SMB procurement trends hold despite inflation
To be creative
Sourcing trends, not surprisingly, vary by organization. A pharmaceutical company has launched a global airline tender for North America and Japan, where previously each region had its own contract.
“We decided to take a different approach and strategy and leverage our global footprint on airline spend,” said Danielle Amoroso, Otsuka’s senior corporate travel and spend manager. “We brought all the data together and approached the airlines with that bargaining power behind us versus the bargaining power we had just on behalf of North America. We are in the first round, so I cannot speak about the results yet.
Amoroso also gets “more creative” with negotiation. For example, Otsuka is studying the possibility of paying an airline a pre-determined amount in advance and getting a flat rate on two or three particular routes, with a set period of time to use this prepaid funding basket, said. Amorous.
“We had never looked at this pricing model in the past, not least because as an SME you don’t know if you have the buying power, and you don’t necessarily get the funds back if you don’t use them. not,” she said. said. “No decisions are made there, but we are looking at different models and pricing structures.”
Additionally, Amoroso negotiated a package deal with its TMC just prior to the pandemic, so Otsuka’s dedicated travel agents remained intact, resulting in very few service disruptions in its post-pandemic TMC support. , unlike what some other companies have reported experiencing.
For hotel sourcing, Amoroso is a “big proponent” of dynamic pricing and only considers static pricing in a few key markets, where it might only contract one or two properties. And with dynamic pricing, it wants contracts of two to three years. “There are limited bandwidth and resources to run a tender every year,” she said, adding that those resource costs add up. “You have to calculate the savings made by not doing an annual tender.”
Where she has a roadblock is with a major hotel supplier and its refusal to offer chain-wide deals. “It’s difficult because of employee preferences,” Amoroso said. “To tell them that they can no longer stay [at a particular hotel] or that they have to stay in a property that is not their preference, this does not bode well for recruitment.
In an attempt to overcome this, his strategy is to focus on specific brands within this hospitality company. “I don’t know where we’re going with this conversation, but the more customers ask for this, [the hotel company] going to have to listen,” she said.
For ground transportation, Amoroso renegotiated its corporate contract with its preferred supplier when it saw the price spike in rental cars happening much sooner than hotels and airlines. “We took the time to renegotiate the agreement to maintain our corporate rates, our static rates,” she says. “It was super helpful.” Additionally, because Otsuka’s representatives have fleet vehicles, it has negotiated rates with airport parking vendors.
Yet, like other buyers BTN has spoken to, Amoroso has also requested contract extensions, “to give me another year to recognize our new travel patterns and new footprints,” she said. , “so that I can negotiate accordingly”.