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The CPO's Corner
How Can a Travel Department Show its Value?
Often, employees view Corporate Travel as an impediment, a watchdog that stops people from flying business class or using the carrier on which they’ve already accumulated 300,000 miles. And when travel reports on accomplishments, the first number shared is often based on the negotiated discount per air ticket.
But unless you have a large spend, the odds are that the relative value of any cost per ticket savings will be very small compared to the kinds of savings being reported by other projects within the firm. Think about it. Even a 7% discount – much higher than you are likely to achieve with a modest spend – is only going to give you $21 on a $300 ticket. And you are subject to the inevitable comparisons between the ticket price generated by your program and the ones that people find online. (Although they rarely are apples-to-apples comparisons, providing explanations consumes valuable time and puts you on the defensive.)
But Corporate Travel is more than a ticket negotiation vehicle. It is an ENABLER of value to the firm, and it is important for the travel team to keep that aspect front and center.
Here are a few examples of the places where you are likely adding value that should be reported on in addition to negotiated ticket discounts. The more of these you can identify and consistently report on, the better chance your team will be seen more broadly as a value-enabler.
- Corporate Travel enables safety and security. From volcanic eruptions in Iceland to terrorist attacks to personal family situations, there are countless times that a business needs to know where its employees are. People remember this when there is a big public situation, but it fades from memory and can be overlooked as a value-add that’s in place. In the reporting you do and the goals you set, this should be an element. (Example: track the number of employees in different parts of the globe at any one time or the number of travel emergencies you’ve managed, etc.)
- Corporate Travel enables companies to stretch their travel spend by putting processes in place to manage unused tickets and corporate awards programs. Tickets that are cancelled or changed for business reasons could easily fall under the radar and be ignored. Putting a program in place to manage and reuse any credits can be a great value add for a firm. I saw it used effectively in two companies where unused credits were tapped so customer support teams could make one additional set of face-to-face meetings each year, sales make a few extra calls, and a global HR team hammer out a new set of policies sitting around a table together in the same time zone, instead of trying to conduct it via SKYPE.
- Corporate Travel enables savings that result from smart practices being followed. Running a travel program a few years ago, our best cost savings came not from ticket prices but from advance purchase. Even with the occasional need to make adjustments, it was the single biggest enabler to lower ticket cost. By building awareness of best practices, measuring and reporting, Corporate Travel can lower ultimate cost well beyond what negotiated price discounts.
Joanna Martinez is a global procurement / supply chain leader and the founder of Supply Chain Advisors LLC. She is a frequent lecturer and blogger on procurement topics and also provides coaching, strategy development, training, and cost reduction opportunity assessment. Her clients range from Fortune 100 companies to technology startups.
As either regional or global CPO, Joanna has led transformation initiatives for companies in many different sectors: among them Johnson & Johnson (consumer products), Diageo (beverage), AllianceBernstein LP (financial services) and Cushman & Wakefield (real estate services, property management). She has also held client-facing roles, effectively giving her the opportunity to “sit on both sides of the table”.