The “old model” of measuring savings in travel management by cost avoidance and cost improvement is no longer enough, Jean-Michel Kadaner told the ACTE Forum in Amsterdam.
Mr Kadaner, a purchasing specialist and president of Key Corporate Solutions, said purchasing involved unit price, quantity, specification, process and quality and had to take into account any delays and service levels
He told the 75 delegates that buying travel was the same as buying another commodity and, like them, needed “cost contained programmes and cost managed programmes.”
Aspects like price, revenue, inventory, availability, technology, supplier performance and customer satisfaction all had to be measured in terms of performance.
For this, a new model was needed which provided a “Balanced Scorecard” on performance with four key perspectives: that of the customer's, the company's internal perspective of its process, how the company could learn and improve and the financial perspective – how the shareholders saw the company.
The Balanced Scorecard could be used as a base for strategy and the areas it covered as an approach to managing organisational performance and setting goals. Improvements could also be continually benchmarked.
But he warned the delegates that business travel management model was complex. Many suppliers paid commissions or incentives, GDSs expected booking fees and sometimes signing bonuses, agencies expected transactions fees and sometimes incentive payments and corporates would sometimes do deals direct with suppliers.
Mr Kadaner said the need to manage data properly was vital. If not the travel management programme was left with questions which are not easy to answer, like what is the compliance level, what is the cost per transaction, how is the process impacting on the traveller's time and what are the financial implications.
He said that purchasing performance measures must be comprehensive, transparent and communicated throughout the organisation, tied closely to performance based incentives, backed with appropriate resources and championed by strong leadership.