Today's travel procurement professional knows how to manage supplier relationships
Results of new Purchasing magazine survey detail travel buyers' value.
By Susan Avery -- Purchasing, 2/12/2009 2:00:00 AM
Managing the company's travel services buy is nothing new for purchasing professionals.
While much has been made of late of the growing trend toward the purchasing and travel departments converging at many companies, more than half (56%) of travel procurement professionals responding to a new Purchasing reader survey have been buying travel services for more than three years. Another 13% has more than 10 years' experience in travel procurement.
Results of the survey provide a complete profile of today's travel procurement professional as well as a clear picture of the benefits of purchasing's involvement in the travel services spend.
Purchasing responsibility. Especially important to top management is purchasing's skill and expertise at negotiating agreements and managing relationships with travel services suppliers. Negotiating contracts is the number-one job responsibility for 91% of travel procurement pros responding to the survey. Another 87% say they lead processes for selecting suppliers. Managing relationships is a third area that comes under purchasing's purview, say 84% of respondents.
Says one respondent of his travel buying responsibility, "Procurement involvement is important to the travel category because of our broad and encompassing view of the total company spend, advanced knowledge of the market so as to effectively negotiate, as well as overall sourcing expertise in supplier evaluation, selection and performance management."
Another buyer adds that purchasing is valued at his company for its "expertise in writing and evaluating requests for proposals (RFPs) properly to locate suppliers that strategically fit with our company's travel policy. Procurement also is best to handle negotiations and overall project management."
According to survey results, travel procurement professionals manage suppliers of a host of travel services including: car rental companies (98%), hotels (97%), airlines (96%), travel management companies (82%), T&E card programs (59%), meetings and events planning (46%) and expense reporting software (36%).
Seventy-one percent say the scope of their purchasing responsibility spans the organization, with 35% managing the spend for more than 2,500 travelers.
Average annual spend survey respondents manage is $25 million, with many travel procurement professionals responsible for much more than that. One says his company's travel budget approaches $1 billion annually.
Relationships. Managing costs associated with travel spending is the responsibility of the travel procurement professional, say 66% of survey respondents.
While 74% say spending on travel services at their companies increased or stayed the same in 2008, 67% don't anticipate the trend continuing this year. In many cases, this increase in total spend was due to rising airfares and other fees as well as higher hotel room and car rental rates, not an increase in the amount of travel.
Steps travel procurement professionals are taking to control rising costs include such sound purchasing practices as consolidating the supplier base (79%) negotiating global agreements with travel services providers (79%) and adopting technology (83%).
One respondent "is negotiating and selecting key suppliers, encouraging and measuring employee compliance to corporate contracts/preferred suppliers and identifying and reporting leakage and opportunities."
Other mentions include increased use of videoconferencing and more demand management activities.
Travel procurement professionals meet regularly with top management regarding spending on travel services, say 65% of respondents. Travel buyers also collaborate with representatives of the finance operation (75%), internal customers or business units (67%) and the travel department (51%) in their companies.
Forty-two percent have formal programs to measure supplier performance. Another 46% say their companies' relationships with travel services suppliers are very good or excellent; 43% say relationships are good and 10% say they are poor.
The biggest challenges for today's travel procurement professional are related: Helping to curb maverick spending and working to improve compliance to travel policy and preferred suppliers. Rising costs is another.
One respondent says a big challenge is: "Justifying that a managed travel program generates better pricing for airlines than travelers booking directly on the Internet." Another says, "Changing people's behavior from shopping on websites and comparing to our provider."
Professional Profile. Despite the challenges, or because of them, travel procurement provides a satisfying career for Purchasing readers responding to the survey.
Results show that the travel procurement pro today is a seasoned purchasing veteran with a business degree from a four-year college or university, in his or her late 40s, has more than 10 years purchasing experience and most often holds the title of purchasing director.
Most have held previous positions in purchasing, although some respondents have come to their current post from the travel services industry. The travel procurement pro is on a career track and aspires to a job as purchasing vice president or chief procurement officer (CPO).
"Maximizing the value that procurement delivers without compromising service and quality," is one of the more satisfying aspects of the job, says one respondent. In the same vein, "Balancing company cost reduction goals with traveler comfort and safety" and "Hearing that selected suppliers provide excellent service to travelers or helped them in a difficult situation" are other comments from respondents about job satisfaction.
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