Three Myths About Sourcing Airlines – Part 1

Given that air travel is typically a large spend item for most companies, it makes sense for procurement folks to attack it with extra energy and creativity.  Here are three ideas that often come up:

  1. Consolidate air spend across a few firms to get better negotiating leverage
  2. Buy air travel in bulk
  3. Leverage frequent flier miles by stripping them out of the fare price, or by pooling them for corporate use.

Unless you’re the type that likes to take long walks in the hot sun, you can forget about using any of these methods – they just don’t work.  Here’s why: Continue reading

Top 5 Posts – Last 40 Days

Here are the five most popular posts on this blog from the last 40 days:

  1. Trippy – Tomorrow’s Biz Trip Planning Tool? (Trippy is a mash-up of Google Wave, Google Maps and Lonely Planet content)
  2. Travel 101 (a 4-minute video introduction to the travel category, and four posts covering Travel Data 101)
  3. Travel Procurement’s Fighting Words (started by a slam against using procurement principles in the travel category)
  4. Future Innovations in Airline Distribution – Condensed (a summary of problems and  innovations needed in the airline distribution channel)
  5. Why Travel Disses Procurement (explains the friction found between travel and procurement staffs and what to do about it)

I’m surprised that two of these posts don’t relate directly to travel procurement (“Trippy…” and “Future Innovations…”).  You’re saying it’s OK to cast a wider net in terms of topics.  Cool.  I’ll continue to bring in this type of content from time to time.  What else would you like to see here?

When Travel Suppliers Look The Same – Beware!

This post continues the thread from “Deciding How to Decide”.  Here, I deal with the common case of having to choose from suppliers that seem comparable on non-price dimensions.

One of the things that makes sourcing the travel category unique is the need to factor in traveler behavior.  Therein lies the key to selecting a winning bid from suppliers who look the same.

Let’s assume that you have a set of bids from a variety of suppliers, and that you don’t see much difference among them on the relevant quality dimensions.  That leaves you free to focus on price as the deciding factor, right?  Of course not…you know it’s never as simple as that. Here’s what you should do: Continue reading

Deciding How to Decide

This post continues the thread “Why Travel Disses Procurement…And What To Do About It“. In that post I explained why procurement has a bad reputation among many (not all!) travel managers, and two steps that will help travel managers overcome this problem.  This post describes the third step.

Get Your Flu Shot

This third step is a lot like getting kids to take their flu shots.  Continue reading

Travel Data 101 (part 4): Travel Analytics

Today we’ll look at data reporting’s sexy cousin, analytics.  Well, “sexy” may be a stretch, but my point is that data reporting is not very interesting, while good analytics can make you say “Wow – look at that!”

Travel category managers can be overwhelmed by all the data available to them.  Data reporting tools are necessary, but they typically produce “dumb” data.  By dumb, I mean Continue reading

Why Travel Disses Procurement…

… And What To Do About It.

As promised in “Travel Procurement’s Fighting Words”, here are my thoughts on why procurement has a bad rap in the travel management community, and what each side should do to get along better.  First, the Why, then the What To Do. (Beware –  this is a long post, so you might need a fresh cup of coffee to get through it, and it ends with a teaser for an upcoming post.  Now back to the original program)

Why the bad rap on procurement? It usually comes down to either fear or a bad experience on the part of the travel manager. Let’s start with the bad experience, since this is the hardest one to overcome. Continue reading

Travel Data 101 (part 2): Data Scrubbing

(I originally posted this article on SupplyExcellence as part of a series on using data in travel procurement)

Let’s assume that you’ve collected all your travel data – now what?  Just like with your other categories, you now have to scrub the data before it’s ready for your sourcing project. These two generic rules shouldn’t surprise you:

  • Discard abnormal values.  Your sourcing data is the basis for representing your future purchase patterns. Throw out the $35,000 plane tickets, the $300 per day car rentals, and the $1,800 per night hotel stays. While these may be fine audit items, they don’t belong in your sourcing data.
  • Embrace the 80/20 rule.  Travel data sets have very long tails…lots and lots of very small purchases in obscure places.  These purchases are of no value to your negotiations, so trim the small stuff from your spend files.  It makes the analysis much easier and the negotiations more relevant.

Here’s what you need to know about scrubbing Airline, Hotel and Rental Car data: Continue reading

Tyco Wins Procurement Honors

Tyco International ($20 B revenues; TYC) yesterday earned Purchasing Magazine‘s highest honor, the Medal of Professional ExcellencePaul Teague, Editor in Chief, covers the path to excellence taken by Tyco’s procurement team in this in-depth and insightful article.  It’s must reading for any procurement executive.

Did the travel category get mentioned?  Absolutely! Susan Avery gives this in-depth account of how travel’s big challenges were met with textbook collaboration and strong senior management support.  Rose Speckmann, Tyco’s director of global travel, led a sprawling multi-national effort to integrate and improve Tyco’s travel supplier contracts in all sub-categories. In addition to global sourcing, Rose led efforts to increase the use of video conferencing and improve traveler security.

This is a classic success story achieved in a turbulent corporate environment.  Congratulations to Rose and her team for achieving success and helping Tyco win the Medal!

Travel Data 101 (part 1): Best Sources of Travel Data

(I originally posted this article on SupplyExcellence as part of a series on using data in travel procurement)

Sourcing the travel category is the same as most other procurement categories – you need to start with good spend data.  The trick with travel data is knowing where to get it and how to use it.  Let’s start by dividing the travel category into its major food groups: airlines (or just “air”), hotels and rental car.  These sub-categories each have different places to get useful sourcing data. For the impatient reader:

  • For airline spend – get it from your firm’s travel management company (TMC, a.k.a. travel agency)
  • For hotel spend – use a combination of your firm’s TMC booking data and your corporate card data
  • For rental car spend – get it from  your contracted rental car supplier Continue reading

Views on Travel Procurement in Asia

Here’s an interview with Brett Henry, VP of Marketing for Abacus.  Abacus is the major GDS in most parts of Asia, so it has an excellent feel for trends in travel spending, both corporate and leisure.  Brett covers the state of travel procurement in Asia, his views on the pace of the rebound in travel spending, and emerging patterns of travel program management in Asia by Fortune 500 firms.   The interview is not dated, but seems to be from 2009.