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by By Lisa English | February 01, 2011
Procurement's Priorities

Procurement professionals are concerned with satisfying the following criteria in their day-to-day practices, which apply to any spend category.
• Follow an auditable bid process;
• Complete the procurement process in a timely manner; this is especially important in venue sourcing, when timing for holding space can be rather brief;
• Provide measurable cost savings during the course of the negotiation process (usually there are established savings targets by which procurement is evaluated);
• Offer a clear representation of the bid's true value inclusive of concessions, payment, attrition and cancellation terms, and other less conspicuous proposal elements to the decision maker;
• Facilitate an informed decision;
• Practice impartiality in supplier negotiations, and have supporting documentation;
• Show no favoritism; information provided to one supplier should be provided to all.
• Do not disclose competitor bid data to other bidders.
• Document the reasons for the decision-maker's supplier selection.
• Consolidate bid data for reporting and benchmarking purposes.

 

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It's hard to ignore the numbers: Standardized meeting policies can save a company 10 to 20 percent in related costs, according to market research firm PhoCusWright. With many companies looking for every opportunity to pinch pennies, meeting planners are increasingly faced with not only establishing a comprehensive procurement policy that addresses meetings and events, but also ensuring that employees stick to the rules.

Even before the economic downturn, organizations increasingly were launching strategic sourcing initiatives and Strategic Meetings Management Programs (SMMPs), with the goal of driving quantifiable cost savings and reducing risk in a spend category that eluded procurement for years. Since the downturn, this trend has picked up steam, and organizations are taking an especially keen interest in reining in meetings sourced across departments, not just those sourced by the professional meeting planner. The goal is to optimize professional procurement of meetings-related services, taking this important responsibility out of the hands of novices.

You, the meeting professional, should be proactive with regard to procurement policies. Before the CFO hands down the new rules, you should be collecting comparative data, establishing communication channels with employees and searching out best practices.

Collect dataThe first question to ask yourself is, "How much are we currently spending on meetings annually?" Unfortunately, for most meeting managers, the answer is, "I have no idea." Expenses often are distributed across travel budgets, marketing budgets and personal expense reports. To know how much your company is spending on meetings, you must first define the term "meeting." Are meetings only off-site events? Events that include more than 10 attendees? Events that require a vendor contract? The definition might be different for each organization.

Though a company might have its own set of unique metrics that need to be tracked in establishing a meetings procurement program, some common baseline figures are useful to any program. Such metrics include expenditures by vendor or vendor type, by spend or cost category, by meeting type, by business unit or division, and by geographic location. With a baseline of meeting expenditures established, it will be easier to compare actual spend to initial estimates.

Once you have established what you will track, you can begin gathering data. Methods range from simple spreadsheets to complex management programs. Whatever method you choose, it is important to be consistent. Your CFO will be looking not only at total expenditures, but also trends. Are hotel costs going up? Are there more meetings this year? Are fewer people attending off-site conferences? After three years of collecting data, you can begin to craft more strategic policies, and vendors will be better able to anticipate the value of your business.

Meeting managers also should compare their data to established benchmarks, such as those offered by industry organizations like the National Business Travel Association and Meeting Professionals International. Also, establish yearly procurement objectives, either for cost reduction or cost containment, to show upper management that you are doing all you can to support overall business goals.

Legal and procurement departments often lack the domain knowledge to recognize what constitutes a best practice, and they don't have the capacity to become meeting and event experts. You should provide guidelines on what are considered best practices and what is acceptable for common meeting business terms and conditions. Also, offer benchmark rates or costs that they can use as a point of reference. Having this information readily available will streamline the meeting contract review and negotiation process, thereby reducing the time it takes to process a meeting contract.

Build purchasing power
It's easy to understand that if a company consolidates its purchases with fewer vendors, those lucky vendors are more likely to cut the company a deal. Before the procurement department makes a decision on what preferred vendors it will allow, formulate your recommendations on what suppliers you prefer, and communicate your preferences to the CFO. Base your argument on what is good for the company, and provide as much hard data as you can on costs. For example, if your preferred hotel property is 10 miles closer to the airport, calculate how much time and money the company would save on attendee travel.

Once the preferred policy is in place for meetings procurement, the meetings program manager is tasked with making sure employees follow the rules. Many companies are reluctant to enforce harsh mandates for noncompliance, but there are other ways to encourage employees to make the correct decision without threats and punishment. Visual guilt is a popular method to increase compliance by flagging out-of-policy bookings with a reminder to employees about the correct policy. Notifying employees that their managers will alerted to noncompliant purchases usually corrects the behavior quickly.

Establishing standard policies and developing a comprehensive communication plan to inform and educate both employees and suppliers is key. Widespread awareness of the organization's procurement policies and access to standard procedures (often via technology solutions) provides much-needed guard rails.

Seek technology solutionsMeetings procurement technology can dramatically help streamline and standardize meetings procurement processes by bringing site selection, budgeting, registration, payment processing, travel, housing and reporting functionality all into one system.

When it comes to enforcing compliance, SMM software is particularly helpful, as it can filter pre-approved vendors into search results and give creative control to planners while maintaining oversight by travel management and procurement.

Some specific software features that help standardize procurement include the following.
• Automatic meeting request routing to procurement or planning professionals to increase visibility into meeting and event requests before supplier sourcing is concluded and contracts are signed;
• Standard electronic request for proposal (e-RFP) templates, inclusive of consistently asked questions and critical fields of information necessary for sound and impartial decision-making. (Standard e-RFPs also ensure consistent messaging to suppliers resulting in fair and equitable treatment during the procurement process.)
• Side-by-side comparison reports of bid data in a way that clearly identifies bids representing the best value;
• Standard attachments to e-RFPs, such as contracts or hotel addendums, to consistently communicate contractual expectations to all recipients;
• Easy capture and consolidation of bid history, including rates and other metrics used to establish benchmarks and measure supplier performance over time;
• Integration with major travel booking tools;
• Generation of reports on all aspects of your meetings program, and easy sharing of key meetings metrics across departments to evaluate meetings ROI.

Embrace changeChange is hard, but if meeting professionals approach a shift to procurement-driven practices in the spirit of collaboration, the result can be very beneficial. The opportunity for professional development associated with learning new skills and the subsequent expanded scope of your exposure to other areas of the organization can increase your potential for advancement. Be a team player and you are likely to find that the influence of procurement is a positive development for your meetings program.

Lisa English, CMP, CMM, is marketing manager, Strategic Meetings Management, at Cvent (cvent.com).