A fundamental challenge of indirect and services procurement is that we’re often asked to make sourcing decisions — not to mention negotiating with and managing suppliers — based on historic data that may or may not reflect future demands and requirements. Travel procurement is the spend poster child for this kind of challenge today. Might the evolution in travel procurement that we’re seeing today represent an even larger paradigm shift that will permanently reshape the function? Perhaps, especially if you believe some of the key tenets presented in a February Wall Street Journal article. According to the story, “Historically, business travelers have accounted for half the customer base of major carriers and an even bigger chunk of their revenue. But even as the airline industry reports that corporate travel has begun to bounce back, many U.S. companies are keeping a tight leash on travel expenses.” From a travel-sourcing perspective, it’s more than just volume levers that may be changing permanently.
Before I get into the specifics of how the travel scene is evolving rapidly, it’s worth pointing out the case of Newell Rubbermaid, whose slashing of its travel budget is par for the corporate spending course. Consider how Newell “slashed its travel budget 28% last year and aims to keep travel costs flat in 2010” in part by encouraging “staff members … to skip airplanes entirely and use videoconferencing instead.” When it comes to a permanent shift in travel-spending strategy, what’s more interesting is how Newell is changing its travel-product mix…
