, but "it's a very clever option. We picked a tool that can provide the whole buffet of options we needed."
RDA travelers are told to use the online system for simple, domestic trips. On that score, Siciliano reported an adoption of 94 percent. Travel agent assistance is permitted for some executives, international travel and other complex itineraries.
The inclusion of limousine reservations in the self-booking tool--a project currently underway--follows a major culling of limo service providers. Though RDA's culture continues to allow for such transportation, Siciliano endeavored to reduce the disparate spend. A first step was identifying all the providers used by the company--more than 100 of them--and choosing 10 that had the capability to accept Web reservations (a "punch out" from RDA's company intranet). By promoting to the company's administrative assistants and "shepherding travelers through this process, one on one, we got compliance at a good rate immediately," Siciliano explained. This summer, RDA conducted a formal RFP with the 10 limo operators and selected three, setting the stage for their participation in the online booking tool.
On the lodging front, the company had been using 650 hotels in 250 cities. RDA is looking to minimize that number by working on chain deals. Educating travelers about which properties are preferred includes communication directly and via the company intranet, as well as "vendor days," when supplier representatives come to RDA locations to meet travelers.
The effort also includes visits by administrative assistants to preferred properties and working cooperatively with travelers. "It is about collaborating with the people not staying [at the preferred] one on one, to really explain to them the difference and the value and to find out why they are not staying with the preferred," Siciliano said. "Maybe there is something I am missing that I don't understand."
If, for example, a traveler frequents a nonpreferred property because of a loyalty program, RDA would ask the preferred property to provide an incentive to the traveler, possibly by matching his or her elite status level.
With this approach, the company reduced the number of hotels it was using in Westchester County, near the firm's Pleasantville, N.Y., headquarters from eight to one, plus a back-up. That one property now accounts for 73 percent of RDA's local hotel spend, Siciliano said, up from about 26 percent a year ago.
The company uses a similar strategy with preferred airlines, which are determined on a route-by-route basis.
"There is a travel policy, but we try to drive it through collaboration and understanding," Siciliano explained. "No one wants to be told what to do. They want to be told how to do it together," especially if they receive similar or more benefits at a cheaper price. That leads to the "nonmandated mandates," which generate higher compliance without dissatisfying travelers.
The next steps for RDA's travel program is globally expanding the single agency solution, starting with Canada and the United Kingdom. The company also is examining advance purchase guidelines for airline bookings, applying a purchasing card to meetings transactions, considering meeting management tools and building out the infrastructure required to analyze data and produce key performance indicators, including metrics related to savings, lost savings and compliance.
RDA publishes 50 editions of Reader's Digestin more than 60 countries, and has more than 20 other media brands in food and entertainment, home and garden, health and wellness or educational fields.