Once upon a time procurement and category managers were largely practical in their focus and procurement departments had the power to mandate what needed to be done within an organisation.
But now everything’s changing.
Changes in the role of procurement
Procurement is becoming increasingly focused on people; their opinions, their experiences and their individual requirements. When hiring a new service, procurement professionals are being handed the challenging task of managing the points of view of multiple key stakeholders – the people who will be using the service, or who depend on outputs from the service (such as reports and invoices) and who will therefore be affected by the change.
This is certainly the case when it comes to procuring the services of a travel management company (TMC). Business travel can not only benefit or inconvenience an organisation, but it also has a significant effect on the work and home lives of the travellers and bookers themselves and so taking the time to collate the opinions and experiences of key stakeholders is vital if you’re looking to land a travel supplier that is the right fit for your organisation and its staff.
Stakeholder engagement during the procurement process
Assembling a team of stakeholders for discussion at the start of the procurement process is the best way to let their requirements inform the rest the process, as well as giving you a chance to define the needs of your organisation and gain clarity on exactly what it is that you would expect from a service provider.
However, knowing how to manage discussions with stakeholders and using these to inform the procurement process to achieve a successful outcome is one of the most common problems faced by procurement and category managers right now – too often these discussions can get off topic and do nothing more than lengthen the procurement process, so having a structured approach is the best way to ensure that you leave the meeting with useful information.
Here are 5 questions that you could include during discussions with key stakeholders, and why it’s a good idea to ask them:
1. Should we have an objective to drive online adoption?
Driving online adoption reduces your travel management costs by attracting lower fees for bookings made online through an online booking tool, rather than higher fees for making offline bookings over the phone or by email. Be wary of any TMC that tries to push offline booking too strongly – this could well be because it’s the more expensive way of arranging your travel and will therefore make them more money. Of course, online alone won’t work for a lot of organisations, but if the TMC doesn’t want to encourage online booking, you need to wonder why.
2. Do we need to review our business travel policy before we engage suppliers?
Often, travel policies are dusty documents that were written ages ago and that no one has looked at since. If that’s the case, it’s probably worth dusting it off and ensuring it’s still fit for purpose before you get going with your procurement. Your travel policy will be at the heart of your travel programme, so it’s not a great idea to make huge changes to it right after rolling out a new travel management service.
3. Do we have detailed travel data available regarding our current travel spend?
You need to share as much data as you can with prospective suppliers, in order to get the best advice and best pricing from them. If you don’t have any data, prospective suppliers are likely to price defensively to ensure their worst case scenario is covered (e.g. you only book low-cost carriers, and budget hotels from which the revenue stream for the travel provider is negligible and therefore your fees will be higher). If you’re in this position, it’s worth ensuring there is a break clause in your contract, such that you can renegotiate prices based on actual data once you’ve been working with your chosen supplier for 12 months.
4. Are we trying to reduce our core travel and hotel spend, and if so by how much?
Not every organisation is out to slash their travel and hotel spend! Some organisations appoint a travel management company to ensure that their staff have great service at their fingertips, or are properly cared for and secure whilst travelling the globe on business. But if you are looking to reduce costs, it’s good to have an idea of what success would look like to you.
5. If we’re out to reduce cost, what are we prepared to compromise on?
Travel management companies don’t have a magic wand with which to conjure away your travel spend; serious cost reduction inevitably means compromises have to be made, so it’s worth thinking about what would be acceptable and what wouldn’t. Switch from business class to economy on flights? Reduce your per-night cap on hotel spend? Drive online booking (which reduces cost through visual guilt)? Tighten policy constraints? Introduce pre-trip approval for bookings over a certain amount?
More practical procurement advice…
Once you’ve clarified exactly what it is that your organisation requires from a TMC and have collated the experiences and opinions of those who will be most affected by the change, you’re better equipped to move onto the next stage of the procurement process – the research stage, as knowing exactly what you’re looking for will enable you to focus on TMCs that can meet your requirements, therefore streamlining the whole process.