Is your TMC delivering value, or just savings?

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Author: Andre Moten, Corporate Travel Management

 

Procurement personnel have a big job to do. Responsible for establishing and managing partnerships, these professionals are tasked with delivering savings while ensuring the business receives value for the product or service procured.

This is particularly true when considering partnerships with travel management companies (TMC), where internal clients can compare every transaction against online pricing for airfares, hotels and hire cars.

Savings are essential – but too often people focus on fees to the exclusion of savings and total value.

So it was with great interest I read recent commentary describing TMC services such as traveller tracking, 24-hour assistance, and risk management, as “useful”.

I would argue these services are actually more than “useful”, and instead should be considered an essential component of businesses’ travel management; delivering enormous value to clients.

Previously, being able to offer prospective clients tools to manage and reduce the risk to employees travelling interstate or internationally was a unique selling point. Now, an inability to offer these tools is a non-starter with most organisations.

For progressive businesses the catchword is ‘risk’ and how best to track, manage and reduce risk in all supplier interactions. Those who ignore employee risk may not understand the value, or appreciate the consequences, until their employees are in the eye of a storm.

Consider this scenario – The Bureau of Meteorology has issued a cyclone watch for large areas of Queensland. Airports have closed leaving your staff, travelling on business, stranded ahead of forecasts of extremely high winds and widespread property destruction.

Your CEO wants to know the plans to return staff safely to their homes and, if they are unable to secure a flight, how safe is their accommodation.

Right now, how important is accurate information, a 24/7 connection to all domestic airlines, and a robust communication systems to broadcast updates to waiting staff?

Is this service delivering a saving? Or value?

When it comes to staff, your responsibilities may go beyond risk management and OH&S, with some jurisdictions setting out this duty of care in legislation. A failure to comply can attract financial and other penalties.

Your travel management company should be your partner in fulfilling these obligations.

For many businesses, the final decision comes down to cost.

Understandably, procurement personnel need their TMCs to make their dollar go further.

If you are comparing like-for-like, on fares, accommodation and other requirements, your TMC should consistently be able to deliver a lower cost, through greater negotiation power, extensive supplier relationships and better systems integrations to find available inventory at the right price.

Procurement personnel face pressure to demonstrate savings, so your TMC’s systems must be able to transparently demonstrate these savings to you and your business.

At Corporate Travel Management, our goal is to demonstrate to our customers a constant return on their investment.

Lower fares are important, but not the only savings available.

Policy and compliance filtering, unused ticket and credit management, account management and reporting are now essential components of any TMC partnership.

After all, it’s a business truism that what you measure is what you get, and if you transparently track and report on travel costs and savings, you will secure cost reductions for your business.

Based on the experiences of Corporate Travel Management’s clients, the savings available can be substantial. The appropriate tracking and management of unused credits on hold can account for millions of dollars in a large client’s travel budget.

Let me ask another question at this point. When your traveller is unable to make their flight, do you wear the cost or does your TMC seek a refund and report back to you on these savings?

Some TMCs, and Corporate Travel Management is one, are able to liaise with suppliers for ground chargebacks, such as invoices for hotels and hire cars.

For example, last week we were able to secure more than $2,000 for one client, just in ‘waivers and favours’ – savings which rapidly add up over the course of the year.

Transparency and a focus on costs must be at the core of your TMC partnership, as it is at the core of our booking systems, which were built from the ground up.

A good TMC should move beyond mere compliance.

Your travel policy may include a requirement to choose the lowest fare of the day.

A staff member booking travel on the day of a significant sporting event in their destination city can rightly claim to have chosen the best fare for that day. But that fare must be considered alongside lower fares before and after that sporting event, and combined with hotel rates which must complement, not outweigh, the potential savings. Delaying or bringing forward their travel 24 or 48 hours may halve the costs while still meeting their business needs.

Here again a strong TMC partnership can help procurement personnel drive greater savings across their business.

Our systems give 21 days of visibility over not just the fare under consideration, but fares and hotel accommodation inventory before and after the planned travel date as well. That puts the power in clients’ hands not only to save on an individual booking, but to allow procurement personnel to make policy changes across a business if they identify there are significant savings available by making changes to policies.

Our client Challenger Ltd did just that, reducing air expenditure by 14 per cent by using our tools to develop greater visibility over the best time to travel, and adopting travel policy enhancements to match this capability.

Ultimately, decisions about your travel arrangements should be considered hand in hand with core competencies.

Is it the best investment of your employees’ time to manage the complexities of staff travel, and can they do so in a way that reduces risk, costs and lost time to your business?

Working with a TMC can deliver savings and value combined, a genuine win-win for all.

Just make sure to find one that considers the risk reduction, transparency and a return on investment as critical rather than merely “useful”.

 

Andre Moten is the General Manager, Australia & New Zealand, for Corporate Travel Management (ASX:CTD).

Mr Moten has significant business development experience in the public and private sectors and has three key rules: “Never take yourself too seriously; listen to your customers (internal and external) and walk in their shoes; and finally, ensure that ‘win-win’ is achieved wherever possible, especially when long term business relationships are concerned.”

About Author

Procurement and Supply Australasia (PASA) is the leading provider of information and education to procurement and supply professionals throughout Australia and New Zealand. PASA supports the largest community of engaged procurement stakeholders in the region, through its renowned series of events, publications, awards, plus various community and network building activities. PASA is a trading name of BTTB Marketing, for many years recognised as the leading producer of conferences and events for the procurement profession in Australia and New Zealand. Whether producing under the BTTB, CIPSA Conferences or now PASA brands over the last ten years, our events have consistently led the market in terms of both educational and networking opportunities.

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