Profiles in Supply Chain Enablement: By mandating, and enforcing, a Corporate Card policy, this manufacturer was able to automate manual AP processes and gain better visibility into its spend, resulting in greater leverage in negotiations with suppliers.
Company: Fortune 500 Manufacturer (Southeastern U.S.)
Company Size: Medium
Company Sector: Manufacturing
Area(s) of Enablement: Payment, Supply Chain Integration & Technology Infrastructure/ERP, Decision Support
Enabler: American Express (New York, NY)
Case Study: This Fortune 500 manufacturer, whose name has been withheld for reasons of confidentiality, was experiencing challenges with its expense process and was looking to gain better control over its spending. The company needed greater visibility into its spending data to help in negotiating better supplier rates, to improve policy compliance and processes, and to reduce accounts payable (AP) headcount.
The manufacturer undertook an initiative with American Express to achieve these objectives. American Express worked with the client to communicate spending policies to employees and to mandate use of Amex Corporate Cards. Under the program, employees were required to use their Corporate Card for all appropriate business expenses. This enabled the company to simplify the employee reimbursement process to set specific days for employee reimbursements, move to electronic reimbursement versus check-writing and implement an automated expense reporting tool to reduce labor-intensive and costly manual processing of expenses.
In addition, by implementing a company-mandated Corporate Card, the company was able to improve its float by reducing weekly reimbursements from processing 600 per week to only processing the reimbursements once a month, which enabled the client to reduce the headcount in its accounts payable department by two. The company also was able to gain control of delinquency management through a garnishment program and to implement individual billing/company pay as an incentive for employees to pay on time.
Elsewhere, enforcing the use of the Corporate Card helped the company capture spending data, enabling the client to gain visibility into its spend through market intelligence reports. The company originally only had visibility into $7.5 million of its travel and entertainment (T&E) spend, but by putting the card solution in place, it was able to access $50 million in T&E spend and then turn around and use this information to negotiate better rates with suppliers.
Finally, the company was able to update its travel policy with more effective controls and guidelines. The new data enabled the client to define out-of-policy principles, including tolerable variances, and the company was able to monitor adherence to those rules through Corporate Card data by analyzing patterns of non-compliance and identifying opportunities to improve policy compliance.
For more stories of successful supply chain implementation, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.