COMPANY NEWS
Rising rail fares challenge procurement professionals to prove value
the UK rail sector over recent weeks -and the implications are significant for procurement professionals, particularly those operating in the public sector.
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Firstly, one of the major outcomes of the Comprehensive Spending Review was the decision by government to change the formula within which rail fares are set, moving the boundaries from 1% above inflation to 3%.
This was followed by
announcements about enhanced investment in rail which in time should lead to improved rolling stock, faster journeys and greater capacity on the most popular business travel routes.
The short-term, though, will be dominated by the tighter travel budgets brought about by this age of austerity. Proving the value of effective procurement will become increasingly important, particularly in the public sector where every detail of expenditure is being opened up to public scrutiny in this new era of transparency and accountability.
So leveraging optimum return on the available budget and proving the necessity and value of the spend have never been so important. Smarter travel procurement, facilitated by the use of sophisticated online booking tools, is clearly the way ahead.
Indeed, the national procurement framework, operated by government, is a key strategic vehicle that will likely play an increasingly important role
Nov/Dec 10
here have been some significant developments in
in driving cost control and influencing buyer behaviour. It’s no longer just about delivering value - it’s also about proving added value.
Every travel management company currently on the framework uses the Evolvi online system to book and fulfil rail travel.
This isn’t just because it opens up easy access to best-value fares (if booked in advance), it also makes the implementation of travel rules much more effective and the allocation of spend to potentially thousands of cost centres an easier and automatic process.
Given that public scrutiny of such transactions will only increase, the ability to report in this way will become a key priority for procurement professionals.
“Through the framework, government and its agencies are benefiting from the efficiencies made possible through travel management company expertise and the value created by online systems, particularly when it comes to rail travel, where there can be a high degree of complexity in terms of ticket type, restrictions and fulfilment options,” says Jon Reeve, trade relations director at Evolvi Rail Systems.
Central to the benefits available through Evolvi is its integration within a managed purchasing environment, operated on a white label basis through travel management companies.
The result of such an approach is improved and more transparent budgetary control and detailed management information,
covering everything from cost centre allocation to environmental impact.
Add to this the access to the best available fares – which can sometimes result in savings worth hundreds of pounds on just a single journey – and it’s clear why public sector rail procurement is fast moving online.
“It’s fair to say that the age of austerity is focusing the mind of every organisation – private and public sector alike,” says Jon.
“Whereas in the past, managers might have been a little more sanguine in allowing ad- hoc rail ticket purchases by employees, the current operating environment requires clarity and evidence that best practice is being followed.
“Online systems make this process automatic and intuitive - and provide the means of identifying exceptions to the established rules.”
What’s interesting is that while there is immediate pressure to demonstrate the need and the value of rail travel, the longer term view is that train, with its productivity and environmental benefits over air and road, will grow substantially from its current market value of £1.5bn.
There is certainly a growing appreciation of being able to work while on the move, particularly with the availability of quiet carriages and at-seat internet connectivity – hence there has been a modal shift away from air on a number of key trunk domestic routes.
“With the affirmation of pse 15
investment in high speed rail links, plans for smarter ticketing and the ability to access and print best value tickets from the desktop, demand for travel by train will increase even in an era of higher average fares,” says Jon Reeve.
Systems such as Evolvi will become more central to procurement strategies as a result of the increasing wealth of data made available in real time and in a format easily imported into propriety software programs.
Moreover, there are no significant hurdles in terms of system migration for organisations using TMC platforms powered by Evolvi. self-booking tools (SBTs), global distribution systems (GDSs) and expense management tools are easily integrated.
Indeed, Evolvi has considerable experience in working alongside TMCs to address IT issues and to provide the training that will bring users quickly up-to-speed.
Critically, in this set-up phase procurement professionals play a key role in defining the rules within which travel will take place and in shaping the regular reports that are required.
In this way, the new era of transparency will become an advocate of smarter procurement and prove the value of operating in a managed travel environment.
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