March 2008 - Dawn Food Products has neither a designated travel management company nor an installed self-booking system that employees must use, but there is one aspect of its travel management policy for which travelers have no wiggle room: the card. The international bakery supplier as of December mandated that employees use the ABN Amro MasterCard for all travel purchases or they would not be reimbursed. And Dawn is not alone. Industry data suggests that more companies are mandating corporate card usage.
A poll sponsored last fall by the Association of Corporate Travel Executives and Sabre Holdings found that two-thirds of more than 300 corporate travel decision-makers worked for firms that mandated usage of their designated corporate cards or payment systems. Nearly half of those companies had created the mandates within the prior year, while about 8 percent of the 300 planned to do so in the next 18 months. Last year's BCD Travel benchmark study of 219 clients found that 57 percent mandated use of the corporate charge card for reimbursement, up by 14 percent from the prior year.
As beneficial as such mandates can be for spend capture, reporting and reduced processing costs, Management Alternatives president Carol Ann Salcito argued that they remain just one piece of a well-run corporate travel program. Asked about Dawn, for example, Salcito said, "Kudos to the fact that they have a corporate card program and that it's mandated. At least they know at year-end what they have spent in the different categories. But a truly managed program can reduce the costs 5 percent to 20 percent, conservatively."
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"Dawn is not a you will/you must kind of culture, except with the card ... To the hard-line person who has lived the travel world, there are a lot of pitfalls and gaps, like tracking and unused tickets, ticket changes and fees."
— Sam Barber, Business Travel Director, Dawn Food Products
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Dawn Food Products business travel director Sam Barber knows his company's travel program could be more robust. The corporate card mandate is "really about it" for the company's travel policies, he said. "Dawn is not a you will/you must kind of culture, except with the card." The mandated card helps Barber's travel program overcome some limitations. For example, the company is better aware of certain spending patterns than it otherwise would be.
Dawn Foods negotiates car rental contracts as well as preferred room rates at properties near its manufacturing and distribution facilities. "That's where I try to take some control," said Barber. "We make those commitments in good faith and adhere to that." Nevertheless, cost control is "permeated from the chairman through the C-level executives," he added. "They walk the talk about spending the company's money wisely. If our chair calls and asks to arrange some travel, and Southwest is the nonstop and cheaper, then he flies Southwest and waits in line with everyone else. Dawn also rewards associates with generous profit sharing, so people know that what they spend they are taking out of their own pockets at the end of the year.
"We have empowered the associates to arrange their travel in a manner they are most comfortable with," he continued, although he said the company has an account with Orbitz for Business. "They use whatever tools are available to them, whether airline.com sites or the online travel agencies. We're not completely opposed to 'use it or lose it' sites, like Priceline and Hotwire. It's the nature of Dawn to be that trusting."
But Barber also admitted to shortcomings. "I'm constantly talking with people to see if what we're doing is making any sense at all, and to that hard-line person who has lived the travel world, there are a lot of pitfalls, like tracking, unused tickets, etc.," he said. "That's why I had two TMCs here just in December, both saying that what Dawn is doing wouldn't work for everyone. 'You're making it work,' they said. I keep coming back to being aware of the majority of our shortfalls. We know there are gaps, like with ticket changes and fees. That $100 isn't real transparent, and I can't answer those questions."
He also doesn't know the company's exact travel spend, but that is information Barber expects to obtain through the card program after a year's use. "We know it's probably $5 million to $7 million overall for air, car, hotel and conferences," he said.
"It's an unusual approach," said Salcito. "Having the card does show what the company is spending, but what he doesn't know is if he spent too much."
