Nordic Business Travel Supplier of the Year - NBTAnbta.no/wp-content/uploads/2014/12/fbta_2009_nbl_procurement.pdf · Nordic Business Travel Supplier of the Year Jan Borg ... common

Nordic Business Travel Lunch & Seminar 15.10.2009

Nordic Business Travel Supplier of the Year

Jan BorgVP, ReseGeometri Nordic

The Winner:Singapore Airlines


Business Travel Procurement

Mirja KivimaaCo-chair, FBTA Travel Management CommitteeTravel Manager, Outokumpu Oyj


Ann Cleveland-Oey

30 years of experience from travel industry and procurement:

Global Sourcing Director, Indirect materials and services, Konecranes PLC, 2008-Category manager, Indirect procurement and Global Travel Wartsila Corporation, 2005 - 2008Global Travel Manager, Wartsila Corporation, 1999 - 2005Production Director, Member of Board,Toolo Travel 1985 - 1999Hotel InterContinental, Helsinki, 1979 - 1985

Education:

eMBA, TAMK 2009ADP London Business School 2006Reach, Wartsila Mgt Programme 2000Iteronomi, Helia Porvoo 1983High school graduate 1979

NBTLS October 15, 2009


Global macro economic procurement trends

centralised 1960-70de centralised 1980 globally centralised and categorised 1990



Procurement today is easier to handle across country boarders due to technological development and has become more global, yet leaving needs for both local and regional procurement as well



Supply chain optimisation and product savings.

Where does travel fit in this and why is this done?

What are the benefits??

WHY??

Strategic effectConcentrate

Make clear policy

Standard process

Follow up

LogicGet better price

Get people to understand

Easy to follow, safe and effective

Make necessary changes

ResultCost savings

Follow policy automatically

Time saving // no redundancy // cost effective

Change with need, develop,Feedback

Cause - Effect ResultsStrategy -

Category driven sourcingStrategic suppliers enable company growth and profitabilityOne corporate voice towards suppliers

Harmonized key processes in procurement e.g. Supplier Base Mgmt

Professional people network to leverage business volume, knowledge and resources

Local tactical execution of own suppliers - little leverage.Fragmented supplier base of thousands of suppliers

No common way to co-operate with suppliersLittle process development

Fragmented local responsibilities

Strategy and Sourcing

Procurement as-is & to-be

Process

Governance

To-beAs-Is

Common spend analysis toolsGlobal contract database

Individual target setting based on common KPIsScorecard based monthly reportingRegular feedback to suppliers

Independent local solutions

No common KPIs and transparency of supplier performance. Little individual targets and measuring

Procurement IT

KPIs and Target setting

GSD, Mechanics

GSD, Parts Subcontracting

GSD, Electrics

GSD, Indirect Mat. & Services

Typical Procurement organisational chart

ProcurementDevelopment

CPOProcurementBoard Executive Assistant

HR

GSD, Steel and Structures

5

4

3

2

1

SupplierDevelopment LegalProcurement

Controller

GSD, Service Parts & Services6

President / CEO

CapacityManagement

RSD = Regional Sourcing DirectorGSD = Global Sourcing DirectorCPO = Chief Procurement Officer

GSD, Logistics7

RSD, EMEA RSD, Americas RSD, NEA RSD, SEA Program Sourcing

Typical Indirect Categories

Indirect Categories

Distribution

Sea

Air

Marketing

Print

Marketing materials

Marketing agency

IT

Hardware

Software

Services

Fixed

Mobile

Travel

Airlines

Train

Hotels

Car rentals

Cars

Leased cars

Maintenance

External Labor

Temps

Sub-contractors

Facilities

Catering

Rent

Utilities

Cleaning

Office

Furniture

Supplies

Capex

Packaging Equipment

Buildings

Production Equipment

Operating Services

Insurance

Consulting

HR

Data

Road

Courier

Postage

Other

Agencies

Exhibitions & events

Restaurants & representation

Tax & Audit

LegalAdvertising

Equipment

MRO materials and services

Energy


Special in indirect

The volume in Euros is normally between 25-60% of company purchasing volumeThe transactional volume of indirect is 80-90% of the company transactions (Barry, 2005)The administration of indirect is heavy; process needs to be defined and effective, tools need to be in place


Possibilities

Outsource the whole business process of indirect globally (IT, people, process and knowledge)Build a category organisations into the company and do everything by yourselfTake a mix, do both; some locally, some regionally, some globally


What does it mean for TRAVEL category??

Outsource the whole business process of indirect globally (IT, people, process and knowledge)Build a category organisations into the company and do everything by yourselfTake a mix, do both; some locally, some regionally, some globally


How to make agreements??Corporate with suppliers?Join a consortium, who buys for many?Outsource to Travel management company?Outsource to third party company?Use a global IT-platform, with ready negotiated deals in it?Go for the best best price of the day?

Jouni Malmivaara+ 30 years of experience from Sourcing and Finance in Pulp/Paper/Engineering industry:

Managing director of Nordic Source Purchasing consortium since March 2009Vice Presindent of Sourcing in UPM-Kymmene Corporation since February 1996CFO of UPM Woodworking and Joinery industry since 1990CFO of Rauma-Repola Forest industry since 1987Sourcing Director of Rauma-Repola since 1985Purchasing Manager of Kajaani Oy since 1974

Education:

- B. Sc in Economics (Turku School of Economics)- Several Leadership and Management courses (Rauma-Repola, UPM)- Several International seminars and courses in Sourcing and Procurement

JM/NBTLS October 15, 2009

World Class Procurementtoday

Jouni MalmivaaraChairman of the Procurement Forum of Finnish

Association of Purchasing and LogisticsManaging Director, Nordic Source

From . . . To . . .

Cost Focus

Buyer

Local and Regional

Functional approach

Low Integration level

Value Focus

Supply Manager

Global and regional

Supply Chain Integrator

Business Partner (Innovation with Suppliers)

Highly Integrated Corporation

Trends

JM/NBTLS October 15, 2009 18

Changed Agenda for Procurement

Value

Cost Risk

Value Improvement:-‐Business orientation-‐Improving customer value proposition-‐Providing total service solutions-‐Exclusive solutions-‐Alliance mgt

Materials Cost reduction:-‐Purchasing savings-‐Doing more with less-‐Aggressive sourcing-‐e-‐Auctions-‐Contract mgt

Risk Mgt:-‐Single vs multiple sourcing-‐Performance based contr.-‐Buyer dependence-‐Supplier dependence-‐Financial position-‐Proprietary knowledge

Buying Supply Chain Mgt

Value ChainMgt

19JM/NBTLS October 15, 2009



Harmonised Sourcing Process

Engage stakeholders

Sourcing DirectorSourcing ManagerBack Office

Cross-functional team Regional/local staff

Supply analysisBuild fact base

GenerateIdeas

Generate Sourcing Strategy

ContractingImplement &Measure impact

1.

21


Purchasing Process is in Place; Whatever we buy, we follow the

processInternal Customer demandPerformance expected

= Technology, R&D, Supply

(challenge the demand) Supplier / product Selection

Through RFQ, Selection Criteria, Trials, Contracts

Fact Base / Cross-functional team

knowledge management, be upstream

Supplier development

to pave the way for better cost and better value in the future

Strategy built and communicated

Strategic Sourcing Strategies and Tactics


SourcingStrategies

Product Specif.

Improvement

Joint Process

ImprovementRelationship

Restructuring

Best PriceEvaluation

VolumeConcentration

23

Global, RegionalSourcing

Importance of Building Best Practice Strategic Sourcing Capabilities


Setting Strategic Vision/Plan

OrganisationCoDe

TCO, Supplier economics

Category strategies

SRM Strat. IT Global Supply base

NegotiatingManaging proposals

Demand Mgt

Transactional Processes & Systems Support

Vision

Strategic

Tactical

Transact.

24

Buyer-evolution


Partnerships!

25

World Class Excellence Model

INTEGRATED, ALIGNED AND GLOBAL

InsourcingOutsourcing

Develop CommodityStrategies

Establish world-classSupply Base

Develop, ManageSupplier relations

Integrate SuppliersInto Product/Processprocessing

Integrate SuppliersInto Order Fulfillment

Supplier Dev.And Quality Mgt

Manage CostsStrategically acrossSupply Chain


World Class Excellence (enabling processes)

INTEGRATED, ALIGNED AND GLOBAL

Develop Org. AndTeaming strategies

Deploy Globalization

Develop purchasing,Supply chain KPIs

Develop and implementIS/IT systems

Establish HR develop.And Training

Establish globallyIntegrated, aligned,Sourcing Strategiesand Plans


Category Strategy Development:a Five Step Approach

28

1. Strategy evaluation 2. Data

Analysis

3. Goalsetting4. Strategy

definition

5. Implementationplan Continuous process


Main characteristics of world-class sourcing organisation

High aspirations

Advantaged fact base

Strategic focus

Top talent

Supplier network

Enabling technology

Rigorous target setting in TCO reduction and continuous improvement schemes

Thorough knowledge of supply market, supplier economics and category TCO elements

Category sourcing strategies based on profound fact base and is done by best available cross-functional experts

Cross functional sourcing teams staffed by the "best and brightest"

A world-class supplier network with a few demanding partnerships that can truly contribute to competitive advantageTechnology enables and accelerates the journey to world-class procurement supporting better decision making and integration of suppliers



Strategic Sourcing Positioning needs to be done for each spend category

L

H

L H

Supply risknumber of potential suppliersavailability of substitutes

Businessimpact

SpendQuality

PulpingWet-end

Spares

Cons

Coat +Lamin.

Maint Services

SparesChemicals

Raw materials

Investments

Othercoat

Packaging IT

Travel

Marketing

Office

FacilityAdmin

PalletsRollServ.

Addit

Leverage Strategic

Non-critical Bottleneck

Bundle andcreate

competition

Minimize TCO and long termdevelopment

Outsourcing& eTools

Mitigate risk and ensureavailability

30

Supplier cost structure Our company TCO

Additional valueProductQualityStability

Production flexibility

Service value proposition

Time

Customer TCO

Total Cost of Ownership (TCO)The breakdown of spend shows costs across all

the product life cycle

CapexLaborRaw materials

Utilities Pur-chase cost

Trans-port

Inven-torycarryingcosts

Profit Qualitycheck-ing

Reve-nue

TCO

External Internal Joint



Global SourcingSourcing Tools (E-sourcing, Sievo, E-

procurement)SpendAnalysis Market Analysis

Supplier Analysis

CategorySourcingStrategy &Aspirations

RFx processReverseAuction

SupplierSelection

ContractNegotiation

ContractManagement

ComplianceFollow-up

SupplierDevelopment &PerformanceManagement

Global SourcingDashboard

32

33

Typical Indirect Categories

Indirect Categories

Distribution

Sea

Air

Marketing

Print

Marketing materials

Marketing agency

IT

Hardware

Software

Services

Fixed

Mobile

Travel

Airlines

Train

Hotels

Car rentals

Cars

Leased cars

Maintenance

External Labor

Temps

Sub-contractors

Facilities

Catering

Rent

Utilities

Cleaning

Office

Furniture

Supplies

Capex

Packaging Equipment

Buildings

Production Equipment

Operating Services

Insurance

Consulting

HR

Data

Road

Courier

Postage

Other

Agencies

Exhibitions & events

Restaurants & representation

Tax & Audit

LegalAdvertising

Equipment

MRO materials and services

Energy


Thank You!

Success in Strategic Sourcing is a must today!


Miia Haakana+ 10 years of experience from travel industry:

International Travel Manager since Jan 2008 Rautaruukkiworking in corporate sourcing department, responsible for international travel category

Sales Manager KalevaTravel, Finland Travel Bureaubusiness travel agency experience, including also travel management consultation projects

Sales Manager - PalaceKämp Group, Hotelzonselling Hotelzon hotel booking tool and Palace Kämp hotel-, meeting- and restaurant services for the corporations, tour operators and travel agencies.

Airport Service Agent Scandinavian Airlines SASmaking travel arrangements in the airport ticket counter, transit hall desk and business lounge

Education:

The Institute of Marketing - Diploma in Travel Management Haaga Institute Polytechnic - B.Sc in tourism management



How to upgrade meeting &

your company?

Rautaruukki OyjMiia Haakana

International travel manager

AgendaFew words about Rautaruukki

TOP 5 hints how to get Senior management interested

Possible challenges

Summarize Strategic Development Frame


Ruukki in nutshellProcessingSales and serviceSteel production

Net sales in 2008 3.9 billion

Operating profit in 2008 568 million

Personnel 13,460 in 26 countries

Metal-based solutions for construction andengineering customers

Standard and specialsteel productsStrong foothold in Nordic countries Focus of growth in CEE,Russia andUkraineThe company's share is quoted on NASDAQ OMX HelsinkiThe Corporation uses the marketing name Ruukki

1. Find your main stakeholders


Reporting for internal stakeholders

President & CEO

Finance /CFO- Risk management

Business Development- Corporate Sourcing

- International TravelLegal

Human Resources

Information Technology

Communication & IR

Marketing

Technology

Eastern & CentralEastern Europe

North Europe &Infrastructure Construction

Operations

Finance

Lifting HandlingTransportation

Energy andOffshore, Marina,Paper

Steel & Parts

Finance

Sales

Operations

SCM

Finance

Ruukki Construction

Ruukki Engineering

Ruukki Metals

Corporate Functions

International Travel Management organization

International

Travel

Manager

Travel

Coordinator

Finland

Travel

Coordinator

Hungary

Travel

Coordinator

Russia

Travel

Coordinator

Poland

Travel

Coordinator

Norway

Travel

Coordinator

Sweden

2. Analyze your current situation


Evaluate your current situation, make gap analysis and find out development targets

Situation in 2 Q 2008:

Travel costs + 14 %

TMC purchases + 44 %

No consolidated data

No clear corporate travel policy

No centralized sourcing:

300 hotels

35 airlines

Lot of add hoc travelling45 % of trips booked < 7 D

Average rates too high+ 20 % in air

+ 31 % in hotel

Define the scope

89 %

3. Make the business case and sell it


The Buyer is also the Seller

Sell your development ideas

for senior management!

=> target is to get the mandate for

your projects

Corporate Travel Policy

Corporate Clarity for employeesMandates the use of preferred suppliers

Current situation

5 %

Travel Program Consolidation- Business Case

Centralize sourcing

Air average prices are apx 20 % too highHotel average rates are apx 31 % too high

Decreasing the number of air and hotel suppliersNegotiating contracts with corporate volumes

Live meeting implementation

Active use in Finland, others notpoor usage due poor implementation

Easy to use for internal meetingsSaving potential can be more

One TMCAt least 14 different local TMC sPoor policy steering and reporting

Consolidated dataPolicy steeringBetter security, SLA

One credit card company

Local credit card solutions Extra invoicing and voucher costs

Consolidated data and automated inflow to TEM systemNo invoicing and voucher service charges

Total Saving potential

22 % of total costs

Benefits Potential SavingsScopeProposals

5 %

7 %

1 %

Corporate

Corporate

Corporate/ regional

Corporate/ regional

One travel expense

management system

Own TEM tools in FI,SE,NOOther countries manual processes

Consolidated data and automated inflow to TEM systemless manual work, labour and time savings

4 %Corporate/ regional

No clear travel policy defined in corp. levelPolicy gives possibility for presumptions

Benefits from the developmentTravel policy mandates to plan business trips better and make cost efficient travel arrangements Better cost transparency, steering and monitoringBetter service and securityBetter contract rates via centralized sourcing and active negotiationsBetter control over the supplier base by centralizing processesIndirect process cost savings from automation and centralization

Saving potential 17 % of total travel costs millions of euros!

Aug Sep Oct Nov Dec Jan Feb MarJun Apr MayJul

Centralize SourcingExpected Savings

X M

Corporate Travel PolicyExpected Savings

X M

Live Meeting ImplementationExpected Savings X M

Naming local key responsible persons for implementation

Roll-out travel policy

Formulate travel policy

2008 2009

Make a realistic schedule

TMC consolidationExpected Savings X MCorporate credit card solution

One travel expense management system

Expected Savings

X M

Gather the project group together/planning

Launch

Air & HotelRFP process

Implement

Steering and monitoring

Send RFP Evaluation and select the partner

Steering and monitoring

Send RFPEvaluation and select the partner

Implement

RFP and evaluations

Agreement and CCC policy

Gather the project group

1 year project + impl

1 year project + impl

6 month project + impl

Background was ready for the change..

Strong business growth until end of 20083 Q 2008 Operational excellence programme Boost launch 1 Q 2009 huge change in market conditions

was easy for the cost saving projects!

4. Communication is a must


Let people hear about you & communicate

Your best buddy is

Internal Communication

Department !

5. Analyze & report about the results Follow up


Active follow up & reporting

Weekly cost savings report to VP Corporate sourcingMonthly travel cost report to CFOQuarterly report for Senior management levelQuarterly report for International travel team about the country situation

Senior management is interested to hear about the success stories!

Main metricsKPI´s Statistics

2008 H 1 Statistics 2009 H 1

BenchmarkFI (Source:

Kaleva Travel)Travel costs (Corporate) + 23 % - 37% NA

Average flight rates Dom / Int(Finland)

+ 7 % / - 2 % - 15 % / - 24 % - 9 % / - 20 %

Average hotel rates Dom / Int(Finland)

+ 2 % / 0 % - 9 % / - 25 % - 5 % / - 9 %

Advance purchases Dom / Int (Finland. % of total bookings done less than 7 days before departure date, target max 15 %)

49 % / 40 % 49 % / 33 % 47 % / 31 %

Live Meeting usage(Corporate)

13544 + 181 % (38075)Savings 8 %

NA

Challenges


Challenges in global development

Change the local purchasing to international sourcingFind the right people Cultural differences

Implementation of new rolesFew people are used to international working

Communication especially to travelersSecure proper implementation of corporate contractsGet resources for development:

Matrix organization > you need some supervisor skills to make the team work

own a right hunch..

be patient..

http://www.google.fi/imgres?imgurl=http://www.salestrainingonline.com/soca/files/images/FloppyEars.jpg&imgrefurl=http://www.salestrainingonline.com/content.asp%3Fpageid%3D4258&h=410&w=340&sz=21&tbnid=L0F0b2nlKpwZVM::&tbnh=125&tbnw=104&prev=/images%3Fq%3Dpicture%2Bgood%2Blistener&hl=fi&usg=__H5jGf8RUmys4Zs_szWN6LaSNep8=&ei=H2YBSoXrGdiY-gaEivmrAw&sa=X&oi=image_result&resnum=4&ct=image

Summarize


Strategic development frameINPUT

Stakeholder meetings - Interviews, Data analysis, Define best practice models and development areas, Identify quick hits, Communicate

INTERNATIONAL TRAVEL DEVELOPMENT PROGRAM Centralize sourcing, Consolidate processes, Set the target,

Communicate about decisions

OUTCOMEReport about achievements cost savings, process efficiency etc.

Follow up - travel policy compliance,

Communicate about the results

FIND

NEW

OPPORTUNITIES

R

E

P

O

R

T

I

N

G

A

N

A

L

Y

Z

I

N

G

C

O

M

M

U

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I

C

A

T

O

N

T

E

C

H

N

O

L

O

G

Y

Thank You!

Any Questions?

[email protected]


Panel discussion


Nordic Business Travel Lunch & Seminar October 15, 2009

Mika Kiljunen+ 20 years of experience from travel industry:

Managing Director of Kaleva Travel Invest as of April 2006Managing Director of KohdematkatKaleva Managing Director of Kohdematkat GroupManaging Director of Kohdematkat Travel; prev. Marketing Dir, Vice MDManaging Director of Travek Travel Agency; prev. sales rep, sales managerSales Representative & Travel Agent of Finland Travel BureauSales Clerk in Browns Bay Cellars, NZ

Education:

High school graduate 1983Graduate from Malmi commercial college 1987

Hobbies: Basketball, running, golf


Jouni Malmivaara+ 30 years of experience from Sourcing and Finance in Pulp/Paper/Engineering industry:

Managing director of Nordic Source Purchasing consortium since March 2009Vice Presindent of Sourcing in UPM-Kymmene Corporation since February 1996CFO of UPM Woodworking and Joinery industry since 1990CFO of Rauma-Repola Forest industry since 1987Sourcing Director of Rauma-Repola since 1985Purchasing Manager of Kajaani Oy since 1974

Education:

- B. Sc in Economics (Turku School of Economics)- Several Leadership and Management courses (Rauma-Repola, UPM)- Several International seminars and courses in Sourcing and Procurement


Petra Metsola+ 18 years of experience from travel industry:

Category Manager Travel since 2008; Wärtsilä Corporationoversees and develops travel management across all Wärtsilä Group companies in 70 countriesresponsibility covers travel related acquisitions, contract negotiations, processes and technologies globally in Wärtsilä Group

Category Manager for HR and Finance, including the duties of Global Travel Manager; Itella CorporationCorporate travel management companies with different positions


Taina Saarikoski+10 years of experience from travel industry:

Exec.Ass. & Travel Manager, Tekla Corporation (2003-)Administrative Manager (incl. Creation of Travel Mgmt practices), Moom Solutions Tour Guide, Iloiset Seuramatkat (Paris, London)10 years abroad (USA, South America, Spain, England)Lecturer, collaborator in seminars, schools, venues related to travel management topics

Education:

Master of Economic Sciences/ Turku School of Economics

Hobbies: Singing (lied, solo & choir), sports, all sorts of cultural interests

Photo


Jarkko Härmälä10 years of experience in travel industry :

Currently Director of Sales & Marketing; Scandic Hotels

2008 - 2009 Area Vice President, Sales2005 - 2008 Sales Director, France - Based in Paris2002 - 2005 Sales Director, Thailand, SEA and Australia, based in Bangkok2001 - 2002 Sales Director, Far East operations (and Project ManagerHong Kong route)2000 Client Manager Helsinki1999 Client Manager, Central region Finland

Education:

Ms Econ, Helsinki School of Economics


Mikko Turtiainen10 years of experience from travel industry:

Sales Director Finland, FinnairSales Director North America Business Development Manager USASales Director Far East (situated in Finland)Client Manager Sales Unit Finland

Education:BA International Business, UK

Hobbies: Basketball, tennis. At the moment I enjoy spendingmy time outside of work with my three children, theycreate new hobbies for me!

http://today.finnair.fi/phonebook/henk_kuvat/258812.jpg


M O T T O S

Send text message questions to +358 50 548 2444

Mika KiljunenManaging DirectorKaleval Travel Invest

Mikko TurtiainenSales Director, Finnair

win-

Jarkko HärmäläDirector of Sales & MarketingScandic Hotels

Taina SaarikoskiExec. Assistant, Travel ManagerTekla

the complete travelmanagement process is alsothe key to directing purchases.

Jouni MalmivaaraManaging DirectorNordic Source Purchasing consortium

incharge of the RIGHT price leveland optimed Costs-

Petra MetsolaCategory Manager Travel, Wärtsilä

what you always did,you will always get

http://today.finnair.fi/phonebook/henk_kuvat/258812.jpg


CONCLUSIONCompanies can outsource the work, but

not the knowledge and understanding

Travel is still a process no matter where it sits in the organisation and the value comes from the total process which needs to be measured as efficiency factor as well


CONCLUSIONTo whom the travel process will be

outsourced might change in the futureThe outsourcing model might include more

IT and total process but agreements as wellConsortiums local, regional and global as

well as third party companies offer another choice for all, small, midsize and big companies



CONCLUSIONAND the most important thing to know

and understand This is not difficult! World is filled with

possibilities for all different size companies through many different value chains, you just need to decide which way to go!!

THANK YOU!!

Next Nordic Business Travel Lunch and Seminarwill be hosted by

The Danish Business Travel Association DBTA


Documents

Nordic Business Travel Supplier of the Year - NBTAnbta.no/wp-content/uploads/2014/12/fbta_2009_nbl_procurement.pdf · Nordic Business Travel Supplier of the Year Jan Borg ... common