10 Things Every Travel Manager Should Know About ??10 Things Every Travel Manager Should Know About Procurement ... •Improve key performance indicators Corporate Travel Priorities

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  • LABTA Educational Session

    10 Things Every Travel Manager Should Know About Procurement

    Proxima Group March 2013

  • What will you get from this session?

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    How to harness the benefits of procurement to maximize your total travel program effectiveness

    Practical leadership tips that will help elevate the results of travel procurement projects

    How to be more innovative in your thinking around travel cost management

  • 1. Know what Good procurement looks like?

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    I dont have experience of that specific

    service

    Why dont we hold off until

    the contract is up for

    renewal

    Is that the lowest cost

    bid?

    We need to follow the company sourcing process

    Im running a bid at the

    moment so wont have

    time to help

    Ill google the supplier

    before we meet

    Its ok I am trained in

    negotiation

  • 2. Bring procurement in early and keep them involved throughout the contract period

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    Determine Need Sourcing Purchase &Receipt

    SupplierRelationshipManagement

    Capability

    Typical sourcing process

    Conventional procurement focus

    Redefined procurement teams

    Low

    High

  • 3. Successful sourcing projects include a team of people that all have an important role or function in the process

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    Agree on project details& kick-off

    initiative Sign-off on approach

    Sign-off on implementation plan

    and savings realization

    Evaluate performance & conclude project

    What is the business case for the initiative?

    Propose project outcome/value and timeline

    Present findings, analysis, and strategy/approach for project execution

    Secure (BU) participation

    Propose implementation plan

    Present refined costs/ benefits

    Propose savings methodology

    Present implementation results / status

    Escalate unresolved compliance issues

    Does the business case demonstrate value to continue the initiative?

    Identify roadblocks & propose mitigation Identify appropriate project stakeholders & facilitate communications

    Approve project for development

    Evaluate strategy & approve project for execution

    Facilitate / conduct communications to relevant stakeholders

    Evaluate & approve implementation plan

    Sign-off on savings realization methodology

    Facilitate/ conduct communications to relevant stakeholders

    Help define & execute mitigation plan for non-compliance issues

    Escalate unresolved issues to leadership

    Do I support the initiative for the business?

    Informed of approved initiatives

    Informed of project status

    Communicate expectations for compliance to end-users

    Support non-compliance requests through communications & reinforcement

    Category Team

    Council

    Leadership

    Travel mngr. Category lead Sourcing mngr. Finance mgr. Regional buyers Traveler/Arranger

    Procurement Lead Finance Director Travel Director

    CFO VP Shared Services

  • 4. It is important to differentiate between lowest price and lowest cost

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    6

    Total Cost

    of

    Ownership

    Travel

    Hotel Cost

    Agency Cost

    Air Ticket Cost

    Emergency Travel Services

    Change Requests Support

    Management Fees Online Booking

    Agent Assisted Booking

    Client Negotiated Airfare

    Transaction Fee

    Rental Car Cost

    Airfare Cost

    Nightly Room Rate

    Misc. Charges Internet

    Parking

    Fitness Center

    Misc. Charges

    Fuel

    Daily Rate

    Mileage Charge

    Vehicle Fees

    GPS

    Concession Fee Recovery

    Self fill

    Fuel and Service Charges

    Fuel Purchase Options

    Price

    Procurement

    Process

    Labor Costs Time to register new online users

    on Cliqbook

    Time to train new online users

    Air Ticket Cost

    Taxes

    Room Rate

    Taxes

    Daily Rate

    Taxes

    Travel Policy

    Policy Enforcement

    Advance Booking

    Preferred Suppliers

    Upgrade Fees

    Energy Surcharge

    Ancillary Fees Baggage Fees, Early Check - in

    Change Fees, Preferred Seating

  • 5. Procurement can be the catalyst build trust with the stakeholder community

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    Trust

    Intimacy Credibility Reliability

    =

    X

    X

    Understand

    stakeholders

    challenges

    Deep

    expertise &

    insights

    Deliver whats

    agreed, and

    on-time

    Self orientation

    Know that you care about

    serving our interests

  • 6. Procurement practices have evolved just like travel management has

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    Area Conventional Procurement

    involved

    Redefined Procurement

    involved

    Defining needs/team members

    No Yes

    Setting up decision criteria Yes Yes

    Supplier analysis Yes Yes

    Total cost evaluation Limited Yes

    Cost Management & Audits No Yes

    Compliance Reporting No Yes

    Managing KPIs/Reporting Limited Yes

  • 7. With access to current thinking and market knowledge procurement can bring support for better decisions

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    Look to the ancillary fees and traveler behavior to find the proper balance of room night price vs. ancillary fees

    Inputs Action

    Compliance Reporting

    Procurement has the POV to do a thorough evaluation of T&E spend to determine most cost effective policy

    Supplier Commitments

    Restructured Policy

    Outputs

    Artist Title Sales (#) Spend ()

    AdSales(/#)

    Inc. sales (#)

    CPU (/#)

    TAKE THAT PROGRESS 1,825,458 463,064 0.29 254,301 1.82

    WANTED THE WANTED 220,763 196,865 0.91 65,988 2.98

    ELLIE GOULDING LIGHTS 153,480 110,504 0.72 50,023 2.21

    BLACK EYED PEAS THE BEGINNING 259,403 224,801 0.90 74,803 3.01

    CHERYL COLE MESSY LITTLE RAINDROPS 318,963 269,646 0.89 80,405 3.35

    EMINEM RECOVERY 89,419 4,146 0.05 646 6.42

    SATURDAYS HEADLINES 56,299 57,792 1.06 5,546 10.42

    DUFFY ENDLESSLY 155,722 142,378 1.05 42,404 3.36

    NELLY FURTADO THE BEST OF 22,129 2,637 0.14 2,046 1.29

    Artist Title Sales (#) Spend ()

    AdSales(/#)

    Inc. sales (#)

    CPU (/#)

    TAKE THAT PROGRESS 1,825,458 463,064 0.29 254,301 1.82

    WANTED THE WANTED 220,763 196,865 0.91 65,988 2.98

    ELLIE GOULDING LIGHTS 153,480 110,504 0.72 50,023 2.21

    BLACK EYED PEAS THE BEGINNING 259,403 224,801 0.90 74,803 3.01

    CHERYL COLE MESSY LITTLE RAINDROPS 318,963 269,646 0.89 80,405 3.35

    EMINEM RECOVERY 89,419 4,146 0.05 646 6.42

    SATURDAYS HEADLINES 56,299 57,792 1.06 5,546 10.42

    DUFFY ENDLESSLY 155,722 142,378 1.05 42,404 3.36

    NELLY FURTADO THE BEST OF 22,129 2,637 0.14 2,046 1.29

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  • 8. The negotiation strategy should be formalized

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    Be Ready - Never forget to prep the suppliers BEFORE you meet for negotiations

    Design The Outcome - Review and set the roles and negotiation strategy

    Educate the Suppliers -Tell them why they want your company as a preferred customer

  • 9. Align category strategies with corporate travel priorities

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    Market driven

    competitive bidding

    Policy Compliance

    Utilization of

    Preferred Travel Agency

    Optimize traveler

    experience

    Contribute to growth

    of Company

    Measures Of Success

    Optimize travel spend by reducing Total Cost of Ownership (TCO)

    Reduce TCO Increased competition and volume leverage Utilization of preferred suppliers Leverage & build key supplier relationships

    Influence traveler decisions thru a) appropriate booking tool content and b) compliance

    Reduce TCO Utilization of Travel Agency Utilization of preferred suppliers Policy Compliance Improve key performance indicators

    Utilizing appropriate procurement channels

    Travelers booking thru Travel Agency Policy Compliance Aligning process with business needs

    Traveler communication and training

    Utilization of Travel Agency Policy Compliance Improve key performance indicators

    Corporate Travel Priorities

    Ca

    teg

    or

    y S

    tra

    teg

    ies

  • 10. Harnessing procurement thought leadership can bring understanding to the category lifecycle

    Example: Agency

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    Defining needs

    Agency selection

    Contracting

    Buying Reviews Effectiveness measurement

    Cost management &

    audit

    On-going benchmarking

  • A quick recaphave we shown you how to:

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    by creating a procurement team that can build trusted relationships, not just be good at sourcing

    Get a deeper and up-to-date understanding of the market

    by using knowledgeable specialists who invest time in understanding the market on an on-going basis

    Be more innovative in your thinking around cost management

    by investing in experts who can deliver solutions that meet business needs, not just cost control

    How to harness the benefits of procurement to maximize your total travel program cost

  • Q&A Thank you

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