McDonald's supply chief says travel is a commodity

3 November 2005
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03 November 2005 | Anusha Bradley

Travel is a commodity and travel managers who do not take this view are "outdated", according to Barry Edwards, senior director of worldwide supply chain management at McDonald's.

He was addressing travel managers at the Association of Corporate Travel Executives conference in London. "Travel is evolving towards what we are doing in [procurement of] food and paper," he said. "It's becoming outdated not to see it as a commodity."

Edwards said the travel supply chain needed to be more responsive to rapid industry changes, particularly in the US where many airlines are going bankrupt.

He urged buyers to make contingency plans and work with suppliers on a long-term basis to avert risk. "The supply chain must be an enabler for business. You need to align your procurement strategy with your corporate strategy."

Patty Little, director of global travel services at McDonald's, said buyers should think more about long-term relationships with suppliers as well as using the short-term "best price of the day" approach.

US staff at McDonald's clock up $25 million (£14 million) of travel a year. In 2003 the firm outsourced a self-booking service, which helped curb overspending. It kept strategic supplier relationship management and corporate strategy in-house.

Some managers disagreed that travel buying could be commoditised. One delegate told SM her work was "about people and relationships, not like buying paper".

Peter Sijbers, global commodity manager at Philips Electronics, said travel was a growing spend item and had strategic importance. But "procurement and travel management are still square pegs in round holes".

Edwards said e-procurement enabled McDonald's to cut labour costs by 85 per cent and e-auctions had reduced supply prices by up to 15 per cent. "The same approach could be taken with travel procurement."

But Little said the travel industry has been slow to use technology because of a lack of training and availability of global systems.

SMnov2005

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