(Travel as the Early Test Case for Efficiently Managing Multi-Category Supply Volatility)
Travel is neither your largest nor your most critical supply category. But travel suppliers are on the front line of the coronavirus mayhem and so present high supply continuity risk. The response in critical supply areas is clear. It should be urgent, structured and focused on business continuity. But there are a range of other categories, especially services and indirects, where the actions you take now may determine the strength of your company, and your capacity to rebound in the inevitable recovery stage. I think travel therefore is a test case for the effective and efficient response to sure up a range of mid-ranking categories measured by risk x size x criticality. Getting travel right is a blueprint for use elsewhere. Here are some of the things I think need to be considered.
The 4 Steps :
1. Of course you can just bluntly stop all travel. Probably in stages, based on destinations. Many are already doing this. But there should also be an assess-and-approve step that considers the business value of the trip, especially outside of the depths of the health fear. If the trip is still possible and safe, its competitive advantage may be much higher now when others are cutting back on everything, than it was the past. This would apply to several other supply categories.
2. If the downturn lasts more than two months, it will probably cause some travel suppliers to cease trading. Airlines and TMCs are most at risk. How vulnerable are your suppliers? How do you assess privately owned suppliers? What are the symptoms to look for? When and how should you prepare alternative supply?
3. The circumstances will present savings opportunities, without adding pressure to stressed suppliers. These can be identified and pursued, especially to make ongoing savings after the recovery.
4. Timely consultation and collaboration with key travel suppliers has little downside and could prove to be valuable times spent. Firstly, they would greatly appreciate anything you can tell them about your plans, so that they can better plan their own response, making you a more highly valued client. Secondly, there might be feasible arrangements that could ease their pain and spread the risk, such as alternative pricing or fee structures. Thirdly, cooperation now could help you to avoid the cost of rebuilding services later on. It could be cash positive in the medium term. And lastly, together you can work out a lighter call on your resources at both ends, without risking supply, value and quality. It’s a good time to take supplier relations to a higher level. The recovery could be untidy, and it would help not to be at the back of the re-servicing queue.
I can provide a low-cost service to put the right structure and measures in place so that both buyers and suppliers can limit the negative impacts and emerge with better relationships and better alignment.
Please see www.butlercaroye.com.au/transform
Tony O’Connor has been providing independent travel management advice for twenty years through as Butler Caroye.