About the Client
A worldwide manufacturer striving to enhance its sourcing strategies. The company aimed to cut indirect costs by streamlining operations and optimizing service procurement.
Global Strategic Sourcing Initiative
Corporate Travel Program Optimization – Fortune 500 Industrial Manufacturer
Key Achievements Overview
0
% Cost Reduction
achieved through the new corporate travel strategy
$ 0
MM
gains realized via optimized payment solutions
$ 0
MM
savings captured in transportation and lodging programs
Secured supplier credits to cover expenses during the transition phase.
Initial Challenge
The client's fragmented travel management system led to limited transparency and minimal discounts on travel expenses. This lack of oversight resulted in over $120 million in untracked and unconsolidated spending across Air, Hotel, Rental Car, and Travel Management Services.
Assessment
Opportunities for cost savings were identified, along with organizational challenges hindering efficiency. Specifically, the consulting team:
- Conducted interviews and focus groups with stakeholders and employees to uncover pain points and preferences for a new program.
- Gathered detailed business requirements essential for project success.
- Analyzed existing contracts to identify untapped savings potential.
Strategy
To achieve comprehensive savings on over $120 million in annual expenditures, the consulting group launched a Strategic Sourcing initiative targeting travel management, credit card, rental car, hotel, and air providers. The team:
- Provided training to the client's team in areas such as Sourcing Methodology, Executive Communication, and Supplier Negotiation.
- Engaged a diverse range of suppliers, including national, regional, and local options, to secure optimal value and coverage at competitive costs.
- Leveraged industry expertise and market insights to gain competitive advantages during the sourcing process.
- Implemented a phased approach for issuing and evaluating online requests for proposals.
- Developed category-specific negotiation strategies for effective discussions with suppliers.
- Transitioned from an unmanaged travel program to a fully managed solution, paving the way for future savings through policy enhancements.
- Facilitated the recruitment of a global travel manager to oversee operations.
Outcomes
Savings were achieved by consolidating the supplier base and strengthening relationships with key partners. Key results include:
- Realized $2.5M in benefits through credit card programs (travel & entertainment and purchasing cards).
- Captured $6.2M in savings across rental car, air, and hotel programs.
- Improved visibility for future savings opportunities with key suppliers like hotels, airlines, and rental car companies.
- Secured implementation credits from suppliers to offset transition-related costs.
- Built long-term collaborative partnerships with hotel, air, rental car, and travel management providers.
- Negotiated complimentary on-site travel consultant support without additional charges.
- Deployed cutting-edge technology for traveler safety and tracking.
