7-Step Strategic Sourcing Process
 Step 1 – Define Strategic Opportunity
 Step 2 – Baseline Current State
 Step 3 – Industry Analysis
 Step 4 – Go to market Strategy Development
 Step 5 – Selection and Negotiation
 Step 6 – Execute and Implement the Contract
 Step 7 – Monitor Results
A Case Study
Global Hotel Strategy
 We outsource the process. We conduct hotel spend analysis using data from
Agencies, major hotel chains, credit card and T&E systems.
 Solicit preferred hotel preferences from administrators and top travelers in your
key global markets that may not be captured in the data due to direct bookings
 Understand your travel profile –


Why do you travel? What type of hotels are needed for the type of travel you have?
What ancillary items are in your hotel folio data that your travelers use and that are expensed?
 Compile a list of all hotels used – Case study: 1400 hotels used and 980 hotels where
we had spend in the previous year with over 100 room nights in the market. I combine
meetings and events and corporate travel spend to be sure we leverage our contribution.
 RFPs are sent and we narrow the selection. Case study: Narrowed to 410 hotels
where we had substantial spend or the property was requested as a preferred by
travelers or administrator.
Selection
and
Negotiations
Execute and
Implement
Contract
A Case Study
Global Hotel Strategy
 We negotiate preferred properties based on the following:
 Location – Near offices and customers
 Cost competitiveness in the market including ancillary costs
Internet, breakfast, shuttle service, – cost identified in expense data
(Note: Don’t negotiate for items your travelers never use.)
 Business Travel needs – Mix use 3 and 4 star properties, full service and limited
service properties.
 We subsidize with dynamic pricing in secondary markets
 We do take commissionable rates when it is most cost effective
 Feedback from travelers and arrangers
Selection
and
Negotiations
Execute and
Implement
Contract
A Case Study
Global Hotel Strategy
 Each year we try to reduce number of properties.
 In 2012 we identified the purpose of travel and solicited additional 3 star properties
to fit the need. This reduced our Average weight hotel room night cost
 Rates begin loading in the global preferred agencies online and offline systems for
booking on December 1. (Hotels must load the rates). 2 formal audits are held
through out the year to make sure the rates are loaded and used. We also do spot
audits through out the year.
 Estimated Global savings for 2013 is 13% below preferred rates in 2012 despite
industry predictions of 5-9% increase.
 What is keeping me up at night?
Loading additional special rates – Small meetings, government rates, project rates etc.
Multi-year deals with strategic properties
Consistent availability of my rate
Booking source on Hotel Room nights and security tracking
Selection
and
Negotiations
Execute and
Implement
Contract