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Key Procurement Considerations for Corporate Travel

Things are changing due to the COVID-19 pandemic, and the travel industry still facing ongoing, unprecedented challenges and quickly learning how to approach safely and with vigilance. Corporate travel is undergoing a significant shift amid the COVID-19 pandemic. In corporate travel procurement, there are many considerations and key factors to choose a travel management company that will meet the business’s needs.

The corporate travel procurement function ensures that key travel suppliers such as the travel management company, key lodging partners, air, rail and ground transportation providers, and related services providers are adequately compensated for the additional effort and costs associated with ensuring traveler health and safety. The procurement team need to reassess travel policies to facilitate business resumption in cooperation with their human resources, finance and accounting, functional directors and risk/security counterparts.

Impact of Travel Policy Compliance

Travel policy is a set of company rules that provides employees with guidelines to follow when booking a business trip. The travel policy governs employee safety, travel approval, the booking process, expense reporting and reimbursement. However, travel policies are not a one-size-fits-all solution. A corporate travel policy should meet the company’s needs to achieve business objectives.

The travel policy should be kept simple and regularly reviewed to ensure that it is up to date. Updating the travel policy is a balancing act because it affects multiple stakeholders. The travel policy should not be edited more often than necessary. But it will need to be adjusted as the organization grows and changes.

Key points to note are as follows:

  • Keeps the travel booking process organized.
  • Streamlines the reimbursement procedures.
  • Enables more savings (clear policy + happy travellers = more policy compliance and savings).
  • It helps the company avoid fraud.
  • Protects employees through clearly outlined safety procedures.

Preparing Contract Negotiations

Contract negotiation is the process of agreeing on a set of legally binding terms before start doing business. Going through negotiating contract terms is crucial. Investing time in analyzing past contracts is a great way to optimize costs and save money. Also, avoid past mistakes by perhaps agreeing to too high a price or unrealistic terms. Include Service Level Agreements (SLA) into the contract. Many companies spend a lot of time discussing service levels at the RFP stage and then forget to incorporate SLA into the contract. If another company buys the travel management company, will they provide the same service? Maybe this provider rejected in the first phase of RFP! Look closely at termination clauses. Can terminate if things do not go well? What if the provider doesn’t deliver at all?

Setting Expected Level of Service

Service Level Agreement (SLA) is a guide to set clear expectations on performance levels, provide potential opportunities to ensure and reward performance and offer dashboards of metrics to monitor program performance. Travel managers rely on SLA to monitor and manage relationships with travel management companies. Adopting the SLA framework to travel, corporations define the performance and service levels that they expect of suppliers. Typically, the SLA would detail the performance metrics that a company expects of the Travel management company and the financial incentives for exceeding expectations and penalties for falling short.

Most travel-related SLAs are just about 7 to 10 metrics, some of which are as follows:

Due Diligence and Duty Of Care

As the world evolves at a rapid pace, risk management is a crucial issue for businesses. Organizations are increasingly interested in improving in this area to make traveler safety a top priority.Three significant challenges hinder a travel management company able to provide critical support.

  1. False or unreliable travel alert.

Many organizations rely on risk information providers that use data from news sites or social media for risk alerts, but both sources can be unreliable and inaccurate. Travelers being notified too often or not at all, leading them to miss out on critical warnings.

2. Limited or Incomplete travel data.

Travel one-way tickets, split tickets, bookings from other sources and travel out-of-programmed activities. It can be a challenge to quickly and accurately determine if their travelers are affected by unforeseen events.

3. Lack of travel awareness and procedures.

Unclear of travel risk management program and procedures to ensure the highest level of protection.

Layers of Mitigating Travel Risks

  • Preparation

Travel management company help to provide pre-trip information includes aggregating destination briefs, communicating safe travel practices, ensuring employees receive appropriate vaccinations and ensuring the traveler clear their responsibility as identified in the formal travel risk plan.

  • Real-time monitoring

Travel management company using technologies can monitor global events in real-time like weather, health, terror, or other events-and immediately notify travelers when they may be affected.


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References

Alice Tew. (2016). “How to procure a travel management service”. Retrieved from https://www.slideshare.net/AliceTew/how-to-procure-a-travel-management-service?from_action=save, accessed 20/03/2021.

Benny SeetJin Peng, DLSM. (2020). “Key Indicators to Measure Supply Chain Performance”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/key-indicators-measure-supply-chain-performance/, accessed 20/03/2021.

Dustin Downing (2016). “Duty of care: Managing corporate travel risk in an unstable world”. Retrieved from: https://www.sabre.com/insights/duty-of-care-managing-corporate-travel-risk-in-unstable-world/, accessed 28/03/2021.

Elsa Zhang Chunhao, DPSM. (2019). “Mitigating the Risks of Global Sourcing”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/mitigating-risks-global-sourcing/, accessed 28/03/2021.

TravelPerk. (2021). “The complete guide to corporate travel policies”. Retrieved from: https://www.travelperk.com/guides/corporate-travel-policy/ , accessed 20/03/2021.

Trawex Chong Siau Ting, DPSM. (2021). “Key Strategies for Negotiating Corporate Travel Deals”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/key-strategies-negotiating-corporate-travel-deals/, accessed 20/03/2021.

Foo Yee Choong, DPSM
Foo Yee Choong, DPSM
Foo Yee Choong has substantive years of experience in the travel industry and specifically in customer service. He holds a Diploma in Hotel and Tourism Management. Yee Choong is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). He completed the Diploma in Procurement and Supply Management (DPSM) on March 2021 at SIPMM Institute.
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