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September 2022, Virtual
September 29 2022, Virtual
Price may be king in most procurement categories, but the equation is less clear-cut for travel
Complex equationWhile traditional procurement processes for many business items are normally based around securing the lowest price, the equation for buying travel isn’t so simple.Most procurement professionals agree there’s a balance to be struck between “price and comfort” when it comes to travel. That’s because by booking a traveller on a cheaper but more convoluted airline route, they are unlikely to arrive at their destination in the most productive shape.For those with no experience of procuring or managing business travel, often the only thing they have to fall back on are their own travel experiences.Steve Isom, vice-president of finance for website hosting firm Flywheel, based in Omaha, Nebraska, took on responsibility for travel for the first time in his career when he joined the technology firm a year ago.“Before I joined, we historically had not spent a lot of time thinking about travel,” he tells BBT. “People wanted to book travel themselves through Kayak or Priceline. But if something went wrong, travellers had to reach out to our employee experience team and call them to say their flight has been cancelled. It was not ideal for them to get calls in the middle of the night.”Isom quickly realised travel was challenging for Flywheel’s employees who mostly only travel to attend four annual staff meetings – two at head office, plus events in Australia and Europe.“Within my first couple of months it became a pain point – what we were hearing was that people were having bad travel experiences and were not looking forward to travelling, because the flights were inconvenient with a long layover,” he explains.Flywheel is now working with travel management software specialist Lola as part of the company’s first move to a managed travel programme.“We moved to Lola as we wanted something that was easy to use with a tool and app that was really easy to adopt. We also put in a policy and reporting to give us visibility,” says Isom. “On top of that, we also wanted access to 24/7 support for our travellers, so when a flight was cancelled they could reach out to Lola support – that’s been a game-changer.“We’ve been with Lola for about a year. We get little leakage – everybody is using the tool.”Price isn’t always rightFor all the talk of focusing on the experience of the traveller, those organisations with the strictest procurement processes can still find it hard not to just go down the route of securing the cheapest flight or hotel deal, particularly during the RFP (request for proposal) tender process.These views are also reflected in a new report produced by Clarity, with input from the Chartered Institute of Procurement & Supply (CIPS), entitled The Rules of Business Travel Have Changed. Have You?Clarity argues that simply pursuing the cheapest option within a travel programme cannot only be detrimental to the health and wellbeing of an organisation’s employees, but can often mean missing out on the potential benefits achieved by “taking a longer, broader view” of the travel programme.“The definition of success when it comes to business travel procurement is not to obtain the cheapest price on a single item – such as a flight or hotel room – but to ensure that, without paying over the odds, the arrangements are comfortable and convenient enough for the travellers to be on top of their game when representing your business,” adds Pat McDonagh, Clarity’s chief executive.There are also suggestions that having a mandated, price-driven travel policy and programme can become a negative factor when trying to recruit, retain and attract talented employees.With all these elements to consider, procuring travel for the non-specialist manager becomes a potential minefield, particularly when you consider how time-consuming the traditional RFP process can be for travel.Streamlined tenderingOne area where strict procurement and compliance rules continue to apply is the public sector. But even here, the tendering process for travel services can be streamlined to make the decision-making more straightforward. Buying as part of a consortium can also be beneficial in terms of securing better deals than as an individual institution.A good example is the Southern Universities Purchasing Consortium (SUPC), which gives universities and other higher education institutions access to a four-year Travel Management Services Agreement, offering them “a compliant route to market and a collaborative procurement channel” for an estimated £700 million of travel spending across the UK.Jayne Thorn, SUPC category manager, says: “We create high-level framework agreements across travel and other procurement categories. This takes away a big chunk of the administration from the institutions.“Our institutions have three ways to make awards: they can use the top ranked supplier; they can adjust the importance of the criteria, so an institution may decide service is a more important factor and select the TMC that way; or they can hold a mini-competition with the six approved suppliers.“Travel is complex and emotive because you are dealing with the end users of the services, so it’s best if you can get a service tailored to an institution’s needs.”One of SUPC’s leading advocates is Linda Wardle, procurement manager at Lancaster University, who says the framework offers a “huge help with contract management”.“It’s less work for the institution as the tender phase is already done,” says Wardle. “The mini-competition is a shorter piece of work as we know the suppliers already specialise in providing travel in our sector.“It’s about knowing what your travellers want – the frustration can be that the end user will complain about a supplier but will not tell me, so I can’t do anything about it.”Price may be king in most procurement categories, but the equation is less clear-cut for travel. Finding a way to balance costs with higher levels of traveller satisfaction is sure to impress bosses. They may even forget how much they paid for office supplies.