HENRY SCHEINAPPLYING EXPERTISE BEYOND TRAVEL IN A FORTUNE 500 COMPANY

Background
Corporate Travel Department Creation
Corporate Card Program
Online Expensing
Travel Intranet Site
Charter Air
Strategic Meetings Management
Globalization (first steps)
Online Booking Tools
Ground Transportation (regional & national)


Background:

In seven years with Henry Schein, Inc. a multinational Fortune 500, Lee Coltman applied his expertise to benefit the company in areas that went beyond traditional corporate travel management, including:

  • Corporate Travel Department (CTD) creation
  • Corporate card program
  • Online expensing
  • Travel intranet site
  • Charter air
  • Strategic Meetings Management
  • Globalization of travel services
  • Online booking tools
  • Regional and national black car transportation

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Corporate Travel Department Creation:

In 2003, with nearly two decades of corporate travel account management (including six years of agency and client contract analysis, negotiation and administration), Lee Coltman came to the attention of Henry Schein, Inc. through his consulting web site. Initially brought on as a consultant to review the corporate travel program and recommend changes, he introduced to senior management the concept of the Corporate Travel Department (CTD). The ARC-accredited CTD program is an alternative to the TMC model providing independent, highly customized management of a corporation’s travel program.

After a six-month setup negotiating the complicated application process to acquire ARC accreditation, Henry Schein, Inc. subsequently opened a full-service, fully licensed corporate travel agency authorized to issue ARC documents thus immediately eliminating all transaction fees associated with third-party travel management. Other components initiated or required for set up included:

  • Selecting a team of qualified travel counselors on the Henry Schein payroll.
  • Negotiating a favorable GDS contract that included returning all booking segment bonuses to the corporation.
  • Implementation of the professional reservation system Sabre.
  • Development of the paperless travel office environment.
  • The set up of the back office accounting system TRAM’s.
  • Dealing with all vendors directly negotiating exclusive contracts.
  • The implementation of ‘Travel Helpline’ to provide international and domestic after hours and emergency service 24 hours a day, 365 days a year .
  • Superior reporting capability using data sourced from PaymentNet. PaymentNet is an accurate to the penny, internet-based real-time payment processing software managed by the company corporate card services provider JPMorgan Chase. (see Corporate Card Program).

Henry Schein, Inc. continues to manage its travel program using the CTD model.

Below learn more about the Airlines Reporting Corporation CTD program on the official site and other related links

ARC Official CTD Program

Official CTD Association Site

CTD Group

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Corporate Card Program:

With the CTD successfully operating and having joined Henry Schein as Director of Travel Services, Lee Coltman moved on to his next project—further developing the company corporate card program. A managed corporate card program of ghost accounts and individually-held cards would accomplish five things:

  • Introducing individually-held cards would provide a convenient way for employees to pay for company-incurred T&E expenses replacing their own personal cards.
  • Migrating from paying for airline tickets and limousine transportation with a ghost card to the individually-held corporate card would provide greater expense transparency.
  • Linking all cards to online expensing and paying the bank directly would provide added convenience to employees.
  • Using ghost cards for big-ticket items would eliminate the cumbersome check request process and the inconvenience of using a personal card.
  • Creating a coordinated program would provide a greater rebate on spend.

The company corporate card program at this time was limited to one “ghost card” covering air expenditures, which paid a modest rebate. The potential for substantially increasing the rebate was obvious: Pay all invoices normally settled with a company issued check with a card. Working with AP to identify opportunities to pay invoices with a ghost card(s) was a simple first step.  Step two, rolling out an individual cardholder program, would be a little more complex. Three banks were invited to bid on the business – Citibank, JPMorgan Chase and American Express. The successful institution had to provide adequate resources and program support to implement from scratch a customized program with potential for low to mid-nine-figure spend.

Pending the introduction of the individually-held card to pay for tickets, a ghost card would continue to be used. Unfortunately there was an inherent glitch in the system. When using a ghost card for a ticket purchase, matching the charge to an internal department reference number or “cost center” for AP processing at end-of-month reconciliation was entirely manual and extremely labor intensive.

With the explosive growth of company travel, an automated solution was needed. Cost center reconciliation was addressed by working with the bank’s technical support team to develop a search engine that would locate the 13-20 digit numbers embedded within the traveler’s GDS travel profile attached to the PNR after ticket issuance.  Now identified and recorded, the cost center would reside in the bank’s proprietary account management platform, PaymentNet*, ready for corporate card administrator monthly processing. Automated Excel spreadsheets produced from PaymentNet were e-mailed as attachments to AP, and a “mapper” was designed and created to enable spreadsheet data to be uploaded directly into JD Edwards.

Individually-held ghost card transactions (issued to employees paying for large-ticket items such as meeting and event invoices) were processed manually within PaymentNet by the ghost card holder. An automated spreadsheet was produced, e-mailed to AP as an attachment, and again a mapper was used for the JD Edwards upload. While fine-tuning the ghost card program in preparation for the rollout of the individually-held corporate card phase of the program, Lee Coltman assembled the team who would formulate the overall company regulations and guidelines required for card usage, including colleagues from AP, legal and HR.

Once regulations and guidelines were established, almost 3,000 cards were issued over a period of two years, beginning with the top 20% of spenders (who accounted for approx 80% of annual T&E spend) all the way down to employees who expensed a minimum of $100 annually. Additionally, with the majority of airline tickets and limousine transportation rides now successfully transferred to the individually-held card, the air ghost card and associated processing was eliminated. Each of these transactions could now be added to and processed by the employee’s individual expense reports. This program continues to grow and to date has reached a mid-eight figure level spend with a sizable rebate. The rebate was added to the Travel Department P&L and balanced the books by offsetting all costs associated with operating the department.

After completion of the T&E individual and ghost card rollout, the initiative was further expanded by introducing the “P” card program capturing additional company spend to boost rebate dollars. The blueprint was outlined and the infrastructure was developed and eventually created by colleagues in AP.

A successful card program would now enable first steps to be taken for international corporate travel consolidation and the globalization of the travel function. It is generally acknowledged that precise multi-country data is a key vendor requisite. The corporate card program through PaymentNet would be able to provide that information crucial for joint international agreements. For this purpose Canada was selected as the first partner, and a mirror image of the U.S. program was rolled out to cover all T&E expenses. In addition to data collection the same U.S. benefits applied, including convenience and transparency provided by the Gelco/Concur marriage and the additional rebate dollars.

* JP Morgan Chase PaymentNet is specifically designed to support corporate travel, procurement, fleet and e-procurement payment programs. The Web-based system automates administrative tasks traditionally associated with managing a card program and ensures accurate monitoring, reporting, and analysis of program spending.

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Online Expensing:

Towards the end of the corporate card rollout, Lee Coltman became aware of products in the field allowing for online expensing. Recognizing the need for change from the outdated method of companywide expensing that used Excel spreadsheets and issued checks, he began to research products in the marketplace. At the time the two main players were Gelco and Concur.

Coincidentally the AP department of a recently acquired Canadian business had installed and were beta testing Gelco. Lee Coltman contacted the implementation team as they were tweaking the system and spent time learning more about the product(s) and looking for general feedback. Choosing between Gelco and Concur was difficult. On one hand Concur was considered to be a superior product and generally more expensive, while Gelco was less expensive and not as sophisticated, but provided the right functionality for Henry Schein. The fact that Gelco was installed in Canada and undergoing a beta test to resolve all potential glitches carried tremendous weight. This would be especially important for a much larger U.S. rollout if Gelco was selected, as the Canadian AP team could share implementation experiences and best practices.

After concluding price negotiations, Lee Coltman presented his recommendations to two senior AP members. All agreed that Concur was the most accomplished product, with a per transaction fee negotiated to be the same as Gelco’s proposal. However, Concur would not remove or reduce their substantial upfront fee, which was the ultimate stumbling block. Lee Coltman was outvoted by AP who decided to recommend Gelco to the CFO. However, this decision did have merit based on sound practical judgment, as Canada AP was available to advise and assist on implementation and North America would be on a common platform.

Gelco was purchased, but the decision was moot as within one month Concur acquired Gelco. Lee Coltman again found himself back at the negotiating table with Concur alone. The new agreement would now include transaction fees matching that of Gelco. To lower the overall per transaction rate as Gelco (Canada) was to be phased out, a matrix was created that reflected the addition of the forthcoming Canadian transactions and consideration to any further transactions added as a result of organic growth and future acquisitions. The upfront fee was eliminated and a generous ramp-up and implementation timetable was agreed upon. Concur, working in harmony with the corporate card program, was up and running within a year.

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Travel Intranet Site:

Lee Coltman designed and built the company’s intranet travel portal site. The site features company travel policy; useful travel links; corporate card program guidelines and application documents; North American meetings & events calendar and information; links to meetings & events registration; passport application and visa requirement; travel profile forms; destination weather site; currency exchange calculator. The site became the “go to” page for anything related for corporate travel.

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Charter Air:

During a period of tremendous growth in travel, Henry Schein’s senior managers were spending more and more time on the road. Due to the unpredictable nature of commercial air travel since 9/11, it became necessary to find a more efficient and reliable method of traveling by air. Flying via chartered flights was not a comprehensive solution as it was not cost-effective to use exclusively. However, it would go a long in complimenting commercial air travel. While charter air is tremendously expensive on paper, properly managed and used it can be a very effective option for getting from point A to point B. There are four pricing models to consider:

  • Prepaid hours
  • Fractional share
  • One-off charter through a third-party broker
  • Outright equipment ownership

After thoroughly researching all options, Lee Coltman elected to use the prepaid hour model. Prepaid hours (usually in blocks of 25 hours) can be purchased directly from a reputable private aviation company for little or no risk, as long as the “sunset” clause (no expiration) is written out of the agreement. These can, of course, be sold subsequently if no longer required. They have a fixed value, and the cost of hours usually increases annually.

Due to the complexity of flying charter, two suppliers were required to cover all pricing and geographic options:

  1. A regional FBO was selected as the default company to provide for one-way and roundtrip flights that originated from and returned to the New York area. In certain circumstances this company also acted as a broker for some out-of-the-ordinary charters.
  2. As one-way, roundtrip or multiple-leg charters originating outside of the New York area incurred additional cost a second national charter company was needed to provide for this type of itinerary.

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Strategic Meetings Management:

Based on his event planning experience at Ovation Travel, in 2004 Lee Coltman was asked to plan and execute an international retreat to Frankfurt, Germany for all company directors, vice presidents and C-level executives, and also to incorporate a Board of Directors meeting. The event would include presentations, seminars and onsite and offsite events over a period of four days.

This international meeting highlighted the need for a Strategic Meetings Management program at Henry Schein, as the company’s meetings and events were completely decentralized and unmanaged at that time. It seemed logical that someone with travel management experience – destination knowledge, familiarity of air travel, ground transportation and accommodation agreements that encompass a large part of a meetings budget and composition – should undertake a project of this magnitude and scope.

To establish the range of the program, Lee Coltman began with an evaluation of the key components that made up the company’s annual meetings business. Data was collected on:

  • How many recurring meetings (estimate for ad hoc)
  • Location
  • How many attendees
  • Meetings type
  • Vendors used
  • Expenditure (air, accommodation, transportation, A/V, catering, meeting space, entertainment)

The project started with the purchase and implementation of the online event management solution Register 123 by Certain Events. The primary function of event management software is “Strategic Meetings Management” (SMM). SMM software typically includes customized electronic invitations for event attendees; the ability to book air travel; collection of data for vendor manifests; and attendee information on the meeting (such as onsite and offsite events, and the meeting objective, content and theme).

At that time a full rollout to manage all potential company events was not practical. Based on the purchasing model of the SMM software, the company was unable to commit to an annual prepaid registrations number. Additionally, there was no infrastructure to design, build and process multiple electronic registrations for events running simultaneously.

A two-year ramp up to collect all data and set up infrastructure leading to a full implementation was anticipated. An agreement was reached for the first year with Certain Software for the purchase of 2,000 registrations to beta test on a defined series of annual events, with an option on 2,000 further registrations to be purchased if needed.

Initially a travel counselor was recruited to fill the position of program administrator followed by an additional travel counselor in the second year in preparation for the expected growth of the program. The decision to use travel counselors to fill the role, although not mandatory, was preferred. It was felt that a basic knowledge of travel for design, structure and flow of the registration was needed. Also, if tickets were requested they would need to be issued at the processing stage  by a qualified ticketing agent with a familiarity of the registration and parameters of the meeting. Training to build, design and process the events was provided by Certain Software. Time permitting, and if managed properly, events other than those specified could be added throughout the year for processing, necessitating the activation of the option on additional registrations.

Having addressed the questions on number of meetings and attendees, locations, meeting types and vendors used, the question of annual expenditure still remained. To leverage consolidated corporate buying power it is important to understand annual meeting expenditure. The successful corporate card program provided a solution. Ghost cards using unique cost center numbers could be issued to each meeting planner, or the same codes could be used for the personal corporate card held by the individual. PaymentNet would be used to run reports either by card number or meeting cost center showing detail by meeting or any component of a meeting.

The SMM program is now in its sixth year and clearly defined. It processes more than 25,000 registrations through more than 100 meetings. The team includes two dedicated registration administrators, a Director of Meetings and Events and five meeting planners. Subsequently the online event management software was reevaluated, and Cvent was selected (over StarCite and SignUp4) replacing Register 123. This decision was based on a lower per registration cost, as well as a tool that provided more basic management and simpler processing, which was needed as more peripheral staff became involved in the minutiae of event planning. Cvent filled in all the blanks.

Henry Schein/Lee Coltman Certain Events Endorsement

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Globalization (first steps):

Despite various challenges, travel management is becoming more global because the benefits of centralizing a managed global travel program outweigh these challenges. This applies to companies of all sizes. While there are many ways to approach the effort, some fundamental principles apply including,

  • Solid and accurate data for global agreements.
  • The ability to support all agreements by controlling and driving market share.
  • Senior management endorsement.

Tensions will always persist between global goals and local realities due to the unique circumstances for corporate travel programs in each country.  Acutely aware of these inherent challenges, Lee Coltman decided on a “one country at a time” approach.

Of the 19 countries in which Henry Schein operated, the recently acquired Canadian business was best positioned to launch the project for the following reasons:

  • Canada was using the recently introduced U.S. corporate card (see Corporate Card Program). PaymentNet would be critical in collecting data necessary for joint vendor agreements.
  • Canada was earmarked by ARC as the first country for multi-currency settlement.*
  • While “unmanaged” in a traditional sense but still centralized and operating from a consolidated office in the Eastern Time zone, Canada’s senior management were receptive to the initiative.
  • Henry Schein U.S. and Henry Schein Canada used the same international and domestic air partners, which paved the way for shared airline alliance agreements.
  • From a cultural perspective, there was a “local” partner understanding of mutual benefits that consolidating and centrally managing a North American T & E program would provide. This was the final piece in the North American T&E jigsaw, which also included Strategic Meetings Management, Corporate Card and Online Expensing.

With Germany identified as the second country to be added to the program and concurrently undergoing consolidation and considerable overhaul in preparation for the project, the Star Alliance was selected as the group of airlines best suited to service the project. Aside from their route structure offering a good geographic fit their experience in globalization would be instrumental in the success of the program.

Until multi-currency settlement was ready for a full rollout, a regional travel agency – Vision 2000 – was selected for ticket fulfillment, and a travel counselor was hired to work on site. Domestic and international after hours and emergency support was provided by the New York Corporate Travel Department through “Travel Helpline” with a dedicated 800 number to a ‘Canada desk’ with bilingual agents as required.

This rewarding partnership went a long way in building bridges and was a shining example of the benefits of businesses working together during a difficult post-acquisition transition.

* In 2007 ARC introduced multi-currency settlement exclusively for Corporate Travel Departments, with Canada among the first countries beta testing “inter-country” ticketing.   This enabled the Henry Schein New York-headquartered Corporate Travel Department to make reservations, issue tickets and process the sale through their own U.S. ARC number.  Tickets issued for Canada-based travelers by U.S.-based travel counselors could now be issued in Canadian dollars, allowing for billing and payment in local currency through the U.S.-managed corporate card program.

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Online Booking Tools:

With online booking tools becoming more sophisticated and common place in the field, Lee Coltman spent a considerable amount of time researching the functionality and return on investment of the leading products in the market place, GetThere and Cliqbook.

When a corporation is utilizing the CTD model, such tools to save or eliminate agency management fees may seem to be redundant, and, of course, the CTD does not pay these fees. However, if used and programmed correctly the software will provide the corporate traveler with a convenient mechanism to research and book travel itineraries 24 hours a day. It will allow for built-in travel policy and compliance. From an infrastructure perspective, rather than replace travel counselors, it will complement the existing setup. The system is only as good as the content provided by the GDS with which it interfaces, and the need for meticulous set-up is critical. Therefore the relationship between the client and vendor implementation teams is paramount.

Another consideration was to provide for the entrance of Generation Y into the corporate travel spectrum. Generation Y, whose familiarity with communications, media, and digital technologies would make traditional methods of booking reservations seem archaic, would certainly embrace this technology.

Compared to the CTD model, when considering the two options a TMC would have a totally different perspective and would be obliged to offer one of these solutions to their clients—a tool that would eliminate or dramatically reduce revenue derived from TMC fees.

When deciding on which of the two platforms to purchase, pricing models have to be broken down and examined closely. Each will provide different financial benefits and incentives for TMCs and the CTD. Both products are packaged: GetThere, a Sabre holdings brand with the GDS Sabre; and Cliqbook marketed by Concur with Concur Online Expensing (see Online Expensing). The GetThere package rewards the CTD, who holds the Sabre contract, as it increases the amount paid from per segment bookings. This revenue is returned to the corporation directly as opposed to the managing TMC. All upfront GetThere fees are discounted overall, which also benefits the corporation. Alternately, Cliqbook offers a packaged discount with Concur, the online expensing solution, if used by the company.

There is no question that both GetThere and Cliqbook bring tremendous value and practicality to the corporation and convenience to the end user, and either would enhance the travel program.  However, after considering all practical and financial benefits, GetThere was selected and is in the first year of operation in the United States, soon to be made available to Canada.

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Ground Transportation (regional & national):

Recognizing the need to upgrade the existing limousine transportation vendor, Lee Coltman researched several national and regional companies, both large and small. After an exhaustive selection process, a strong regional vendor was eventually retained that proved to be a perfect fit. The prerequisites to service Henry Schein’s limousine requirements appropriately had to include vehicles with no more than 100,000 miles or less than two years in service; knowledgeable drivers who have been properly screened; insurance coverage above industry standards; competitive rates.

It was at this time Lee Coltman also decided to further explore his initiative, the Henry Schein in house executive car program, to expand and incorporate more employees normally using more expensive methods of ground transportation.

The earlier purchase of two cars with on-staff drivers had been successful in reducing the annual limousine company expenditure substantially. The concept was simple: establish all the costs associated with a driver and car, and if those costs could offset or better the price of a hired car and driver provided by the black car company then the opportunity to considerably reduce company limousine fees would be feasible. The executive car program had proved it could work and with some additional tweaking it could be improved. The cost equation had to include:

  • Salary and all company benefits for driver.
  • Price of car, including maintenance, gas, insurance and residual value.
  • Management or dispatching fee derived from lost limousine company revenue per driver.

It was quickly established that the drivers of Henry Schein’s current limousine providers were covering more than 25 trips per week at an average price of $130. The math was as follows:

  • 1 driver, 5 rides per day x 5 days x $130 (average ride price) = $3,250.00
  • 50 weeks x $3,250.00 = $162,000

Using this calculation logistically speaking if all annual costs came in under $162,000, then Henry Schein would be ahead of the game. The on the road annual costs associated with each Henry Schein car and driver including dispatching and management fees (the fee negotiated with the limousine company to dispatch the car and provide Nextel cell phone communication married to the Henry Schein network) were just slightly more than $100,000.The program also offered intangibles such as the complete control of drivers appearance and hours, car cleanliness and overall maintenance and significantly driver/passenger familiarity offering peace of mind for late night pick ups for example.

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Henry Schein, Inc., a FORTUNE 500® company and a member of the NASDAQ 100® Index, is the world’s largest provider of health care products and services to office-based dental, animal health and medical practitioners. The Company is a FORTUNE World’s Most Admired Company, and ranks first on the FORTUNE list in the Wholesalers: Health Care industry. Henry Schein is also on Ethisphere’s list of the World’s Most Ethical Companies.