Boeing Consolidates Cards, Capitalizes On Savings

<B> Boeing Consolidates Cards, Capitalizes On Savings</B>

By Mary Ann McNulty

<I>Bellevue, Wash.</I> - One of last year's biggest mergers is producing one of this year's largest corporate card rollouts, as The Boeing Co. begins implementing more than 60,000 GE Capital Corporate Expense Management Services travel, procurement and fleet cards.

Boeing's merger with McDonnell Douglas took effect last August. In one of the first companywide processes to be launched in the new company, executives hope to shave 30 percent off existing costs by consolidating all purchasing on the GE Capital MasterCard and reengineering current procedures, according to Carol Holley, public relations manager for the Boeing Shared Services Group.

The combined company spent $200 million on U.S.-booked air travel and reported worldwide T&E of $600 million for 1997 (<I>BTN,</I> July 6). Holley was unable to detail the projected procurement and fleet volume, but it's a safe bet the total will top $1 billion. GE executives would comment only that "Boeing is in our top three largest accounts."

At press time, Boeing was beta testing the mass card rollout that is expected to begin shortly. Cards will be implemented division by division, with the process completed by year-end.

As part of the implementation process, Boeing has created a mascot, called Ele Phant, that appears in cartoon form on every communication about the card program, Holley said.

The Shared Services Group, headed by Jim Palmer, began analyzing the benefits of leveraging its card business with a single vendor earlier this year. While the entity known as heritage Boeing used the American Express corporate card and McDonnell Douglas had GE travel and procurement cards, Boeing North America, formerly Rockwell, had Citicorp Diners Club cards, Holley said. Boeing issued a request for proposals to all incumbents before deciding on GE.

"We really wanted to realize the synergy of the merger through cost savings," which will come from greater volume discounts and better data, Holley said. "Data was a big issue for us, to have just one data source rather than three."

GE executives and Jesse Gonzales, the GE account manager for McDonnell Douglas, shared with Boeing the "six sigma tools" that GE used to reengineer its own travel payment process, according to Jeff Dye, GE's former travel manager and current senior vice president of its corporate card business.

"We pioneered the process with the former McDonnell Douglas that uses six sigma tools to take a very disciplined approach to measurement and understanding of costs. We eliminated 90,000 purchase order requests on the purchasing card side," said marketing vice president Mitch Gross.

As part of this process, GE estimated that Boeing could probably realize a 30 percent savings in its cost of doing business, Holley said. At this point, however, Boeing is unsure exactly how many of the 60,000 cards will be for travel and how many will be for procurement and fleet.

With more than 250,000 employees worldwide, the company initially will be giving the GE MasterCards only to U.S. employees, though a worldwide deployment is planned.

Going through the six sigma process helped Boeing recognize the savings potential of total consolidation. Shared Services exists, Holley said, "to maximize earnings for all product groups."

The group provides companywide computer services, telecommunications and information management, security, transportation, facilities, travel management and the purchase of non-production goods and services. Boeing Travel Management Co., the travel agency formerly owned by McDonnell Douglas, also falls under SSG management. Company executives have made it clear that decisions made by Shared Services will be implemented companywide.

"In today's globally competitive environment, Boeing is serious about driving down infrastructure costs. Consolidation and integration of our purchasing strategies is key to our aggressive cost reduction activities," said Candace Ismael, director of SSG supplier management and procurement.

The mandated culture at Boeing is in direct contrast to its major competitor Lockheed Martin, which last summer selected First Bank Corporate Payment Systems, now U.S. Bank, to issue cards to its 85,000 employees in an effort to consolidate its more than $600 million in annual spend.

One of the advantages that GE offers Boeing is a new point-of-service system that automates company policy, contracts and contacts and puts them on the screen of all GE customer service agents. The automation was patterned after the point-of-sale technology developed for the GE Travel Center and other call center systems used in GE business units, Dye said.

"The key is trying to be a one-stop shop. You call one number, regardless of the issue. You don't get voice mail--you get service, 24 hours a day, seven days a week," Dye said.

Winning this account is allowing GE to speed up deployment of some of its planned enhancements to its travel and procurement reporting systems and their interfaces to intranets, Dye said.

GE also expects to add new purchasing categories to its P-card reporting system to help this huge customer better track and analyze temporary and contract labor costs.

With mega-merger activity producing several billion-dollar accounts, GE Capital executives note that they're not intimidated by the size of these customers. "We love merger and acquisition activity and have the capability to play with huge volumes. We know how to play that game, support people and offer services that provide value. We're gearing up to double in size every year. I'd love to have a couple more customers like Boeing," Dye said.

However, Gross added, "It's not for the faint of heart. Their needs are great and there is a lot that must happen in the field and in the process to make all this work.