Beyond the RFP: Modernizing travel procurement

modernize-your-procurement-process

By Dan Godsell, global sales

It’s an accepted fact of the global economy that the pace of change is accelerating. Customer expectations are constantly rising and businesses have to keep innovating to improve the customer experience. Enterprises need to be agile, flexible, and adaptable. This requires updating processes regularly.

In an environment of accelerating change, mismatches between the importance of a particular function and the processes around it create problems. For instance, what happens when something once viewed as a commodity becomes strategic with head-snapping speed? It can take a long time for traditional procurement practices and tools to adjust, and that has implications for the business. Business travel is part of that changing landscape and I want to explore this dynamic from different angles.

Think of car batteries — yes, car batteries (please indulge me for a minute). Auto manufacturers needed a regular supply of them for their internal combustion engines, so they were important. But were batteries seen as a strategic part of the supply chain? Probably not. Cost was no doubt a determining factor for battery procurement. But technology, concerns about emissions, and competition from new entrants into a very traditional market changed the battery’s status. The shift to electric vehicles that’s been gathering momentum around the world changes the battery’s commodity status dramatically, and companies such as Tesla now build entire businesses around them.

Or think of the way workplaces have evolved in the knowledge economy. Not that long ago, many of us worked in cubicle cities. The cost of a cubicle city could be calculated pretty easily (square footage divided by number of employees) and put out to bid for the lowest cost of those tacky fabric walls. Today, a lot of thought and work goes into designing these spaces with different types of areas for interaction and teamwork. Workspaces aren’t just carved up commodity spaces, but ways that enterprises define culture, promote innovation, and create an employee experience. Enterprises invest in thoughtful design services, not just anyone with a truck full of cubicle walls.

These kinds of shifts in the importance of a good or service will happen more frequently as the pace of change accelerates throughout the global economy. Few would argue that the battery pack for a fully electric vehicle should be sourced the same way as the commodity battery used to start an internal combustion engine. It can be easier to see that mismatch in tangible hardware as opposed to service industries like corporate travel. Traditional procurement practices — often centered around the request for proposal (RFP) — are lagging behind this shift in business travel’s role in enterprise success.

Changing travel options

The biggest change in business travel was actually driven by a revolution in consumer travel. Our parent company, Expedia Group, was one of the prime movers in that transformation.

A flood of tools, apps, options, and ways to compare flight and hotel cost, location, and amenities, all changed the consumer travel experience. For corporate travel, that meant the workforce quickly grew sophisticated and their expectations rose for what a modern corporate travel experience should be. For businesses, it also created a challenge to keep those sophisticated employees compliant with travel policies.

Travel procurement can capture the tangible parts of this change: Pricing, percentage of compliance, and more. However, travel is now embedded in less tangible aspects of the business. Good travel experiences play a role in employee satisfaction — a metric often tracked internally by management. A good travel policy can be used as a recruitment and retention tool. Travel can help drive company revenue. And much more.

It’s hard to capture all of those intangible moving parts in an RFP/RFI. In my experience, they fall into three basic categories:

  • Start of a process: A broad net is cast, and options are assessed in a standardized scorecard. Potential providers are screened, and a short list is prepared for further research and discussion.
  • The end of a process: Most of the decision-making has already occurred. The RFP is a vetting process and kicks off the negotiations over final details.
  • The RFP is the process: The vendor fills it out and waits to hear what happens.

Each of these processes has their merits, and many organizations have not changed these standard practices for some time. For those still using an RFP as the process, it’s becoming increasingly difficult for differentiated suppliers to identify where they can add value. In many cases, it results in a no bid situation. It doesn’t mean we don’t want your business. However, we both need to do more due diligence to determine if our working together is a good fit for your needs.

Travel procurement: From commodity to strategic partnership

Upgrading travel procurement practices is more than just repositioning the RFP in the process. The only way to understand the intangibles as well as the checklist items is to talk with people, even when you’re not looking to make an immediate change in providers. Knowing who is out there and what they have to offer makes travel managers and procurement professionals much more prepared to find the right provider when they’re ready to make a change.

We really do want to open a dialogue with you so we can learn something about your culture. Are your travelers technology savvy? What are their expectations? Does your management view travel as an investment or as a cost to contain? What are the overriding goals/vision in the business that you need to align with the travel program? Do you want to align these with your travel program? These are a few questions that go beyond checklist items, though the answers can impact costs and efficiencies in a big way.

One of the most important discussions we can have is: Will your travelers be happy using our platform? The answer to that question says a lot about whether they’ll stay compliant and whether or not there are opportunities for continuous improvement in the long term.

True success in travel management requires partnership, and it can take time to find the right partner. In a recent success story, we met with a prospective client many times over the course of several months in order to understand their needs and whether or not we could help. To them it was about more than just change management and ROI — they were making a strategic choice to evolve their travel program to better align with their with organizational goals. The investment in these discussions led to a much easier bid and change management process.

This all begs the question: How do we adapt procurement practices in order to effectively manage the travel (or travel and expense) category in this digital age, continuously improve, and make better strategic decisions? I humbly suggest that it begins by aligning your organizational goals with your travel program goals, as closely as possible.

To read more on our modern take on business travel procurement, download the white paper.