Why low-cost pays off for travel, trees and teeth - Supply Management

Why low-cost pays off for travel, trees and teeth

22 November 2011
Buyers looking to get their fill of luxury in the skies, would be advised to tune into the new US drama Pan Am. In the real world, there are signs that the joys of extra leg room and complementary drinks in order to alleviate the imposition of having to travel for business are in decline, and the days of roughing it on budget airlines are in.

Last week, the low-cost, no-frills and overwhelmingly orange easyJet reported that its business traveller customer base had increased by almost one million in the last six months to 9.5 million people. This helped boost pre-tax profits by £60 million. For people that travel regularly for work, it could well mean being saddled with having to pay for peanuts.

Considering the tough economic conditions, lack of new business and abundance of costcutting in the private sector, it seems a fair to assume the extra million people taking things easy (or not so easy) for their company have had their previous travel arrangements substituted for a lower-cost option. Substituting quality for cost is, of course, not exclusive to the world of business travel. Last week, it emerged demand for gold teeth had hit an all-time low due to the high price of the precious metal, with dentists raiding the stocks of base metals and palladium to construct replacement teeth. And yesterday it was reported that retailers and families across the world may have little option but to substitute their Nordmann fir Christmas tree for a plastic impersonation, because high demand and a lack of supply is expected to result in record prices. Procurement has come a long way in defining itself as a function that delivers best value for money, rather than lowest cost. But as the pressure to substitute everything from business travel to gold teeth for lower cost alternatives increases, it might have to fight its corner a little bit harder to stop a rush to the bottom.
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