Elevating the Role of Travel Procurement — Tyco's Experience

Purchasing recently ran a very well-researched article examining how Tyco is driving savings and compliance across its $150 million in travel spend. The story profiles how Tyco's Director of Global Travel, Rose Speckmann, coordinates teams, resources and tools across the globe to save her firm as much as possible in the travel arena. Her actions go beyond just negotiating air, hotel and car rental rates on a global basis. Rather, she is partnering with her client, Tyco's decentralized operating units, on a regional and even local basis. Consider how in fact, Speckman "works closely with the company's real estate organization to learn about office openings or closings in each region". This allows her to gather "data [that] helps in negotiations with air and hotel suppliers". Technology, however, also plays a key role in driving savings, compliance and overall supplier relationship and performance management.

In this regard, consider how Tyco is achieving an 89% online booking compliance rate, due in large part to the Rearden Commerce web (and mobile) based tool. And what about the 11% who insist on either calling a travel agent or thwarting the corporate travel program entirely? Speckmann "provides sourcing managers and CFOs within the businesses with reports on employees who phone the travel management company to make a reservation that he or she can do just as easily with the online booking tool". The net result of these efforts has been a 40% reduction in transaction costs in North America. Outside of driving transaction efficiencies, Tyco has taken "advantage of lower prices resulting from the recession" to review its agreements with "travel service providers in North America and Europe". This benchmarking effort resulted in sourcing programs to renegotiate with car rental and hotel providers in both North America and Europe.

As anyone involved in travel procurement knows, the various categories that comprise its core can be complicated to decompose from a price perspective, understanding all of the middlemen involved (not to mention various rebate programs and schemes that are available). Without question, moving users to a Rearden-like booking tool is a great first step to driving compliance. But often the real savings will come -- as it does from most Spend Management initiatives -- from better managing supplier relationships, from up-front sourcing and negotiation through to targeted development initiatives that work with a supply base to drive additional cost out of the travel equation.

- Jason Busch

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