Original Date: 04/20/1998
Revision Date: 01/18/2007

Prior to 1996, ITT Aerospace/Communications Division (A/CD) used a standard process to handle small purchase orders. This process required 25 steps from the time the requester defined the purchase requirements to the close-out point of the purchase order. Typical turnaround times were two weeks for the requestor to receive supplies/services, and 30 to 45 days for the supplier to receive payment. At an estimated cost of $175 per transaction for small purchase orders, ITT A/CD typically completed 4,000 orders for indirect supplies/services that were less than $150, and an additional 3,030 orders on those less than $500. In mid-1996, ITT Aerospace/ Communications Division implemented the American Express Procurement Card program which simplified the procurement process, improved productivity, enhanced internal controls, increased customer satisfaction, and achieved significant savings.

The American Express Procurement Card program uses credit cards that are hard coded with complete accounting and tax information. This approach removes the possibility of errors and allows billing downloads to occur without manual intervention. The program also reduces the procurement steps to 10, and decreases the purchase order cost to $18 per transaction. All purchases less than $500, excluding certain commodities such as chemicals and once-a- year purchases, are eligible under this program. Through the American Express Procurement Card program, ITT A/CD now completes more than 5,000 small purchase orders per year, and achieved a total annual savings of $785,000. Requesters receive indirect supplies/services in three to four days, and suppliers receive payment from American Express in three days. One monthly consolidated bill and one monthly check cover all of ITT A/CD’s transactions.

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