Business Travel News - Procurement Practices 2010 - (Page 6)

Procurement Practices Ebbing Of Procurement Tide By DAVID MEYER C orporate purchasing and travel executive use of procurement practices to manage travel is ebbing this year, following the rising tide that surged in so many organizations during the past few years and spectacularly last year. Rather than continue to ebb, last year’s huge swell in adoption of procurement practices more likely was the crest before another wave of adoption by more companies. While procurement influence over travel decisions has receded slightly from last year, according to many measures taken in this study, it is from a high-water mark, with the current continuing to flow strongly toward growing use of procurement practices for travel purchasing. In light of the severity of the economic downturn and the actions companies have taken to control spending as a result, it’s no wonder that we have seen procurement’s influence lessen at some companies from last year’s crest. The increased decision-making authority or involvement of travel executives at those companies reflects in part the results of a buyer’s market that enabled companies to make deep cuts in travel costs last year, particularly hotel room rates. While there is still some negotiating room left, most organizations recognize it is not in their best interests or control to further reduce supplier costs when the result would be to weaken suppliers’ abilities to provide service. Many also recognize that the pendulum that has swung to their side of the negotiating table soon will begin its Role of procurement in supplier selection 14% 34% 17% 8% 27% 27% 7% 26% 12% 27% 2010 All conducted by procurement All require procurement signoff Travel team must follow procurement policy 2009 Procurement, travel teamed; travel has final decision authority Procurement, travel teamed; procurement has final decision authority Respondent responsibility for company travel or procurement 33% 57% 10% 56% 36% 58% 8% 34% 63% 8% 26% 11% 2010 Travel inevitable return to the other side, and some are looking to make long-term arrangements. Despite the game-changing aspects of the economic downturn, the mission of travel procurement remains the same: Define how to measure service quality and costs while raising the former and reducing the latter. While it is true that the periodic aggregation, quantification and analysis of performance and cost information that are the hallmarks of procurement practices are easier for 2009 Procurement 2008 2007 Both travel and procurement ment executives on travel purchasing has prompted a rise in the number of companies and categories of suppliers for which they are using service-level agreements. There also is a rise in using key performance indicators, which nearly always include air, hotel and car rental savings. To generate data for this fourth annual examination of the application of procurement practices to travel management, Business Travel News editors solicited responses from several thousand readers who are procure- senior management to digest than less disciplined travel reporting, even travel buyers from companies without procurement organizations long have used many classic procurement techniques as part of their standard operating procedure. Such techniques include issuing requests for proposals, mandating the use of preferred suppliers and establishing service-level agreements, particularly with travel management companies. The growing influence of procure- 6 April 19, 2010 // www.BTNonline.com // BUSINESS TRAVEL NEWS http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - Procurement Practices 2010

Business Travel News - Procurement Processes 2010

Contents
Letters to Our Readers
Ebbing of Procurement Tide
Reining in Disciplinary Measures
Managing Demand and Structure
Evaluating 2010's Travel Outlook
Negotiating the Role

Business Travel News - Procurement Practices 2010