Backdrop: The Travel Sourcing Opportunity -- Skills, Technology and Clout (Part 2)
In the first post in this series, I set the stage for our 2011 coverage of the travel procurement market. And I also hopefully established myself as someone with a complete lack of travel specific procurement credentials (yet broader procurement knowledge). Ironically, this probably makes people like me more qualified than many so-called experts in the field to pick apart a category where opportunity knocks. But what doors are the best ones to bash in (or more quietly pick the lock) on first in the travel area? Reading between the lines of a recent Travel Procurement study can help us begin to get the lay of the land when it comes to dispensing with current program models and components that are cheating us of potential savings opportunities.
According to the study, which you can read in its entirety by clicking here, travel management only reports into procurement, purchasing or sourcing 31% of the time. The remainder it reports into finance, executive offices, HR, administration and "other" 26%, 20%, 7%, 6% and 11% respectively. Nearly 50% (49%, to be exact) appear to be near career travel-types, holding 10 years or more experience in the field. And almost as high a number (47%) had worked previously for travel suppliers. It looks like these professionals typically learned through the school of hard knocks, as less than 25% have any type of professional certifications despite the fact that 91% devote at least part of their agenda to sourcing travel (93% manage "manage" it, for what it's worth, according to the survey).
So what we have here, if I'm allowed to interject at least one outsider opinion, is, in most organizations, a team of folks managing a category without much -- if any --formal experience in any other aspect of sourcing or cost reduction. Moreover, a significant majority of respondents in the study have limited or no chance of general procurement/supply chain mentorships, as they don't even report into the procurement function. In addition, judging from the data, most travel professionals appear to know the industry they work in, but lack professional certifications and credentials within it, let alone the broader procurement function.
In short, your typical travel manager is probably someone who knows quite a bit about the ins and outs of the travel industry. But statistically, the numbers suggest that the majority don't know jack, relative to other category leads in your company, about general supplier management, strategic sourcing, demand management, procurement/T&E technology or other techniques to reduce costs and better manage an overall spend program in the area. Moreover, chances are they lack empathy for what it means to truly sit in shoes of stakeholders, since they don't come from other areas of procurement or the business itself.
Does this add up to a recipe for opportunity? You betcha. Stay tuned as we investigate how to get more from travel procurement, driving savings, compliance and happy employees at the same time.
TweetBacks
Haven't read the rreport yet but wonder if there might be issues of definition betweeen the Travel Manager and the Travel (category) Procurement manager? I was CPO in a couple of organisations where there was a Travel Manager who ran the operational side of things handled bookings, advised travellers etc. In one case, this was an employee, in the other a supplier 'implant', although it would have been hard to distinguish between the two for users. In both cases, they didn't report into procurement. But then I had a category manager who led on major commercial stuff - route deals, preferred hotels, and working with HR on policy aspects. There was potential for tension certainly when the Travel Manager was an employee - but just needed to be handled in the same way you need to with Marketing, IT, HR folk when you're establishing the procurement contribution to those spend categories. Anyway, it was a fascinating category, very generous with the corporate hospitality I found (legendary stories about the parties at Richard Branson's house after industry award events - not that I ever got invited...) and lots of scope for spend management contribution! Look forward to the series anyway.
I've been focused on this opportunity for 15 years+. Too many buyers have Clinton Era processes and tools. Too many indirect procurement execs seem to believe that the "fix" for this category is travel less. Also, the general economic malaise since 2008 led to price deflation (especially Hotels) and so buyers were heroes and could watch savings occur. The real test is underway. Rates and travel transactions are on the up and buyers aren't quite sure what to do. Lanyon has developed unique capability to truly manage 40% of T&E. We call it Total Hospitality Spend Management. Sourcing, Rate Integrity, Data Consolidation, Performance Reporting for all companies. Not changing = Higher Prices. We recommend that companies invest in their travel program to create the visbility, control and savings just waiting to be captured. Business Travel helps to drive the top line. Making sure it's fully managed takes care of the bottom line.
