7-Step Strategic Sourcing Process

1. 7-Step Strategic Sourcing Process • Step 1 – Define Strategic Opportunity • Step 2 – Baseline Current State • Step 3 – Industry Analysis • Step 4 – Go to market Strategy Development • Step 5 – Selection and Negotiation • Step 6 – Execute and Implement the Contract • Step 7 – Monitor Results

2. A Case Study Global Hotel Strategy • We outsource the process. We conduct hotel spend analysis using data from Agencies, major hotel chains, credit card and T&E systems. • Solicit preferred hotel preferences from administrators and top travelers in your key global markets that may not be captured in the data due to direct bookings • Understand your travel profile – • Why do you travel? What type of hotels are needed for the type of travel you have? • What ancillary items are in your hotel folio data that your travelers use and that are expensed? • Compile a list of all hotels used – Case study: 1400 hotels used and 980 hotels where we had spend in the previous year with over 100 room nights in the market. I combine meetings and events and corporate travel spend to be sure we leverage our contribution. • RFPs are sent and we narrow the selection. Case study: Narrowed to 410 hotels where we had substantial spend or the property was requested as a preferred by travelers or administrator. Selection and Negotiations Execute and Implement Contract

3. A Case Study Global Hotel Strategy • We negotiate preferred properties based on the following: • Location – Near offices and customers • Cost competitiveness in the market including ancillary costs • Internet, breakfast, shuttle service, – cost identified in expense data • (Note: Don’t negotiate for items your travelers never use.) • Business Travel needs – Mix use 3 and 4 star properties, full service and limited service properties. • We subsidize with dynamic pricing in secondary markets • We do take commissionable rates when it is most cost effective • Feedback from travelers and arrangers Selection and Negotiations Execute and Implement Contract

4. A Case Study Global Hotel Strategy • Each year we try to reduce number of properties. • In 2012 we identified the purpose of travel and solicited additional 3 star properties to fit the need. This reduced our Average weight hotel room night cost • Rates begin loading in the global preferred agencies online and offline systems for booking on December 1. (Hotels must load the rates). 2 formal audits are held through out the year to make sure the rates are loaded and used. We also do spot audits through out the year. • Estimated Global savings for 2013 is 13% below preferred rates in 2012 despite industry predictions of 5-9% increase. • What is keeping me up at night? • Loading additional special rates – Small meetings, government rates, project rates etc. • Multi-year deals with strategic properties • Consistent availability of my rate • Booking source on Hotel Room nights and security tracking Selection and Negotiations Execute and Implement Contract