Whats Next for Travel Management?

Executive Forum - Chicago 23 June 2009

2009 ACTE Global Education Event Sponsors

2009 United States Executive Forum Sponsors

2009 ACTE Chicago Executive Forum Sponsors

Agenda
The Future of Managed Business Travel - Recent ACTE Survey Results Creating Innovation & Managing Change in Uncertain Times
- Lean Six Sigma & Case Study Presentations

Getting to the Good Ideas

- An Unconferenced Session

The Future of Managed Business Travel

Kimberly Heche Global Travel, Meetings & Events Management Hewitt Associates Mary Ann McNulty Content Director ProMedia.travel LLC Stephen Mitleider Category Manager Travel & Property Services Procurement BP Corporation North America, Inc.

Profile of Respondents

236 Corporate Travel Managers

Headquarters Location
USA 45% Europe 27%

Canada

11%

Asia/Pacific

7%

Africa

5%

Latin America

4%

Middle East

1%
Source: ACTE

2008 T&E Spend (not including meetings)

$USD $10 million to $USD 25 million More than $USD 100 million Less than $USD 10 million $USD $26 million to $USD 50 million $USD $76 million to $USD 100 million $USD $51 million to $USD 75 million Don't know 4%
Source: ACTE

22%

21%

21%

17%

8%

7%

Research Findings

Strategic Changes Implemented

(in past 6 months or more)

Reduced travel spend Implemented more restrictive travel policies Implemented pre-trip approval requirement Increased enforcement of travel policies
Source: ACTE

Changes to Travel Management Role

More sourcing responsibility More accountability for traveler compliance More interaction with finance & management Expect more responsibility for SMM
Source: ACTE

Opportunities for Action?

Modified Procurement Practices and Procedures

Implemented more than 6 months ago 32%

Implemented in past 6 months

22%

Not considered

21%

Expect to implement in next 6-12 months Considered, not implemented

14%

12%

Source: ACTE

Renegotiated SLAs with Suppliers

Implemented in past 6 months 28%

Implemented more than 6 months ago

24%

Not considered

20%

Considered, not implemented Expect to implement in next 6-12 months

15%

13%

Source: ACTE

Implemented Travel Technologies

Implemented more than 6 months ago Expect to implement in next 6-12 months 51%

21%

Implemented in past 6 months

12%

Not considered

8%

Considered, not implemented

8%
Source: ACTE

Consolidated SMM with Travel Department

Not considered 27%

Implemented more than 6 months ago Expect to implement in next 6-12 months Considered, not implemented

25%

22%

17%

Implemented in past 6 months

9%
Source: ACTE

Whats Next?
Impact of mobile development Usage of travel alternatives Increased data consolidation capabilities

Lean Six Sigma

Creating Innovation & Managing Change in Uncertain Times

Stephen W. Elliott Process & Innovation Performance Accenture

Objectives
Introduce Lean Six Sigma (LSS) Concepts Describe results achieved Discuss applicability to travel management programs

What have you heard about Six Sigma, Lean and Lean Six Sigma?

What have you heard about Six Sigma, Lean and Lean Six Sigma?
Great Complex Not for Services Need Math Hard Drives Value Rigid It Works!

Most Every Organization is Driven to Quality, Cost and Lead Time Reduction Goals
Customer loyalty and retention Shorter customer lead time demands Downward price pressure: lower costs Lower invested capital Capacity expansion

Process Outputs What Customers Want

Process Inputs Items to Control

f(X) = Y

Lean Six Sigma

Methodology and Approach:
Customer defines level of performance Focused on improving (and managing) critical process inputs rather than just outputs (sales, profits, etc.) Y=f(X) Repeatable methodology to address process opportunities [Define Measure Analyze Improve Control (DMAIC)]

Engaging Leaders:
Project selected specifically to support business objectives Defined organization and set of roles creates accountability Critical mass of resources trained and deployed on the real business-critical projects

Lean Six Sigma Improvement Process

Define
Define the opportunity from both business and customer perspectives Understand the process and its performance Search for the key factors (critical X s) that have the biggest impact on process performance and determine the root causes Develop improvement solutions for the critical Xs

Measure

Analyze

Improve

Control

Implement the solution and control plan

Maximizing the Results Requires Lean (Done Fast) and Six Sigma (Done Right) Together
Lean
Speed + Waste + X Implicit Approach Goal Reduce waste and increase process speed Focus Bias for action/ Utilize existing, proven Lean Tools Method Kaizen events, Value Stream Mapping

Six Sigma
Quality, Cost + Explicit Approach Goal Improve performance on Critical Customer Requirements Focus Use repeatable DMAIC approach for sustained results Method Intense focus on projects performance improvement a key leadership activity

Lean Speed Enables Six Sigma Quality

(Faster Cycles of Experimentation/Learning)

Six Sigma Quality Enables Lean Speed

(Fewer Defects Means Less Rework)

Lean Six Sigma DMAIC Improvement Process Road Map

Define
Project Charter Voice of

Measure

Analyze

Improve

Control

the Customer and Kano Analysis SIPOC Map Project Valuation/ROIC Analysis Tools RACI and Quad Charts Stakeholder Analysis Communication Plan Effective Meeting Tools Inquiry and Advocacy Skills Time Lines, Milestones, and Gantt Charting Pareto Analysis Belbin Analysis

Identify and Implement Quick Improvements with Kaizen

Value Stream

Mapping Value of Speed (Process Cycle Efficiency/Littles Law) Operational Definitions Data Collection Plan Statistical Sampling Measurement System Analysis (MSA) Gage R&R Kappa Studies Control Charts Histograms Normality Test Process Capability Analysis

Process Constraint ID and Takt Time Analysis Cause & Effect Analysis FMEA Hypothesis Tests/Conf. Intervals Simple & Multiple Regression ANOVA Components of Variation Conquering Product and Process Complexity Queuing Theory

Kaizen, 5S, NVA Analysis, Generic Pull Systems, Four Step Rapid Setup
Replenishment

Mistake-Proofing/

Pull/Kanban Stocking Strategy Process Flow Improvement Process Balancing Analytical Batch Sizing Total Productive Maintenance Design of Experiments (DOE) Solution Selection Matrix Piloting and Simulation

Zero Defects Standard Operating Procedures (SOPs) Process Control Plans Visual Process Control Tools Statistical Process Controls (SPC) Solution Replication Project Transition Model Team Feedback Session

Whats LSS Without Some Statistics?

Outbound Calls as Predictor of Revenue
Avg. FF Rev. = 365.467 + 24.4076 Avg Dials /D

ProblemBackground
REVENUE

S = 1854.53

R-Sq = 2.5 %

R-Sq(adj) = 2.4 %

20000

Approach Results

10000

0 0 10 20 30 40 50 60 70 80

AVERAGE DIALS

Process Perspective Value Stream Map: 81% of Steps Are Non-Value Add Waste
Fancy Carriage Company Pocket Pony Inc. Customers Prod. Depts.

240 min

Sales Order

KS Contracts Manager Q 125 min CT 15 min Q 120 min

68 35

JW Assistant

60 120 15

BK Program Admin.

8 45

MP Assistant

MG Finance Manager Q Q C/T 6 min 50 min 184 min

195 480 270

KB Clerk

C/T 20 min 20 min Q

Q CT 17 min 195 min

Q 53 min 5 min

5 min

Q 103 min 22 min

155 min 10 min Q 35 min

40 50

Q C/T 0 min 10 min 10 min 5 min

C/T 22 min

C/T 8 min

10 40

Q 5 min

C/T 2 min

945 min 163 min

Q 50 min

90 min

This Paper Copyright 2001 by Lockheed Martin Corporation. All rights reserved. Portion Copyright etc. 1997-2001 by Lockheed Martin Corporation. All rights reserved

C/T 53 min 25 min

The Perfect Process

Eliminating Non-Value Add Steps Reduces Lead Time from 1440 to 61 Minutes and Eliminates Waste
Fancy Carriage Company Pocket Pony Inc. File Away Customers

Prod. Depts.

Sales Order

KS Contracts Manager

JW Assistant

BK Program Admin.

MP Assistant

MG Finance Manager

KB Clerk

CT 8min

C/T 20 min 20 min

CT 17 min

5 min

C/T 6 min

5 min

Roles for LSS

Business Leaders Own vision, direction, integration, business results Lead change, provide strategic direction

Executive Leadership

Sponsors Own financial result Project/Process owner Create Charter Support team Sustain solutions

Project Sponsors

All Employees
Understand vision Apply concepts to their job and work area Project Leaders

Deployment Leaders

Champions Lead performance improvement within site/business unit Prioritize projects Manage Project Portfolio

Black Belts Lead more complex projects Train and coaches Project Teams Serve on projects across the enterprise Go To subject matter experts Mentor Green Belts

Green Belts Provide project specific Support Gather Data Provide Subject Matter Expertise Provide Input for Solution Help Pilot, Test, Implement Solution

Carlson Wagonlit Travel and Six Sigma

Quality and Customer Experience

Steve Williamson Six Sigma Black Belt Director, Quality & Customer Experience Carlson Wagonlit Travel

CWT - Copyright 2009 CWT

Why CWT Adopted Six Sigma

To elevate our knowledge of a process and understand:
Human and technical aspects How process components interact with the overall vision and mission

Key Processes Drive Results

Drive Processes Drive Processes Customer Satisfaction

Cost Savings

If we dont measure it, we cant control it. If we cant control it, we cant improve it.
CWT - Copyright 2009 CWT

What Six Sigma Methodology Reveals

Stages of Improvement
What you think it is The actual process What it should be What it could be

CWT - Copyright 2009 CWT

Variation Has a Negative impact

 All repetitive activities of a process have a certain amount of fluctuation  Input, process and output measures will fluctuate  This fluctuation or variation can cause defects  Defects are the voices of the process  Six Sigma is the study and elimination of these defects
Measurement

Time

CWT - Copyright 2009 CWT

Best Practices - Results

Example 1: A prominent, global pharmaceutical company

with North American air spend of $80 million sought flawless execution throughout the implementation process and relied upon CWT to ensure success.

The clients critical-to-quality metrics were achieved immediately upon program start-up.

CWT - Copyright 2009 CWT

Best Practices - Results

Example 2: To ensure it was receiving the lowest

available fare at point-of-sale, a financial services leader with $75 million in North American air spend sought a full Topaz audit. CWT delivered the lowest fare 99.14% of the time, exceeding the clients goal. Subsequently, audits for two other companies achieved scores of 100% using these established processes.
CWT - Copyright 2009 CWT

Best Practices - Results

Example 3: A global technology leader was challenged with a significant number of unused tickets when moving to CWT from the previous travel management company. The client was able to secure more than $4 million for future use through CWT automation and negotiations.
CWT - Copyright 2009 CWT

The Race for Quality Has No Finish Line Quality

CWT - Copyright 2009 CWT

Six Sigma in Allstate Corporate Travel

Marie Colby Six Sigma Black Belt Senior Commodity Manager Travel Enterprise Services Allstate Insurance Company

Todays Dialogue
Allstate Six Sigma Evolution Overview of Allstate Travel Compliance Measures Preferred Hotel Process Improvement Business Unit Focus Voice of the Customer Savings Opportunity Brainstorming Solutions Next Steps Questions

Allstate Six Sigma History

Progression of Six Sigma at Allstate
Introduced as a pilot in Allstate Financial in 2001 Integrated into Allstate business units The Six Sigma methodology helps us to more effectively define the problem, collect performance data, analyze root causes, select the right solutions and ensure that the improvements are maintained." Six Sigma Enterprise COE

Evolving Six Sigma in Procurement

Endorse Six Sigma for process improvements in Procurement in 2006 Train additional Black Belts (4) to continue to drive Six Sigma process improvements within Procurement Maintain corporate responsibility to foster participation in other departments Utilize Six Sigma as a consultative design tool for new processes

Overview of Allstate Travel

Guidelines established to manage traveler behaviors:
Request travelers make air, hotel and rental car reservations through online booking tool (Allstate Travel Xpress - ATX) or designated travel provider Purchase all airline tickets at least 14 days in advance Purchase the lowest available non-refundable coach class fare for domestic flights Competitive rates established for preferred hotel program Ensure the safety of all employees while traveling

Compliance Measures
Travel Services
Online Booking Tool Air: 14 Day Advance Air: Low Fare Acceptance Air: Ticket Exchanges Preferred Rental Car Preferred Hotel

Aspiration Range
85% 85% 95% 98% 6% 10% 90% 60% - 70%

Allstate Compliance
85% 80% 85.2% 15% 75% 43.9%

Preferred Hotel Process Improvement

Create a more simplified process by anticipating what and how customers purchase

Initially seen as a way to increase compliance for the Allstate Preferred Hotel program, this became an opportunity to examine our internal customer buying habits, listen to the VOC and design a program to meet their ever changing needs.

Preferred Hotel Business Unit Focus

Pareto Chart of Business Unit Spend Per Million - Aug. 2007 - Aug. 2008
25 20 Spend M 15 10
Individual Value 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% LB=0.0% 60.0% _ X=40.9%

I Chart of % Compliant - August 2007 - August 2008

UB=100.0%

5 0 Business Unit

s n g ts er es ns io in ce th ke rc tio vi at et O ar la ul ou er rk l s g M a S Fi Re na M Re Re nt io te ed te ge an ta ar nd eg ra A h a ls o R m d Al rp C w lS Hu In La Co P& cia n na Fi Spend M 22.70 6.18 3.10 1.30 1.18 0.46 0.44 0.40 0.37 0.20 Percent 62.5 17.0 8.5 3.6 3.2 1.3 1.2 1.1 1.0 0.6 Cum % 62.5 79.5 88.0 91.6 94.8 96.1 97.3 98.4 99.4 100.0 m ai Cl s fic Of e ia nc na

l s s s g n ts ce ns RE ns m ce c ia ce tin tio ke io ffi ai vi & tio la ur an ke at ar Cl lO er ra in so el ar M gu es a S e F t R ic M Re Re d on e e Op rv en gi d re at at y an Se Ag an lst ha Re li t or m d ia Al ity C rp w lS In Hu ec ci l ia La P& Co nc Fa Sp na Fi

Business Unit

Opportunities exist for larger spend business units; historically hotel decisions have not been based on Allstate preferred properties, but traveler convenience.

Voice of the Customer

30% 22%

10% 38%

No preferred hotel in traveler destination was the top reason for not choosing a preferred property

Preferred Sold Out No Hotel in Destination Preference Not Offered Lower Priced Option
18%

14%

18%

Only 44% of Allstate business travelers make reservations via online booking tool or designated agency

6%
Travel Agency/OBT Hotel Direct Other Internet Website Hotel Website

44%

Preferred Hotel Savings Opportunity

Savings Opportunity Between Internet Rate & Preferred Rate
1500000 Individual Value 1000000 500000 0 -500000 -1000000 LCL=-1000675 _ X=307520 UCL=1615716 Individual Value

Savings Opportunity Between Property Website & Preferred Rate

1500000 1000000 500000 0 -500000 -1000000 LCL=-841843 _ X=239010 UCL=1319862

o Ph

i en

/M

a es

Z A

a re

An

m ie ah

J TX r N LA TN NY NC s g a e tte vill e v in re an at lo A r le w I r sh ar ce E k e n ta O ge G ff i Na Ch La id U O ew tla Br e N PA A P om r e / H AU ia H et M CA M y ar FL A a re GA Ar ea IL

City State

J A N LA CA TN A NY NC G a y s g a a a a er re ar tte ville v in re a n A re es re at A M lo A A w Ir /M r le sh ce ar E ke n ta ge m O ix G f fi Na ie Ch id La O en ew tla AU Br ah o e N A PP An Ph o m re / H AU H tia e M Z FL IL TX

City State

Saving Opportunity = (57% of Annual Room Nights ) x (Price Variance to Preferred Rate)

The missed opportunity ranges $2.6M and $3.4M Annually

Potential Causes and Effects

Identified our problem statement and brainstormed the causes and effects the booking process could have on the preferred hotel program

Solution Impact
Solution
Eliminate Preferred Hotel Program

Potential Impact
No knowledge of traveler location/Lost dollars No punch out on tool/add to transaction fee Negotiated savings/ earn commissionable rates. Identify rate by hotel for tracking. Ensure safety of our travelers

Internet booking on tool/add internet bookings to itinerary Primary/Secondary Preferred Agency Rate Mandate use of online booking tool/agency

Proximity of the hotel to the Allstate location.

Allstate travelers are not aware of the value added amenities

Negotiated long term rates with our major chain partners for the CAT team

Next Steps
Quick Wins
Description in online booking tool Low term rates for CAT team for specified chain properties Clarification of Allstates Safety team position on travel

Next Steps Control Phase

Standard practices enhanced processes Training New guidelines and compliance goals Compliance monitoring and measuring Communication of results and recommendations

Getting to the Good Ideas

an unconferenced session
Facilitated by: Harriet Washburn Manager of Strategy and Sourcing IBM

Topics for Discussion

Who owns travel procurement? How do you define the end-to-end process? Incorporating social networking tools What is your mobile strategy? Pros & cons of a global TMS vs. best-in-class local suppliers KPIs for effective travel management programs How do you respond: better, faster, cheaper on the internet

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