Travel Business CPR

Effective Travel Procurement (Part 2)

Effective travel procurement has five requirements for success:

1. Top Management Understanding and Commitment

Corporate travel procurement managers can expect resistance to centralizing the procurement function, particularly in decentralized companies where departments, divisions or operating companies enjoy substantial autonomy. Overcoming such resistance will require that procurement managers have top management's support. In some cases this support will take the form of corporate mandates or directives. In other cases, support will require a top-down selling effort involving key decision makers from the various operating units.

2. Roles & Responsibilities
Travel procurement must distinguish between distribution and vendor management roles. A company may choose to either centralize or decentralize distribution management. Irrespective of this choice, however, vendor management should be centralized. The allocation of centralized and decentralized activities and responsibilities must be clearly defined and understood so as to minimize overlapping activities or avoid having responsibilities "falling between the cracks."

3. Travel Purchasing Policy

Travel policy is the vehicle through which the corporate procurement function controls/influences travelers and agency purchasing decisions. Travel policy must designate the company's preferred suppliers as well as specify the decision rules (e.g., low fare selection parameters) to be used in offering or selecting travel options. Travel policies tend to focus on expense reimbursement procedures. A more appropriate focus is on vendor selection policy and procedure.

4. Information Management Systems

Travel information is the "glue" that binds the elements of effective travel procurement. At a minimum, it must facilitate travel policy compliance monitoring and exceptions reporting, savings analysis, and travel pattern analysis (for vendor negotiations).

Travel purchasing information comes from several sources including travel agency back office systems, credit card companies, and in-house travel purchasing management. In addition, the reports generated by these sources often go to different departments within the company (e.g., credit card reports to accounting, agency reports to the travel manager). Companies need to integrate the information available from each of these sources and ensure that procurement managers can access it on a timely basis.

5. Travel Procurement Managers

Travel procurement managers are responsible for operating in-house travel operations. In some cases, they will also have vendor management responsibilities. Many of these people have travel backgrounds, often in agency operations. In addition, I strongly believe they must have analytical and negotiating skills.

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Tharwat Abouraya, CTIE
Travel Business CPR - Bring Strategy to Life!

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