ABT Moscow Educational session: looking for effective ways to prepare and conduct a tender
Russian Association of Business Travel (ABT), a corporate travel buyer driven association actively promoting the development of business travel environment in Russia and the CIS, conducted the regular Educational session.
The event was attended by more than 70 employees of travel and purchasing departments from major Russian and international companies such as Accenture, VTB Bank, LUKOIL, MAN, Johnson & Johnson, Ernst & Young, Beeline, AstraZeneca, Baker Hughes, Gazprombank, Pepsico, Toyota Bank, Michelin, Shell, etc. The Educational session was held with the support of ABT partners: Starwood Hotels and Resorts and BizKomm.
All participants are sure that bidding for a business travel supplier is the main thing that helps to establish travel policy and also requires consolidation of resources and strategic vision on the current challenges and trends.
The first case by bidding for a business travel supplier is to define clearly its goals and objectives. «A clear understanding, where are start and finish of the tender, what the result can be, will help you to carry out this procedure effectively», — said Olga Khorasanova, Accenture Workplace Lead for Russia.
Irina Kuznetsova, JSC VTB Bank Finance Department Vice President,presented the process of tender like a spiral that included cost analysis, requirements definition, market analysis, procurement procedure, supplier selection, and finally, a contract. She said that before bidding for a travel supplier it is necessary to analyze deeply the company’s relationships with existing service suppliers and the financial results of this cooperation. In particular, issues such as the form of cooperation with TMC (purchase and sale or partnership), the distribution of the risks, reviews of internal buyers of the supplier and other should be discussed.
According to Irina Timofeeva, Baker Hughes Regional Accounting Centre Director, factors such as introduction or modification of the travel policy, the lack of effective means to control costs and excess of total expenses for business trips cause the conducting of the tender. From her point of view one of the most important tasks of the process is a cut in expenditure. Such objective can be achieved by improving the quality of service, following strictly the travel policy, buying services by optimal suppliers, revealing costs, and reducing prices for TMC services.
All the experts who participated in the ABT Educational session agreed that the last factor — the amount of the agency fee — should not be the determining factor in the tender process. Savings depend not only on the reduction of TMC services, but also on the partnership of the corporate buyer and service supplier. «Accenture aims at the partnership with TMC, that can give effective strategic advice, how to act and what decisions to make,» — said Olga Khorasanova. «The price is not the most important. The main thing is to get a quality service »- explained Irina Kuznetsova.
The goals, set before bidding for a business travel supplier, define whether the contract with TMC will be short-term or long-term. According to the speakers, the contract should last at least a year (otherwise the parties will not know each other enough to work effectively), but not more than five years.
Irina Timofeeva explained what information might be useful for company by planning to conduct a tender. TMC has the right to ask the corporate buyer for information on the amount, seasonality, duration, and the total cost of the current business trips, their main directions, means of payment, methods of placing the order and the requirements for the level of service. Also it is better to prepare in advance such information as the existing contracts and incentives to service suppliers and desirable / undesirable trends of the business. The travel policy of the company also must be presented.
Irina Kuznetsova told about the possible forms of the tender. It classified the procurement process for a public / private, pre-qualification, request for quotations, competition and competitive negotiations — the preferred form by choosing the service supplier. Referring to the personal experience, Irina Kuznetsova noted that only negotiations can last from six to nine months. And not only specialists from travel and purchasing departments, but also lawyers, finance specialists, external clients, and of course, the top management must take part in it.
The core of the tender process is a Request For Proposal (RFP) — a formal request for proposals, addressed to potential service suppliers. Session speakers agreed that the optimal date for RFP —
According to Irina Timofeeva to select suppliers, which get RFP, it is necessary first of all to determine the type of TMC that meets the objectives of the company. This can be a dedicated, wide or universal service supplier. TMC may operate on the local market or cover the international arena. It is worth paying attention to the business model of the potential service supplier — whether it is a stable company or a start-up project. Also, Irina Timofeeva recommended analyzing the adaptation of TMC to changes special buyer conditions.
Educational Session Speakers stressed that RFP should contain the maximum number of requirements to service suppliers, to fix the form of answers and clear evaluation criteria. If at the stage of the RFP corporate buyer does not clarify details such as the response time of TMC, the number of requests for booking tickets and the opportunity to cancel it, the person responsible for issuing the visa documents and other issues — the further result of collaboration can bring unpleasant surprises.
According to Olga Khorasanova, a well-structured task for TMC guarantees success of the cooperation. The speaker also noticed that the objective of collaboration should be real and achievable, and the requirements to the supplier — not overrated.