As readers know, Tyco International won Purchasing Magazine’s Medal of Professional Excellence last week. I spoke with Rose Speckmann, Tyco’s Director of Global Travel, to learn more about her success factors.
The situation was that Tyco’s travel spend shrank by about 65% due to divestitures. Tyco’s CPO, Shelley Stewart, challenged his supply chain organization to deliver savings despite the loss of buying power.
Rose initiated a three-pronged approach. One focused on reviewing the contracts with all major travel suppliers; another focused on demand management and usage of video conferencing. (See more details here from Purchasing.com’s article.)
The third prong was all about compliance and communication. Early on, Rose’s boss, VP of Supply Chain Management Jaime Bohnke, used a monthly President’s Roundtable to highlight the costs of travel policy non-compliance – and the names of those out-of-policy travelers. Tyco’s senior management quickly recognized the opportunity for savings. “With our decreased buying power, it is now even more important to achieve high compliance” said Chris Coughlin, Tyco’s CFO.
In Tyco, each spend category has an executive sponsor. For Travel, it is Coughlin, Tyco’s CFO. He was very supportive and engaged. He quickly made it clear to the business unit leaders that this was an important issue.
Rose points to these initial reports of non-compliant travelers and the lost savings as the first major step to success. “Those reports created the initial engagement and trust that I needed to have from senior management”.
Which reports did she use?
- Declining to use the lowest logical fare
- Using a non-preferred airline
- Not using the self-booking tool for simple domestic trips
- Not booking air, hotel or car through the self-booking tool or approved agency
- Not paying for air travel with the corporate card
Of these, which one was the most valuable in terms of getting senior management engaged? It was the one that reported bookings through non-approved travel agencies or websites. Rose explained to management that this was a security risk. If something negative happened (e.g.; aircraft incident, weather disaster, etc.), Tyco couldn’t locate these travelers. Additionally, Tyco doesn’t get credit for the spend, and the traveler’s budget owner doesn’t receive the benefit of the Tyco discounts on the airlines, car and hotels.
She sent non-compliance reports to the heads of the five major businesses within Tyco, and copied the CFO and CPO each time. At first, there were lots of names on those reports, but within about two months, the list of non-compliant travelers got a whole lot shorter. Business unit leaders were paying attention, and travelers didn’t want their names circulated on these “lists of shame”.
Let’s now turn to the communication factor. Tyco operates in more than 60 countries and earns more than 50% of its revenues from outside the U.S. When VP of Supply Chain Management Jaime Bohnke saw Rose’s first category plan after the divestitures, she encouraged Rose to “take less of a North America-centric view” of the category.
Rose quickly went to her communication playbook and formed Regional Travel Councils for EMEA, Latin America and Asia Pacific. “I’d used a North American Travel Council successfully for years. It seemed natural to use the same concept to be sure I was managing the category more globally”, she said.
She asked the five business unit leaders who they wanted on the travel councils. So who did she get? “It’s a good mix – we have quite a few people from the supply chain organization, a financial controller, HR managers and an influential executive assistant.”
She holds monthly calls with each council, and goes for two-way dialogue on the isues of what’s happening in the region’s businesses…what’s new, what’s working well – or not; any special needs…all with an ear for the travel implications.
Her second agenda item is to talk about the travel policies – what’s working, what’s not, ideas for achieving better compliance; again, favoring an open dialogue with people who understand the regional implications of managing travel.
Her collaborative communication style served her well recently when she needed to overhaul the company’s global travel policy. “I used the council concept again, this time with an emphasis on getting people involved from HR, Tax, Treasury, Legal, Audit and Communications”.
She sought input widely on the initial drafts – “Here’s what we’re thinking – what do you think?” The collective input made it much easier to draft a final policy that didn’t have any technical weaknesses. Consequently, the business units adopted it with the understanding that they could enforce tighter policies if they saw fit.
The lesson here? Good savings strategies are necessary, but not sufficient – successful implementation will always require good communication. Congratulations to Rose Speckmann and her team for showcasing this valuable lesson!