Demand management and outsourcing of travel

Organisations that have travel driven by Procurement professionals have a much better ability to do demand management than other functions, most notably when travel is overseen by human resources, who are pretty weak in terms of demand management, says Christa Manning, director of Expert Insights research for American Express Business Travel Global Advisory Services.

Manning attributed demand management strategies’ growth in part to the increased involvement of Procurement in travel.

Similarly, American Express’ data showed an even greater surge in outsourcing air programmes, according to Manning, which she attributes to industry challenges such as reduced capacity and ever-growing ancillary fees.

“Outsourcing of air acknowledges the external expertise and support needed to stay on top of the industry,” she said. “It lets them best negotiate a mix of carriers and alliances and gain access to benchmarking data to get a competitive deal.”

Companies reducing travel spend through videoconferencing technology neared critical mass in this year’s survey, with just under half of respondents saying they saved money through that demand management practice, compared with 37% in 2009. The same percentage also reported year-over-year increases in videoconferencing levels, which is fairly consistent with levels in the survey in the past few years.

In particular, companies focused on using the technology to cut travel for internal meetings, said Manning. “Customer-facing travel remains important, and a priority, face-to-face meetings are important.”

As with remote conferencing, technology improvements also have aided growth in pre-trip authorisation, once not considered a best practice owed to its potential to clog up the travel booking process, companies can now implement systems allowing for quicker automated approvals.

In terms of pre-trip notification and approvals, 39% of survey respondents said they use both in their travel programme, up from 32% in 2009. Only a little more than a quarter of respondents said they used neither. Additionally, 41% of respondents said they had made the processes more restrictive in the past 12 months.

“That was definitely something we saw take hold in 2009,” said Manning. “Pre-trip alerts and approvals really were given a second look and adopted by many companies that in the past may have felt, culturally, that it would never work.”

SmartProcurement is hosting ‘Sourcing and Contracting of Corporate Travel’ on July 21 in Gauteng. In one day learn about comprehensive, leading strategies for sourcing and contracting the travel commodity.

Adapted from Business Travel Network’s April 12 article ‘Procurement Practices 2010: Managing Demand And Structure’, by Michael B. Baker

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