A new variable to managing the total cost of travel
16 Mar 2017 - by Tshipi Alexander
“Multiple departments are involved in the management of the total cost of travel, not just procurement or the travel manager. That's right – travel policy can no longer be managed in silos,” says Tshipi Alexander, head of corporate issuing and merchant services at Nedbank.
If you think complete visibility of travel spend is achieved with a tick and you can then move on to manage your total cost of travel, you need to think again.
In the past, one of our biggest challenges was to understand what we actually spent on travel – and to a certain extent it still is. Travel spend is included in so many different categories and there are so many threads from which we can pull data that it's difficult to get 100% visibility of our travel spend.
A good expense management system is a good start to bridging the gap between what we're actually spending and what our travel management company's management information reporting system says we are, but the one thing that an expense management system cannot measure is the new buzzword – traveller friction.
Frequent business travellers will realise that friction means the wear and tear on the traveller and the resulting cost, not only to the traveller but also to the company, as a result of that traveller having to travel for business.
It is the frequent bouts of jet lag, the red eyes and late-night return flights. It's the staying away from family and eating bad sandwiches on the run. It can even be illness and unproductivity caused by stress or lack of sleep.
In our efforts to manage the total cost of travel, we have to account for the 'quantifiable' traveller wear and tear, as corporate travel guru Scott Gillespie from tClara believes.
Gillespie offers a simple equation to calculate the total cost of travel:
Total cost of travel = trip cost (USD) + traveller friction.
He also gives us some sound tips on how to minimise this 'wear and tear' on the business traveller, and, as a result, reduce travel costs:
As you can see in this decidedly traveller-centric model – although you could argue that the company will also benefit in the long run – multiple departments are involved in the management of the total cost of travel, not just procurement or the travel manager. That's right – travel policy can no longer be managed in silos.
Rather, human resources, procurement, finance, travel and the actual business traveller are all involved in managing the total cost to the company. But it remains the responsibility of the travel manager to co-ordinate all parties involved.
Want to read more about Gillespie's total cost-to-company model? Visit slideshare.net/srgillesp/total-cost-of-travel-more-trips-or-better-trips.
Tshipi Alexander is the head of corporate issuing and merchant services at Nedbank, and has over 16 years of experience in the financial services industry, with 13 years’ experience in the Consumer and Corporate segments of banking. His specific experience includes Private Banking, Structured Lending, Merchant Card Acquiring, and Card Issuing. He’s responsible for the business unit that provides cards and merchant acquiring solutions to businesses across South Africa, with a focus on client acquisition, client retention, and P&L.