Client Spotlight: American Standard

A Business Challenge
Although perhaps best known for its bath and kitchen products like toilets and sinks, Piscataway, N.J.-based American Standard Companies Inc. is a $9.5 billion global diversified manufacturer whose biggest business is air conditioning. It operates a vehicle control systems business, too. Nearly 15 percent of the company's 61,000 employees travel to more than 35 countries in support of its businesses, spending more than $50 million in travel and entertainment each year in the process. Before 2002, American Standard’s process for reimbursing its U.S.-based employees was anything but standardized. The company counted 16 different processes within its operating units – with one of the few commonalities being expense reports were all paper-based.   To simplify its procedures, reduce the costs of processing requests, shorten payment cycle times, improve employee productivity, and apply one expense policy across its U.S.-based operations; American Standard looked to Gelco.  At the end of June 2005, American Standard had more than 7,000 salaried employees using Gelco for expense report filing to be reimbursement.

The Gelco Solution = Quantifiable Results
Following the Gelco implementation, reimbursement cycle times dropped from three weeks to three days. Today employees report improved service, with visibility into past trips and expenses to support budget planning activities as well. More strategically, though, American Standard has been taking a closer look at its employee initiated spending detail and is leveraging that knowledge in its travel supplier negotiations. It has found that the level of spend information collected online today across its companies gives it better insight into larger business operations as well. “Travel agency data is only booked data – employees may extend a trip, and there are other expenses to account for, such as meals, ground transportation and taxes,” noted Ernest Guerra, director of travel services at the company. “Now we are able to see all of the information centrally.” As an example of spending analysis supported through the Gelco system, American Standard has been assessing the costs of all flights, hotels, and meals in particular regions and identifying opportunities for cost reduction based on average costs as a benchmark. It has established new policies on maximum expenses and set thresholds around the averages to flag for further review. In addition, Guerra’s team has been analyzing the cost of trips to serve customers versus trips for internal business. Interestingly, the company has found that it spends $200 to $300 more per trip for internal matters and has been investigating how it may bring those costs down, such as encouraging the use of alternative meeting methods such as phone. As a result, American Standard's overall average trip cost since 2001 has been reduced by as much as 10 percent. Additionally, the business services team is now able to support more employees through the company's travel program, and the travel team's ability to process expense reports has improved 170 percent.

Next Steps
American Standard is expanding its Gelco implementation into Canada this year, bringing on another 500 users and is also looking at supporting employees in Mexico. The company is also processing over $5 million it spends on company meetings each year through the Gelco system. Meeting organizers today have special meeting credit cards that benefit from the workflow-driven approvals in the Gelco system, which will also help Guerra’s team better identify who is doing the spend within the different business and leverage that with other travel spend management activities.

To learn more about Best Practices in Travel Spend Management, download the Aberdeen Group’s 2005 report here.