In this new column, our resident expert, ANDREAS J G WELLAUER, discusses the dangers of procurement taking over too much of travel management functions.

Fifty per cent of travel managers will be out of a job in five years! While the percentage is not absolute, we have been seeing a worrying trend over the past years of travel management functions being taken over by procurement.

Although there are few advantages of doing so, the job of the traditional travel manager is being severely cut down or even eliminated. This is not only a danger to the travel manager but to all vendors – and the travellers themselves – who have to deal with a strictly procurement-driven client.

To analyse the situation we must first understand the procurement process. The classic procurement approach has five steps:

• Process initiation (create charter, form team, generate term of reference, establish project management);
• Situation analysis (define categories, identify business requirements, collect data, analyse data, validate opportunities);
• Strategy creation and approval (strategic analysis, generate options, choose approach, source plan, strategy approval);
• Strategy implementation (plan strategy implementation, conduct negotiations, secure agreement and contract, commence implementation)
• Continuous improvement (supplier management, specification management).

The advantage of a procurement approach is the systematic reconstruction of a purchasing process and therefore nothing is preconceived or given. Travel managers and vendors alike know their field so well that they often do not question some of the basics. A good procurement approach will question every detail of a process and sometimes challenge and change long-held beliefs.

For vendors the switch from dealing with a traditional travel manager to a procurement officer can also be very challenging. As the procurement scope of work is determined at the onset of the purchasing process, any add-on services, soft benefits, value-adds can only be used in exceptions, as they often do not form a tangible value to the procurement process. In other words, in the procurement process the seat pitch or the great hotel gym is immeasurable and therefore unimportant – try telling this to your traveller. This relegates the sales process down to a straight numbers and figures job and can skew the process towards non-frills (or limited service) suppliers.

The procurement process focuses almost exclusively up to the point where the goods and services have been delivered, however, that is when the travel process often only starts. Providing a traveller with an airline ticket and a hotel reservation is just the most basic framework. What is not included are: transportation, visas, immunisation, customs, security, communication, insurance, data collection, post-trip analysis, reimbursement, taxation, etc. While these may sound like secondary issues, any breakdown in the travel chain can cause financial liabilities that far outweigh the sole investment of air and hotel. Increasingly travel also deals with a lot of legal issues such as data privacy regulations (CAPPS II and EU directive 95/46) and new international reporting laws (SOX), areas that can expose companies to tremendous liabilities and are rarely handled by procurement.

Nobody would seriously consider placing personnel under procurement as staffing issues are non-tangible assets and therefore need a specialised department. Similarly, travel also deals with staff, their emotions, personal problems, health issues, etc, so why should this department be under procurement? Travel has a unique position within all companies as it touches on personnel, accounting & finance, legal, IT and procurement. The procurement part is just one single aspect of travel and, may I dare say, a relatively small part.

The travel department belongs alongside personnel, finance, legal and IT in the boardroom of each company. Each traveller represents his/her company to the outside; each traveller represents a large investment of the company; each traveller determines the success or failure of such an investment. Corporations should realise the travel department can support every aspect or issue of a person’s trip and not only focus on the procurement of air and hotel.

Travel can learn a lot from procurement as they are the experts in their field. However, it must make the boardroom understand that travel is unique and vital to any company and separate from procurement. Procurement has a limited function within travel and its process is far more complex than buying a seat or bed. But, it must also be prepared to be held responsible for all aspects of this process.

Andreas J G Wellauer, CCTE, is founder of GALIANT Consulting, which specialises in strategic travel management.

Originally from Switzerland, Mr Wellauer lived and worked in the Netherlands, Germany, France and Monaco before moving to the US.

Initially under contract to the UN Pension Fund at the UN World Headquarters in New York, he then became the agency global general manager for Intel worldwide, based in Phoenix, Arizona. After forming Galiant Consulting in 1997, his consulting experience included working with both “mega” agencies and corporate travel departments.

Mr Wellauer’s articles and comments have appeared in many international publications and he has been a frequent speaker and lecturer at global travel management conferences and seminars.

Mr Wellauer speaks five languages, is a member of ABTA and ACTE, and a graduate of the prestigious Cornell University’s Certified Corporate Travel Executive programme.

GALIANT Consulting helps companies include safety and security issues, cross-cultural training, government affairs and process-flow analysis into any level travel programme, be it based in procurement, professional services, finance or operations. Headquartered in Berlin, it operates globally and has networks in Sydney, London and New York.