“Oh and the procurement method of purchasing travel? If your company is still doing it — you need a new CFO.” (Her full post is here)
My response is copied below, and yes, I defended procurement’s role and capabilities. But the more important question is this: Why does procurement get a bad rap when it comes near the travel category?
I’ll gather my thoughts next week. (Update: See them here) Meanwhile, what are yours?
(My response to Holly’s post follows, emphasis added)
Hold yer horses, cowgirl…these here are fightin’ words:
“Oh and the procurement method of purchasing travel? If your company is still doing it — you need a new CFO.”
I’ve seen two main ways of negotiating travel supplier contracts. One involves relying heavily on relationships between travel managers and travel suppliers about service capabilities,responsiveness and pricing. The key is that the buyer trusts the supplier to be able to serve the account, and trusts that the supplier is pricing its services fairly. Let’s call this the relationship-based method.
The other negotiation method relies on competitive bidding, clear analysis and diligent negotiations. The key is a fact-based assessment of capabilities and the corresponding pricing – and value – offered by the suppliers. I’ll call this the procurement-based method.
This may be where we part trails…perhaps you meant “Procurement method” to mean something else?
Quite a few travel managers have been rubbed the wrong way by their procurement colleagues when travel gets taken under procurement’s wing. Sometimes for good reason, as when procurement folks try to source travel without taking time to understand its unique characteristics. Here’s a video that those folks should watch: Introduction to the Travel Category
The typical cry from travel managers is “you can’t buy travel like you can office supplies”. Agreed, but don’t make the mistake of assuming that procurement professionals focus solely on price. That’s a fear perpetuated by some travel managers who are threatened by the risk of having their long-standing, sometimes-too-cozy relationships threatened by the fact-based procurement approach.
In this economy, it’s hard to argue against any form of cost-saving. Travel is a logical place to look. It should be no surprise that CFOs ask their procurement folks to use proven methods to make sure that the travel spend is procured as well as any other category.