The Importance of Supplier

1. 1 �The Importance of Supplier/Client Relationships in the Travel Industry�March 17, 2010 Colleen Guhin Philips Americas Business Travel Manager American Express Business Travel Make up of audience. Whether corporate, agency or supplier, measurements are important. As a supplier or agency, they are important to your management, but they are also important to your customer. You can help them. People are naturally afraid of numbers, but you don�t have to have a degree in Math to put numbers to work for you. You can have the best strategy in the world, but if you don�t back it up with numbers, you won�t get anyone�s attention. You also won�t be able to tell if your strategy is successful.Make up of audience. Whether corporate, agency or supplier, measurements are important. As a supplier or agency, they are important to your management, but they are also important to your customer. You can help them. People are naturally afraid of numbers, but you don�t have to have a degree in Math to put numbers to work for you. You can have the best strategy in the world, but if you don�t back it up with numbers, you won�t get anyone�s attention. You also won�t be able to tell if your strategy is successful.

2. 2 Strategic Supplier Relationships Definition: � An ongoing relationship between buying and supplying firms involving a commitment over an extended time period, and a mutual sharing of information; it may include the sharing of the risks and the rewards of the relationship.� Source: �Strategic Supplier Partnering: An International Study� by Thomas Hendrick, Ph.D. and Lisa Ellram, Ph.D., C.P.M.

3. 3 General Trends Driving Supplier/Customer Relationships Focus on core competencies, outsourcing the rest Increased globalization of suppliers Consolidation with fewer suppliers Improved information technology Emphasis on total system costs Social networking

4. 4 Security and safety Passenger rights Alliances and consolidation Technology Yield management Connectivity while traveling Procurement strategies Travel Industry Trends Driving Supplier/Customer Relationships

5. 5 A Change of Philosophy FROM TO Price shopping Total cost focus, innovation Short-term relations Long-term commitments Large and growing supply base Focused business relationships Isolation Mutual goals/understanding Vendors Extension of client�s business Erratic performance Consistent and flexible supply of quality service Local negotiations Application of procurement strategies Reactive Proactive �We�re the customer� �We�re partners in business�

6. 6 Benefits of Strategic Suppler Relationships CORPORATE BUYER SUPPLIER - Transfer some financial risks - Economies of scale - Shift functions to third party - Concentrate business expertise - Lower cost/increase quality on fewer buyers - Utilize third-party expertise - Manage fewer relationships - Concentrate on core business - Longer horizon for planning - Manage fewer relationships - Longer horizon for investment - Global flexibility - Leverage expertise - Meet customer service objectives - Business stability and increased revenue if competitive

7. 7 Process Steps Define the role of strategic supplier relationships in your business strategy. Establish the business needs, such as total cost reduction, quality improvement, technology development, etc. Translate needs into specific strategies required. Identify strategic supplier relationship criteria such as supplier capabilities, price/value opportunities, company cultural compatibility, etc. Assess potential strategic partners against the criteria. Identify buyer/supplier executive champions. Establish shared objectives and processes to guide execution of strategy. Review relationship against the performance objectives and continue or exit as appropriate. Manage the relationship.

8. 8 Shared Characteristics of Successful Relationships High level management commitment Measurable convergent goals Trust Loyalty Frequent face-to-face planning/communication High expectation of a long-term relationship Willingness to handle exceptions Willingness to help each other in difficult situations Strive for continuous improvement Shared benefits and risks

9. 9 Supplier�s Role in a Strategic Relationship Must be an expert in the appropriate field Create and provide value to customer Make the customer successful - success of supplier depends on success of the customer Be proactive in providing continuous improvement Address global requirements with a single point of contact

10. 10 Corporate Buyer�s Role in a Strategic Relationship Clearly define expectations Establish performance measures and feedback mechanism Put resources to fixing the problems, not replacing the supplier Demonstrate ability to move market share to strategic suppliers Keep number of strategic suppliers to a minimum so they don�t compete with each other.

11. 11 Now It�s Your Turn What specific things can you do to develop and maintain a strategic supplier/client relationship? Travel Agency Airline Hotel Car Rental Corporate