Supplier innovation is at the heart of new managed travel program at Duff & Phelps
By Susan Avery -- Purchasing, 10/16/2008 2:00:00 AM
Recognizing the importance of travel to a successful corporate strategy, Duff & Phelps is taking a new, more strategic approach to the buy.
Already, the move is paying dividends for the New York-based financial services and investment banking company: Suppliers now are offering up creative new ideas that help streamline processes, reduce costs and improve the travel experience for employees.
To be sure, employees at Duff & Phelps have always traveled. They meet with and consult with clients at locations all over the world. Plus the company has offices on three continents: North America, Europe and Asia.
And Duff & Phelps has always had a travel manager. But, until late in 2005, it was a relatively small company, with approximately 100 employees. That year, it merged with a business unit of Standard & Poor's, a division of McGraw-Hill that was much larger, with 500 employees. Duff & Phelps continues to grow, with acquisitions playing a big role in its strategy. In August alone, it acquired two companies: Lumin Expert Group and Kane Reece Associates. Today, Duff & Phelps has 1,200 employees, and expects to have about 30% more at year end than it had in 2007.
To better manage travel for that growing number of employees and the corresponding expanding travel spend, which at approximately $10 million is expected to rise another 40% this year, management gave full-time responsibility for the buy, T&E (travel and entertainment) policy and corporate cards to Jennifer Byiers, global policy administrator, in February. For one year until that time, she counted travel and corporate cards as a part-time responsibility. In her new role, she works closely with the company's procurement operation which lends its expertise during the process to select suppliers and at negotiating and managing agreements with them.
"After the merger, frankly we didn't know what to do with travel," Byiers says. "We were making it up as we went along. It took a year before we identified what we need to do."
Supplier relationship management. One of the first steps Byiers took toward developing a strategy for Duff & Phelps' new managed travel program is enter into a relationship with a travel management company (TMC). The TMC they selected is Egencia, an Expedia company, based in Bellevue, Wash.
Company travel policy states that every traveler use the TMC 100% of the time; when planning a trip, they use Egencia's online booking tool. The exception Byiers says is when the traveler bills the trip back to the client and the client has a lower negotiated rate with air, hotel or car rental suppliers. Policy also states that travelers use the company's corporate card 100% of the time. Duff & Phelps audits every dollar employees spend on travel through its expense management system. Lawson Software provides the expense management tool.
"Obviously, there are going to be instances when the travel policy is not going to work," Byiers says. "So, we have a pre-approval process through which an employee lets us know why his expenses are out of policy. If we think the reason is justifiable, we will approve the expense. If not, the employee will not be reimbursed."
Having such a travel policy enables Egencia to provide Byiers with detailed data on the spend that she didn't have before and that she says will help in negotiations as Duff & Phelps sets up agreements with suppliers.
"If we know we are going to acquire a company or have a huge engagement in Tokyo that is going to go on for a year, I want to leverage that knowledge with my suppliers," she says of the value of detailed spend data. "I can say that we will be able to give you this much more business from New York and L.A. to Tokyo. This is really good information to have." Egencia also provides Duff & Phelps with industry benchmarking data.
Byiers reviews the travel policy every six months, soliciting feedback from the company's leadership team and asking employees for their thoughts on their travel experiences. Analyzing this data helps her refine the policy.
"One of our consultants had a four-hour flight and there was only a middle seat left in coach that costs $250," she says. "He could book that seat and not get any work done or he could book a seat in business class that costs $1,000 and do three hours of work. The value of that consultant's time is greater than the difference in ticket price. A policy that states an employee can never travel business class is not going to help our travelers. One that says he can always fly business class is not going to please the company's shareholders."
Innovation and more. Byiers says that one of her biggest challenges is working with suppliers that want to dictate the relationship with Duff & Phelps based on old data on its travel spend. The data, she explains, does not accurately reflect the company's current growth rate.
"What's important to us is working with suppliers that think creatively about how we are going to work together," she says. "Some hotels have told us that they will not work with us on a program unless we spend $4 million with them. But they will work with us in specific markets. Why should I give them the big markets if they are not doing anything else for us?"
Working with one hotel chain, Omni Hotels, through which Duff & Phelps had not booked a lot of business in the past, Byiers and the supplier put together a program through which they will pre-register employees with a select guest number. This helps improve efficiency and the traveler experience. New hires will get the number in their welcome packets.
Byiers has ideas for other areas of the travel spend as well. These include a program with a car club that allows employees to use its sharing service on personal time and another with an airline that offers a friends and family program to the company's managing directors. She sees these additional services as benefits or tools to use to help recruit and retain employees and is working on them with colleagues in the human resources operation. Employees especially like benefits to the environment from using the car-sharing service, she says.
Another trait important to Byiers as she continues to work with and select suppliers is customer service. "Travelers will have issues no matter which supplier we select," she says. "What's important is that when we have an issue that the supplier reacts immediately, cares about the issue, is willing to fix it and make sure that it doesn't happen again." Competitive pricing is also a critical component in the supplier selection process.
Next up, Byiers is thinking about expanding her efforts at measuring performance. Now, she takes both formal and informal polls of employees' travel experiences to learn more about how well she's doing her job and she would like to extend the program to include supplier performance measures.
She also is starting to work with colleagues in the company's learning and education group to leverage spending on travel to meetings and events. With the leverage, she plans to develop a global hotel program.
"It is an exciting time for travel," she says. "But with the right partnerships we can navigate through just about anything."
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