Caught in a Web of (travel) procurement

We're delighted to have our first guest post from Guy Allen, VP Global Procurement for Fujitsu. Guy has previously held senior procurement roles in financial services, pharmaceuticals and automotive so knows his way around the procurement world as well as anyone; and he's another serious music fan (favourite band - James). Our sincere thanks to him for contributing.

Just before the CIPS dinner a couple of weeks ago,  I asked Peter Smith (erstwhile Spend Matters editor) which hotel he was staying at, so that we might share a taxi (or at least a’ pre match’ bevy). I was delighted when I found out he was staying at one of my company’s preferred hotels, albeit at a rate 25% less than we pay.  I quickly contacted our travel company to book into the same place only to be told that they couldn’t get our discounted rate as our allocation was taken, and quoted a price that was 80% more than Peter had paid less than 24 hours previously. Needless to say I stayed somewhere else at a much reduced price.

But the whole episode got me thinking. Our procurement department is no worse and certainly a lot better than many, yet they had only achieved a preferred price 33% higher than  Peter could achieve. He had clearly used the internet, so should we disband our travel buying team and get everyone to do their own bookings? Has the internet finally made Professional Procurement pointless in some categories, such as Travel?

Inevitably things are not that simple. We are not really comparing apples with apples here, or even apples with pears. When Peter booked his hotel room through a well know late booking site, he didn't know exactly which hotel it was, only the general location and that he would be in a 4 star hotel (web site must be going well eh?)  Whereas our deal focuses on a handful of hotels near our offices. He paid up front and would have had no recourse to a refund if he cancelled his booking. Also his rate didn’t include breakfast whereas ours did.

The best of our (procurement) breed though doesn’t use these reasons to justify away the price difference; they work out how on earth they can reach the benchmark. So do our employees really need to know their exact location weeks before they travel? How often do they really cancel a booking?  Would it be cheaper to provide them breakfast free of charge when they get into work?

The web doesn't mean the death of the buyer. But it does mean that Procurement needs to be more flexible, innovative and challenging than ever, to make sure we can demonstrate the value we are adding to our organisations.

First Voice

  1. bitter and twisted:

    Why should one ad-hoc hotel room need “Procurement”?

    BTW, Seems to me your travel provider is either scrupulous, or stupid, or both. I I was handling your account id tell the hotel to halve the bill and id cover the difference on the quiet.

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