An Indian subsidiary of a leading global pharmaceutical company uncovered significant opportunity to optimize MRO spend through a detailed Spend...
Strategic Sourcing in Travel Management
A US based IT company achieved significant cost efficiency in its business travel category through strategic sourcing initiative combined with an integrated travel management program.
Overview
The company had a basic travel management process that was functional only in a limited geographies. Commensurate with global expansion, it was looking to implement a robust travel management program to improve on both process and cost efficiency as well as enhance employees travel experience.
Challenges
- Sub-optimal performance and experience with incumbent travel management service providers.
- Service levels had also not kept pace with company’s growth over the years.
- Fragmented supply base made overall program less efficient and costly due to legacy processes as well as poor policy compliance.
Solutions
Given that relatively large portion of the multi-million dollars external spend was on travel, this category naturally came on the radar during spend mapping exercise. We figured that all three pillars of travel management – cost, policy compliance and traveler experience could be addressed in one go.
Various work streams included –- Spend Mapping
Identified key areas of improvement through a detailed spend mapping exercise. - Supply Market Assesment
Through a rigorous strategic sourcing process, a set of best-in-class service providers was selected – one each for travel management, expense management (including on-line booking solution), and global payment solution. - Operational Integration
Project management was key to successful implementation making sure of seamless integration across various elements and enhanced overall output. - Supplier Performance Management
A special emphasis was placed on balancing the costs with overall traveler experience and travel policy compliance, through performance SLAs.
Results
The company not only reduced spend on this category but also improved overall travel experience through an integrated technology solution across travel management, expense management, and payment solution.
Key outcome of this exercise included –
- Over 12% reduction in annual travel spend, including operational costs as well as airlines & hotels costs.
- Improved policy compliance due to automation and increased visibility.
- Integrated ticket booking, expense management and linked payment solution combined with mobility provided seamless travel experience.
- Further cost reduction possible through consolidation exercise on airlines, hotel chains and rental cars globally as well as internal demand management.
Strategic Sourcing is a cornerstone for travel cost reduction
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