The fundamentals of demand management
The key to reducing corporate travel costs often lies in cultural change. Demand management embodies this and more. It is a proactive approach to travel with a focus on culture, as well as consumption, planning and price.
What is demand management?
Demand management is the process of cutting cost by influencing the quantity and/or specification of the products and services you are procuring. In business travel, it reduces waste by reviewing the volume and form of air travel, hotels and car hire you book, and realigning them with your company’s needs. It may also involve challenging your business needs with a fresh perspective.
The following steps explain the fundamentals to the demand management process.
The effectiveness of demand management hinges on a number of factors:
1. Understanding your business and your people
Analyse your company’s travel patterns as a whole. How can it be better organised to reduce the cost of your fares? What are the needs and objectives of your various departments? What are your individual departments doing – both in a travel sense and a business sense? By understanding these factors, you can help identify potential efficiencies. If you have a broad picture of what’s happening across your different departments, you are better placed to align their travel needs where practical, streamline overall usage and eliminate unnecessary expense. And if you have ‘buy in’ and participation from various departments, your goals will be more easily achieved.
FCM has conducted traveller surveys for a number of clients in order to understand their behaviour and motivations. Below is an example of results.
2. Pinpointing what you value most
As a business, it is important to have agreement among your people on what is valued most in corporate travel. Is it productive, flexible and safe business travel, or finding the lowest-cost travel options? In either case, it is essential that your company’s travellers know what is valued, so they can better understand your travel policy and its benefits (see below).
3. A travel policy that is supported
A central travel policy is pivotal to effective demand management. Your company needs a policy that not only guides the way everyone in your business travels, but also provides greater ability to negotiate more competitive rates. Your travel policy must have internal support at all levels, with managers leading by example. It therefore needs to be both practical for your travellers, and costeffective for your company.
Decide on the level of compliance you wish to achieve (ie. relaxed or very strict), agree this with your senior management and communicate it to all staff.
Most companies can achieve balance by understanding internal needs, being realistic about costs and allowing some degree of flexibility for travellers.
4. The ability to measure and benchmark your performance
Information and reporting are essential to capture the best travel and expense management data to make prudent decisions. This goes hand-in-hand with your ability to manage your travel demand. Remember: “if you can’t measure it, you can’t manage it”.
Your travel company and suppliers, who are your key sources of data, will play a critical role in providing you with relevant information. Focus on data that is productive to your travel management. Don’t waste time on data that cannot be analysed, measured or used for benchmarking purposes.
Information such as pre-trip audits, expenditure reporting, traveller profiles and industry intelligence can all assist you with identifying opportunities to improve your travel management.
To discover practical ideas for managing travel demand and to see how FCM has worked with several clients to implement these ideas, please download the full Demand Management Insight booklet by using the link at the bottom of this article.