COLLABORATION IS KEY – IF YOU CAN
UNDERSTAND THE SUPPLIER’S OBJECTIVES, THEN EVERYONE CAN WIN
THE CONSULTANT KAVITA COOPER, MANAGING DIRECTOR, NOVO-K
Supplier rationalisation is usually driven by finance or procurement departments. Normally it’s about finance and often it’s about getting more control of costs.
The main advantages of reducing suppliers include: fewer invoices and improved efficiency; increased leverage and buyer power with suppliers; more control which should improve employee satisfaction; and better payment terms and processes. For example, one of my clients reduced the number of invoices processed by 89 per cent. It did this by moving to monthly billing, while also securing an 18 per cent improvement in negotiated rates from suppliers. In addition, it cut the accommodation portfolio by 50 per cent. Supplier rationalisation should
be just one part of a raft of measures designed to help employees, including flexi-working, CSR (corporate social responsibility) and staff retention policies. Rationalisation is not something done on its own.
Start by scrutinising spend, including the number of suppliers, location, invoices, department and user trends – who books online and when? Learn about travel buying behaviour: what are the drivers, what could be done to support a change of mindset and help reduce cost? You have to take employees with
you – travel can be very emotive, especially when people are staying away from their families regularly. Also, work with HR on duty-of-care – if something should go wrong what are the protocols? While it’s important to get clarity and control, you also have to remain agile. The biggest downside could be the impact on employees, so you need to communicate with them – not telling them why you’re doing this is going to create a backlash.
Set up user groups and a feedback
loop with communication going both ways. Your travellers understand what’s happening on the ground far better than those sitting in the office.
PAUL SPELMAN, MANAGING DIRECTOR, AIRPLUS INTERNATIONAL Rationalisation has several key benefits, including cost reduction, but often that’s not why our customers consider it. Along with directly reducing purchasing costs, the benefits include reducing processing costs and the number of suppliers – decreasing the risk of issues within the entire supply chain. Clients also often find reducing the pool of suppliers benefits their relationship with the remainder of their contacts by developing more exclusive relationships. Ensuring your rationalisation programme
benefits suppliers is paramount to achieving the objective. Always keep in mind the length of contract you initiate with your rationalised list. Rationalisation naturally calls for shorter contracts to encourage competitive pricing throughout the agreement. Consider carbon impact. It’s all well and
good creating a rationalisation programme that saves money, but ensure your business isn’t increasing the carbon impact, as there’s no doubt there will be measurements put in place in the future. Travellers will always find a way to complete their trip using their preferred method of travel and hotel chain, so rationalisation can contribute to maverick buying when not handled with the traveller at the centre of the programme. Travel managers understand their policy is the most beneficial, both for the traveller and the organisation. But sometimes this doesn’t come across as clearly for the traveller, and it’s the manager’s job to reinforce why it’s key to comply with the travel policy. Sometimes the travel policy doesn’t work for every traveller situation and buyers need to understand that. The key to rationalisation is flexibility – policies should include guidelines to follow, not laws.
buyingbusinesstravel.com
2020
JANUARY/FEBRUARY
63
THE PAYMENT SPECIALIST
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