Mastering supplier sourcing: strategies and processes for success

1 - Defining travel needs

Jo Lloyd, Global Head of Account Management and FCM Consulting, emphasises the keys to strategic supplier sourcing. "It's important to find cost effective suppliers, but there's more to it. Strategic sourcing for business travel is about forging resilient, flexible partnerships that can adapt to changing business needs and global circumstances."

‘Cheap’ doesn’t always win. Strategic sourcing often requires the right balance of many different business considerations, including:

• Cost savings and efficiency
• Quality assurance and accuracy
• Risk mitigation and safety
• Compliance and policy control
• Corporate traveller satisfaction

Let's explore the key steps required to create an effective business travel sourcing strategy.

Understanding corporate travel requirements

Before diving into the search for a suitable supplier, it's crucial to evaluate your company's travel needs thoroughly. This involves:

• Analysing current travel patterns and frequencies
• Identifying key destinations
• Understanding travel and accommodation preferences
• Recognising specific service requirements (accessibility, sustainability)
• Examining current and potential expenses 

Create a profile of your business travel programme that captures all these elements, serving as a roadmap for your sourcing journey.

Creating a comprehensive travel profile

How do you build a travel profile for your organisation that can serve as the backbone of your sourcing strategy? A business travel profile helps you create supplier selection criteria and minimum requirements based on your needs, capabilities, and resources.  

Felicity Burke, APAC Director at FCM Consulting, emphasises that this profile needs to be as detailed as possible, so your prospective travel management companies can gauge the best solutions, and travel suppliers understand your 'worth' to them. "A well-crafted travel profile is like a roadmap for your global sourcing journey," says Burke. "It not only helps you identify potential suppliers but also enables those suppliers to tailor their offerings to you. This level of detail can lead to more meaningful partnerships and better programme value.”

Here's what your comprehensive travel profile might include.

Travel patterns

What is your domestic vs. international travel breakdown? What are your frequent destinations? What are your peak travel periods? Are there any recurring events or conferences that drive business travel?

Travellers

Identify your business travellers by department and/or function. What are your company's exxecutive and VIP travel requirements? Do travellers have specific needs to be addressed such as acessibility or dietary restrictions?

Existing suppliers

What are your current preferred airlines, hotels, and car rental suppliers? How do traveller preferences align (or misalign) with your current supplier agreements?

Budget

What is your travel budget and how is it allocate? Do travellers need to adhere to per diem rates or expense limits per your corporate travel policy?

Policy guidelines

What restrictions and rules exist within your travel policy? Are there exceptions or flexibility within the policy? What is your process for approvals?

Technology

What business travel tech platforms are in use in terms of online booking tools, expense management tools, and your travel management company (TMC) tech offerings for reporting, compliance, and risk management? How should suitable suppliers integrate with this technology?

Sustainability goals

What are your company's sustainability targets and initiatives. What preferences do you have within your corporate travel policy for green options for business travellers?

Duty of care

What is your approach to risk management and what are your supplier expectations with regard to your duty of care obligations? What are your tracking and reporting needs, and what supplier data is required?

Payment and expense management

What are your preferred payment methods and your invoicing requirements? What reporting do you need, and how will you receive this data from suppliers?

3 - Evaluating travel suppliers

After receiving responses, it's time to narrow down the list of potential suppliers. Here’s how to make the best choices:

Supplier evaluation and assessment criteria

You’ll start by evaluating potential suppliers based on the pre-defined criteria found within your travel profile. Analyse supplier proposals based on how they align with the requirements you identified in that phase.

You’ll look at factors including cost reduction, service quality, reliability, compliance with corporate travel policies, and traveller feedback. You’ll also analyse supply chain risks, looking at factors such as supplier financial health, service capacity, environmental impact, and market trends.

Site visits and demos

What if you don’t have everything you need? Take it a step further. Conduct clarification interviews if needed so you don’t leave anything to chance. You may also want to request demos or site visits to assess supplier capabilities and service standards firsthand.

5 - Supplier relationship management

Selecting the right suppliers is just the beginning. To truly maximise the value of your travel programme, ongoing management of supplier relationships is crucial. This involves regular performance monitoring and a commitment to continuous improvement.

Remember, your suppliers are not just service providers – they're key partners in achieving your travel management goals. Investing time and effort in these relationships can yield significant benefits in terms of programme performance, cost efficiency, and traveller satisfaction.

Ongoing performance monitoring

Regularly assessing supplier performance is essential to ensure they continue to meet your organisation's needs and contractual obligations. Here's how to approach this:

1. Establish key performance indicators (KPIs) for metrics like cost savings, service quality, performance, problem, resolution, traveller satisfaction, and policy compliance.
2. Use your travel management company’s reporting and data analytics tools to gather and analyse supplier performance data on a monthly and quarterly basis.
3. Schedule consistent review meetings with key suppliers. Use these sessions to discuss performance trends, address any issues, and align on future objectives.

Ashley notes that "consistent performance monitoring isn't just about catching suppliers who aren’t performing. It's about creating a shared understanding of what's working well and where there's room for improvement."

Continuous improvement and collaboration

A successful supplier relationship should be a partnership that focuses on ongoing improvement and innovation. Here are some tips to help you achieve this:

• Maintain open communication, establishing regular check-ins with key suppliers.
• Regularly solicit feedback from travellers and travel arrangers regarding supplier performance. Share this feedback with suppliers.
• Address issues promptly, establishing clear processes and channels for feedback, issue escalation, and resolution. Encourage suppliers to be proactive issue resolution.
• Innovate! Partner with suppliers on new approaches and invite them to share ideas or technologies that could benefit your travel programme.
• Align with suppliers to understand and respond to industry trends, then collaborate on strategies to address them.
• Recognise suppliers who consistently perform well and consider incentives for suppliers who exceed performance targets.

According to Jo, "the most successful travel programmes happen when buyers and suppliers work as true partners. Fostering a culture of continuous improvement and open collaboration helps achieve cost savings, drives innovation, and ultimately improves traveller experience."