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INTELLIGENT SOURCING Case Study

CENTRALIZED HOTEL PROCUREMENT FOR SOUTH WEST EUROPE


Challenging cost reduction targets led Jürg Mueller, Head of Procurement Mobility (South West Europe) and Siemens AG’s global Travel Management, to reorganize the hotel procurement process. With the support of HRS Intelligent Sourcing, Mueller was able to meet his targets within a few months. The results of this pilot project for South West Europe were so convincing that an expansion of the project is being considered. 
 

Emotions have no place in the daily business of a purchaser. One has to calculate and negotiate with a cool head. “I’m a procurement professional,” Mueller says of himself. The Travel Manager responsible for South West Europe sometimes aligns with his colleague from Switzerland, who has a travel industry background and provides “new perspectives now and then.” A winning combination for Mueller.

The challenging savings targets might have overwhelmed anybody else but him. Mueller, however, says that the high objectives motivated him to search for new solutions. It was quite clear from the outset that it would be impossible to realize “the clear requirement of reducing the prices” without a well-thought strategy. 
 

Standardization of hotel procurement

Mueller decided to use HRS Intelligent Sourcing. Since the future partner should be able to standardize the procurement of travel, HRS was the most convincing solution. “The good approach and promising solutions convinced us,” Mueller remembers.
 

High market transparency through comprehensive benchmark data

Jürg Mueller, Head of Procurement Mobility at Siemens Switzerland
Jürg Mueller, Head of Procurement Mobility at Siemens Switzerland

After the travel managers in the respective countries gave their consent, the new partners got to work immediately: HRS produced benchmark analysis for destinations with a certain travel volume. “The benchmarking and analysis were great and extremely helpful for the negotiations,” Mueller comments on the newly acquired market transparency that allowed for identification of optimization potential for the existing hotel portfolio. Yet the most important thing was that “we had centralized our know-how, had excellent benchmark data and were ready to go.” 
 

Reduction of hotel portfolio

Jürg Müller and his team looked through the data and decided which hotels would receive an invitation. Müller and his travel managers accepted roughly half of the invited hotels – a reduction of the hotel portfolio by 7.6 percent. And although a good half of these already were hotels contracted to Siemens, HRS was able to realize improvements of an average of 4.6 percent on the initial offer. 
 

Cost savings and optimization of processes

Siemens
“To combine the global and local approach [...] – that is the ideal solution.”

”We realized process optimizations,” Müller explains, ”as we have standardized the rates and thus made them comparable.“ This sets travel parameters, saves money, and unpleasant surprises are avoided. “To combine the global and local approach, considering the local differences in travel, and yet be able to negotiate centrally – that is the ideal compromise.”