Commodity Value

Reading the article from Norman Gage in relation to the recipe for potential disaster that many corporates face without the professional support mechanisms in place that compliment the value that commodity transaction based buying can bring, it should be noted that many procurement managers are often the last to understand without clear “financial” evidence as to the value a TMC brings to business partnership as many TMC Sales forces are still in the old 45 record groove. We recognised long ago that commodity purchasing was something which required careful discussion and understanding as the switch from travel being a profit centre to it suddenly becoming a cost centre has materialised and focused the mind of many companies and the value they place on the traditional work undertaken by them. To focus the mind of any procurement professional you need to demonstrate that the commodity cost “internally” is often 30% -40% more than a TMC externally placed resource. If TMC sales forces are not in possession of tools to demonstrate like for like comparisons then the commodity value will always be measured in pounds shillings and pence and no amount of emotive rationalisation will change the mindset, nor the business. Norman Gage is correct in his assessment however the juxtor position has switched and you need the tools and acumen to match both the minds and bottom line balance sheets of this new purchasing era. At Norad Travel our consultancy divison mrg consultancy has developed the tools to enable this to take place and without doubt it has been one of the main reasons as to our growth this year. Companies switching back from on line quick fixes to traditionally managed business relationships has created a new dimension in the actual perceived values and bottom line enhancements. We have needed to demonstrate that the commodity costing module satisfies only one part of the component part for a perfect recipe for business partnerships…..details on our Netfeecom tool can be found at www.mrg-consultancy.com Mick Gibbs FinstSMM Director Norad Travel Group Ltd