T & E Management: Procurement's Domain?
PurchTips edition #217
Should You Be Responsible For T & E Management?
Travel and expense (T & E) management has traditionally been handled outside of the procurement department. But, today, many organizations are having Procurement manage this pocket of spend. Why?
"The recent economic downturn has put travel spend under greater scrutiny by companies and, increasingly, the C-level is focusing on travel spend as a target for cost reduction," explains Canda Rozier, Principal of Canda S. Rozier, LLC and former CPO of First Data. "This makes sense - corporate travel is a spend category just like IT or professional services and should be managed as a part of an overall procurement [strategy]." She notes that good T & E management programs not only control costs, but also enhance traveler safety, help companies adapt to the ever-changing business travel environment, and allow travel to support company goals.
In summarizing a T & E management strategy, Rozier says that a procurement department must have:
- Top-down support and a corporate culture that enables it to address T & E management as a procurement category.
- A T & E policy that clearly defines what travelers can and can't do, starting with how they book travel.
- A strong travel arrangement partner and well-negotiated contracts for at least air, hotel, and car rental.
- A partnership with Accounts Payable which has the visibility of expenses required to enforce the policy.
- Systems and tools that provide access to spend, usage volumes, travel patterns, and key performance measures for preferred suppliers.
With regard to the latitude employees have in making travel choices and the enforcement of policies, Rozier stresses that clarity and consistency is critical because of the many political minefields in T & E management. "People take travel very personally, and we all are travelers in our personal lives," she notes. "Some of the biggest issues are usually related to choice of suppliers, travel policy, and overall traveler satisfaction."
Sharing the amount each department saves by using the policy is one way to maximize compliance, according to Rozier. "If managers realize that their budgets are being helped by the savings, they are a lot more likely to 'walk the talk' and require their teams to do the same."
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