Operations

Reader's Digest Association Pares Down Roster of Limousine Suppliers

Posted on October 8, 2008 by LCT Staff - Also by this author - About the author

PLEASANTVILLE, N.Y. – After discovering that employees used more than 100 different limousine companies, Pleasantville, N.Y.-based Reader's Digest Association pared that roster first to 10, then to three. During the consolidation, the company reached out to noncompliant employees to increase adoption rates and used historical data to drive additional savings.

Director of corporate purchasing Joe Siciliano hopes 80% to 90% of the company's limousine bookings will be with the three preferred vendors by year-end, and hopes to realize 17% annual limo program savings by next June, the end of the company's fiscal year. The company made more than 5,500 reservations in the last fiscal year.

While using the three limo companies is not mandated, travelers booking nonpreferred vendors are informed of the new program, and if they continue noncompliant bookings, letters will be sent first to their manager, then their business head.

When consolidating from 100, Siciliano began to drive employees to the company's top 10 vendors. "It wasn't anything other than taking the top 10 because the tail was so long," he said. "I said, before I make you a preferred and put you on our website, I want some discounts from you right off the bat. Then know that in three to six months I'm going to probably run an RFP that you may or may not win. In the interim, put your best foot forward."

All 10 complied with Siciliano's request, while he worked on driving travelers to their new preferreds. "The adoption rate was slow in coming," he said. "Through conversation, by seeing the leakage, I continued to change the behavior month over month."

If a traveler used a nonpreferred company, Siciliano would show them the difference in price between it and a preferred company, and "many of them would jump over."

By June, as the request-for-proposals process began, preferred supplier adoption was in the low 70% range.

During the RFP process, Siciliano asked the 10 vendors to offer competitive pricing. However, he also asked about vendor service at all Reader's Digest corporate locations in the country. "We wanted to make sure they either had the bandwidth to deal with the country or had an affiliate to deal with it."

Reader's Digest initially saved 12% through the RFP process, then chose three vendors as preferred suppliers. Siciliano then provided them with information about employee travel patterns.

"We talked about how the pricing model would change if they knew the habits of all our travelers," he said. "Here's our profiles of our people, put them in the system and give me better pricing. I gave them last year's data and said, here's where the people are, here's where they live, here's where they've traveled, give me the best pricing you can."

One vendor, after being presented with the data, reduced pricing another 5%, and other agreements were pending.

In order to facilitate the transition and ensure service levels, Siciliano informed the vendors that they would transport two business unit heads, telling them to show why they were chosen as one of the three preferreds, but to know that they would have to offer that level of service to everyone. "Whatever you do for them, you're going to continuously have to do because you're setting an expectation," he said.

In the beginning of October, the company also began allowing limousine bookings through its travel agency's self-booking system.

By next month, Siciliano plans to present the savings figures generated by the initiative to the company's executives, as well as evidence of the financial impact of limousine policy noncompliance. "I drive that back to the CFO and the leaders on the business and say, here's the opportunity you had, this is the leakage you had, had you not had that, you could have saved this much money."

Source: Business Travel News

View comments or post a comment on this story. (0 Comments)

More News

Uber Extends Sexual Harassment Probe

The TNC faces more pressure over the results of its review, particularly after the scandal that ousted Fox News' Bill O'Reilly. 

 

Only 4% Of Uber Drivers Stay A Year Or More

Retention is an even worse problem for the TNC than for the taxi and limo industries.

New Jersey Operators Are Perfect Mix Of Old And New

eNews Exclusive: The co-owners of First Choice Limousine play to their strengths to create a blend of traditional customer service with an understanding of the Millennial mentality.

Pot Party Bus Operator's Revenues Surge 66% In Past Year

Colorado Cannabis Tours takes around 200 people each weekend in the marijuana "Napa Valley" of the U.S.

Uber Officially Lost $2.8 Billion In 2016

In the fourth quarter, the TNC both increased its bookings and upped its losses, according to a recent report.

See More News

Facebook Comments ()

Comments (0)

Post a Comment

Submit

Blog

See More

LCT Store

LCT Magazine - April 2017 $12.95 F&I / SPECIAL EVENTS ISSUE COVER STORY: * Don't Panic: Confronting Worst Fears - Fleet Risks * *



Connect

Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment

TruckingInfo.com

THE COMMERCIAL TRUCK INDUSTRY’S MOST IN-DEPTH INFORMATION SOURCE

Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close