With Aberdeen Group’s CPO Summit winding down, our field reporter Andrea Soltysiak is rounding out the Boston leg of her trip. What better time for her to report on the highlights of Merck’s presentation at the event on corporate travel strategies. The secret to their success lies not only in negotiating great deals with airlines and hotels, but demand management activities to control how and when employees book travel.

We have all likely been on the receiving end of a CFO asking why you chose the expensive, direct flight when a lower option existed. Or, we’ve stayed at a less-than-desirable hotel because it was the only one “in policy” within 10 miles of your meeting.

Yes, travel procurement executives have a tough job. Merck, the pharmaceutical giant, is no different as Howard Richman - Executive Director Global Procurement and Lisa Marie Meehan - Director of Travel and Procured Services discussed at this week’s CPO Summit. With 10,000 “travel buyers” and a $400M travel spend (40% restaurant, 31% air and 23% hotel) the company’s Global Business Services (GSB) organization wanted to create a standardized and corporate-wide travel policy. So, they partnered with procurement.

The journey began with challenges we can all imagine (or relate to): non-compliance to corporate policies and lack of access to data and reports while striving keeping employees (“travelers”) satisfied.

In 2004, the organizations unveiled a sourcing management process that used Six Sigma methodologies to build cross-functional teams. With senior leadership support, a team was created with individuals representing HR, Finance, Telecom, Risk Management and others.

Throughout the process of defining the team’s charter, gathering and analyzing data, creating and implementing the strategy and performing value management, the team uncovered critical success factors:

• Proactive executive support
• Compelling business case
• Dedicated commitment
• Dedicated cross-functional resources
• Use of sourcing tools and technology
• Understand supply market and business needs

Throughout the journey, Meehan and Richman explain that it’s key to realize roles and responsibilities will shift – you have to be flexible. Additionally, there has to be a strong alignment between travel and procurement.

With that said, even with your top negotiator on the phone with travel companies, Merck realized a 15% savings by just having travelers book 14-days in advance of their trip. Procurement not necessarily needed but strict policy enforcement is. Merck runs reports to highlight those not complying with the 14-day advance policy; the team adds up the total cost and shows management. Sure, $25 here and there doesn’t particularly matter but if all 10,000 travel employees are incurring that extra cost it equals an unnecessary $250,000 spent. Now, that’s something management may want to see.

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