Case study: Overcoming the challenges of travel management
7 Apr 2017 - by Liesl Venter
Managing staff travel is a daunting task in any business environment - but in the Small, Medium and Micro-sized Enterprises (SMMEs) environment, it can be completely overwhelming. Liesl Venter spoke to entrepreneur, Renko Bergh, co-owner of Forte Supply Chain Consulting, about how to leverage management to increase efficiencies and manage cost.
At Forte Supply Chain Consulting, travel is an integral part of what the company does. Not only do consultants have to travel between the company’s offices in Cape Town, Johannesburg and Namibia, but to clients across the country often in far-out and difficult to reach locations.
“Travel is not just necessary in our company, it is the lifeblood of what we do,” explains Bergh. “It is a fundamental value-add, as our offering to clients is that we meet them face-to-face and not just online to assist in their supply chain solutions. Our promise to our clients is that we will meet them on their home ground any time and anywhere. An inability to deliver on that promise compromises our entire business.”
But managing travel is time consuming, not to mension the costs incurred when valuable resources are being used to focus on that which, no matter how important to the business, is still not a core task.
“It has been extremely overwhelming,” says Bergh. “We have to find a workable solution in regard to travel but it is not as simple as just appointing an expert travel management company because the requirements of SMMEs are very particular and cost has to be part of the discussion all the time.”
The initial approach
In the early days of the company, with only a few people travelling, says Bergh, it made sense for each employee to do their own bookings and arrangements within an allocated budget.
“Our initial approach was to internally centre it, without giving it to one person in our office in particular to manage, looking at utilising all our internal resources first and foremost,” he says.
“This however proved to not be the optimum approach resulting in countless challenges. Our second take was to hand it over to one person in the office to do it all, over and above their usual tasks, but the workload was simply too much.”
According to Bergh, one of the major issues was making changes to bookings and dealing with payments.
“Because we were looking at specials and cheaper options to meet our cash flow needs and all the bookings were being made by one person, no changes could be made at all. The consequence was that travel became very difficult, especially when something had been paid in a specific person’s name using their credit card. We also saw a lot of the payments having to be made by employees themselves and then having to be claimed back from the company.”
He said travel management became completely disorganised.
“From the very beginning when we started our business, it was important that travel not be a burden for ourselves or employees,” says Bergh. “We did not want our staff, who are already away from their homes, to be using their own money and credit cards or be inconvenienced any more than was necessary. No one should land at a far away destination and have to sort out reams of admin just to get a car or book into a hotel.”
With this in mind, the company opted to outsource all its travel to an agency.
“It worked extremely well,” says Bergh. “It ticked nearly all of the boxes as we could now focus on our core business without worrying about travel, it was far better organised, we could make changes to travel arrangements without incurring costs, vouchers were being issued. It worked.”
But one challenge remained. Cost.
“It came at a price,” says Bergh. “A price that is simply too high for a small business. We simply could not justify the amounts being paid for accommodation and flights. Much like when each consultant was booking their own travel, even though we had flexibility, the costs were simply not viable and it was not sustainable.”
He said with an SMME not having the economies of scale to negotiate lower rates, the costs were sky high.
After much deliberation, the company has once again brought all its travel management in-house.
“It is not ideal and we are still grappling with many of the challenges. Essentially having a cost-effective solution is just far more important than having a well organised schedule for an SMME,” he says. “At the same time, while we have considered appointing an in-house travel manager, it is not a priority and the business is not there yet. We are far better served as a business appointing another consultant.”
But, says Bergh, finding a solution that works is important. “To a certain extent we are in a difficult position – we have to travel to grow our company, but to do that well we need efficiency, and to get that efficiency we need to increase the cost, which is something few small businesses can afford.”