Company: Rockwell Automation
Headquarters: Milwaukee
Global Air Volume: $20 millionUsing an automated, mandated pre-trip authorization tool, Rockwell Automation increased advance ticket purchases and nonrefundable ticket use and decreased business class travel, reaping substantial savings in the first quarter of 2007.
By customizing American Express Business Travel's recently released pre-trip authorization tool to conform to its policies, Rockwell in effect mandated advanced purchases of more than 14 days and reduced travel for internal purposes.
When Rockwell's fiscal year began in October 2006, the CFO asked for ways to effectively slash travel costs, the company's largest area of indirect spending, which totals about $100 million and includes more than $20 million in air volume in about 80 countries, said Tim Kusek, Rockwell Automation director of strategic sourcing.
In December, Rockwell's strategic sourcing team worked with its travel management company, American Express, which became Rockwell's agency after it acquired Rosenbluth International in 2003
(BTN, Aug. 11, 2003), to "help us understand what are those cost levers we can push and pull to come up with savings," Kusek said.
As Kusek's team examined reports from its travel suppliers, he was able to identify problem category areas. Using GetThere for two years, the adoption rate was at 65 percent to 70 percent, he said, but via the expense payment system, Kusek identified where additional savings could be garnered. "What we saw was that we were getting clear reports from our credit card piece," he said. "We were driving these Concur payment reports on a monthly basis and saying, wow, we are missing a good 25 to 30 percent."
At that time, the Milwaukee-based company rewrote its travel policy, anchored on booking more advance air ticket purchases, increasing nonrefundable ticket purchases and reducing business class travel. Rockwell then agreed to become a demo program for Amex's automated pre-trip auditing tool, which had a general release in March
(BTN, April 2)."We came back to American Express and said, can we tweak this thing?" Kusek said. "We don't want to have everybody going through this because the company has a lot of other cost-reduction measures that are very aggressive. How do we make this efficient and go after the people that aren't following the policy?"
Before implementing the new policy and tool, Rockwell issued internal communications led by the CFO, who approved the policy and the use of the pre-trip tool, to inform employees of the coming changes. "The CFO supported it 100 percent. The way it's set up is the CFO will have to approve direct staff," said Kusek. "He said, 'this policy is changing and I expect you to follow it.' The message was very clear: Here is the process that you're going to go through; start adhering to the policy."
Two weeks prior to the Jan. 1 launch, a sourcing manager videoconferenced with Rockwell's business units and office locations for training and information sessions, and addressed concerns of some of Rockwell's 4,000 travelers. "We wanted to make sure especially with those heavy travelers that they saw the value and that they understood those reasons," Kusek said. "It wasn't necessarily that they were doing things wrong, but communication of the policy was needed so they knew what the right things were and why and the opportunity for savings."
Kusek and Amex implemented a customized multi-tiered approval process through which an e-mail notification, along with a copy of the itinerary is sent to supervisors of travelers that have booked an air ticket outside of the advance purchase threshold, purchased a refundable ticket or selected a business class seat. If a reservation is not approved by the direct supervisor within 18 hours, it's sent up the ladder to the vice president or director level, for another 24-hour approval threshold. After 48 hours, the request is passed to the sourcing team. "We try to make a determination of either canceling the ticket or saying, hey, somebody is not answering this thing, we need to approve it immediately," Kusek said.
The possibility of a two-day approval time had some travelers who needed an immediate response worried, so a proxy process was installed so an internal "customer service desk in the field" could commit approval.
"One area where we had a concern was in our service group, where we were direct-billing out these travel costs to our customers," Kusek said. "They get a call in the middle of the night and say, I need you to be here in Dallas at seven in the morning, so book a flight. We didn't want those people to get held up."
When the policy initially rolled out, Kusek's team and a Rockwell-dedicated full-time Amex administrator worked with individual travelers to handle their concerns, but now it's business as usual. "Nobody likes to be looked over the shoulder about what they are doing," he said. "The key to it and the success was strategic sourcing and American Express handling this thing with kid gloves from the time the policy went out until when people felt comfortable."
According to Amex, in the first quarter, advance ticket purchase use was up 27 percent, nonrefundable ticket purchases were up 32 percent and business class air travel was down 23 percent.
"We are looking to reduce travel overall as a company, and what we focused on was our internal company travel for Rockwell people seeing Rockwell people," he said. "One of our guidelines as we tweaked this policy was don't negatively affect what we are doing for our customers. If we need to travel with our customers or be in certain places, then do it."