Profiles In Travel Management - 2005-08-15

Raising Company Standards
Company: American Standard
Headquarters: Piscataway, N.J.
Global Air Volume: $24.5 million
Global Hotel Volume: $15 million

American Standard Companies global strategic sourcing director Tom Barrett has used rigorous data collection, benchmarking, reporting and communication efforts to craft a globally consolidated travel program focused on cost avoidance.

When the former global director of travel at Bristol-Myers Squibb four years ago joined American Standard—the global manufacturer known primarily for its bath and kitchen fixtures and fittings—Barrett said he found a "shell of a travel program in the United States, and different attempts on the international side." The company maintained three distinct business units with decentralized travel programs and disparate policies.

"Our approach to travel management is in keeping with a larger cultural transformation within the company since CEO Fred Poses joined the firm five years ago," said Barrett. "Fred's comment was that we were no longer going to operate as distinct businesses, but as one company, and raise the standards on everything we do."

Since issuing global travel and corporate card policies in the fall of 2001, Barrett said the focus has been on collecting, understanding and acting on data to invigorate supplier relations and reduce cost. Today, the company drives roughly 98 percent of transactions through its designated global agency, WorldTravel BTI.

"When you look at compliance to our air policy, in 2002, 1.8 percent of our air spend was lost to non-compliance. Today it's at one-half of 1 percent," Barrett said. "We've used every kind of automation possible to drive compliance, but sometimes you just can't have total policy compliance. That's just a reality of what we do."

The key to driving compliance, beyond issuing warnings at the time of booking and sending notifications of rogue behavior to employee managers, said Barrett, is generating "actionable information." "If you give me the e-mail before he travels, I can do something with it," Barrett said. "If you give it to me one month after he travels, I can't do anything about it."

Barrett, who reports directly into a vice president of strategic sourcing and works closely with the company's financial and human resources organizations to achieve full systems integration, said American Standard sets out a productivity goal of 6 percent year-over-year savings. "We use a global scorecard that was established when I joined the firm and we track both direct savings and cost avoidance," he said. "In 2003, cost savings were at $3.9 million, and in 2004, we realized $3.1 million in savings. In 2003, we had $3.9 million in cost avoidance, and in 2004, it was $3.4 million. This isn't the old way that people used to manage travel."

Prior to Barrett's arrival, hotel spend was largely unmanaged and remains one of the company's biggest areas for potential savings. At the end of July, Barrett hosted a hotel supplier bidders conference for American Standard, which attracted 28 hotel chains.

"At the end of the year, every hotel wants to do business with us and I can't meet with them all. But I can meet with them with WorldTravel and give them all the information about our program and our policy," said Barrett. "We told them about what our strategies and expectations are, but we also knew that we had to create a value proposition for why they should do business with us."

By explaining the company's philosophies about corporate culture and business travel, and presenting the bidders with relevant, timely benchmarking, Barrett was confident he was able to both entice and inform the suppliers in attendance.

"If you looked back to when I joined the firm, we were at 42 percent compliance for booking hotel through the agency. In 2004, we were at 64 percent," he said. "If you look today, just in the United States, our trending is near 85 percent."

Though automation has aided the push toward increased compliance in all areas of spend, Barrett said, "the culture of the organization truly makes people want to do the right thing." Still, the American Standard travel team works to find innovative incentives for its 9,000 travelers, not only to be policy- compliant, but also to familiarize themselves with the travel department's services and online offerings.

"We're running a global contest on our travel portal. It'll flash a picture of a city and say, 'what city is this?' We did Brussels, then Vidalia," said Barrett. "If they log in, and answer correctly, we send out luggage tags and other little rewards and, at the end of the year, we'll award a much nicer prize. It's created a great buzz for the travel program."

Getting employees acquainted with the American Standard travel portal , Barrett said, may encourage more travelers to link to the company's online booking tool, ResX, which is available on the site. "Our online adoption levels are currently at 26 percent, deployed only in the U.S. Our target range is around 65 percent and we'll try to get there in the first quarter of 2006," Barrett said.

In the coming year, the American Standard travel team will focus on containing meetings spend, leveraging meetings and transient travel in hotel negotiations, and keeping a close watch on the global distribution and content discussions.

"The travel industry is a dynamic marketplace and you live through all of these challenges on a daily basis. You have to keep abreast of the various issues because that's what our business requires," Barrett said. "While you want to be responsive, you don't want to be in a totally reactive mode. You want to work at a strategic level. Our drive is to use the knowledge we gather and demand the services that our people demand of our travel group. They expect a cultural improvement in everything we do. I don't want to say that our travel program is mature, but we're always looking for the next frontier."