Not Too Simple

 

There’s recently been another bout of talk about simplifying the TMC tendering process, which isn’t so surprising given the complexity of the process if it’s done properly. Detailed tenders are costly and time consuming for both buyers and suppliers, and a quicker, easier way has obvious superficial appeal on both sides of the table. But for travel buyers, skipping the important details of a TMC tender can be the most costly thing of all.

I’ve been managing TMC tenders for corporates and government for nearly 20 years. It is by far the most important part of the travel supply chain to get right. The systems, people, behaviours, processes and commercial terms of the TMC arrangement have a bigger impact on cost than all your hotel and airline deals, not to mention their impact on service levels and risk.

Travel procurement is now often handled by a procurement category manger. Typically they would manage several supply categories including travel. But travel, they soon discover, is one of the most complicated. The quick acquisition of sufficient industry and supply chain knowledge is what’s needed, and the best way to do this is through a well informed tender. Whether the category manager gathers the knowledge from suppliers, consultants or associations like the GBTA, whatever the mix, without it they are flying unprotected in stormy skies.

What’s the right definition of “transaction”? What are the underlying GDS access arrangements with which airlines? How are the booking consultants remunerated? What’s the exact nature of the invoice creation process? Wherever you need to book from, Beijing, Bogota or Brussels, what’s the nature of that office and its operations? Do the OBTs offered auto-manage tickets and credits? Do they provide one-way faring? Where? When does the TMC ticket, and why? Which automated and value-adding processes are activated in the internal booking systems? What do all the ancillary fees add up to? Why is there such a large difference in the TMCs’ primary fees?

These are just a few randomly picked things from the many that need to be covered. If you go too simple, you’ll receive too little and pay too much.

I think that travel buyers need more information and category knowledge rather than a stripped down process. It’s a complicated and opaque supply area.