Preferred suppliers, once a rarity in corporate meeting departments, are catching on, according to a new study by American Express Global Corporate Services. About 40 percent of respondents use them, and that number is likely to go up as more companies look to streamline processes and reduce costs. In fact, 71 percent of planners and suppliers responding to Meeting Professionals International's 2005 Future-Watch survey said that developing partnerships was among their goals for the year.

“The big companies are already using preferred suppliers, the midsize companies are either doing it or working on it, and smaller companies are kicking around the idea,” says Daphne Meyers, president, Red Barn Group, Durbin, N.D.

Before starting her own independent meeting planning company last year, she was a meeting planner for Microsoft Corp., so Meyers is well aware of what it's like on both the planner and supplier sides of the fence. As a former member of MPI's Global Corporate Circle of Excellence, she also helped to research and write a white paper on the subject, 360 Degrees of Partnership: Uniting Planners and Suppliers Through Collaborative Business Processes in Strategic Meetings Management Environments, released in September.

“The utilization of preferred vendors as part of a strategic meetings management program maximizes process mm efficiencies by, for instance, simplifying RFPs and contracts, streamlining day-to-day tasks, and increasing volume savings and discounts,” the white paper concludes.

Working from a list of three to five preferred vendors for each category of spend enables companies to buy in bulk, leverage their spend across the company, and reduce costs. Just as importantly, it eases the hiring and RFP process because all the vendors are pre-approved. It also helps with compliance because the vendors have already been screened to meet company standards.

While the end list usually contains between three and five vendors per job, the total list of preferred meeting suppliers a company uses can number in the hundreds if you include audiovisual, entertainment, logistics, decorators, and others. The challenge for planners is developing a master list and signing service agreements with vendors across all these different categories.

Of course, companies ultimately choose their suppliers based on the job and the location of the event. For a meeting in a particular city, for example, a company might have the major national chains on its short list, along with a preferred local property. Companies will invite bidders not on the preferred list on occasion, Meyers says — but there usually has to be a good business reason for doing so.

As companies continue to turn to preferred suppliers, what will become of smaller suppliers? The likelihood that these mom and pops will get on preferred lists at large corporations is slim, says Meyers. She believes the best strategy is for them to partner with larger suppliers. “If you partner with companies that are already on a preferred supplier list, and the client says I need XYZ service, the client doesn't really care how that happens. They just don't want to have to deal with adding a new vendor to the list.

“It's really like subcontracting,” she adds. That's what Meyers does with some of the larger meeting planning companies with which she works. “I have two different partners, depending on what my services are, that use me as a subcontractor.”

For all the benefits, the preferred supplier model does change the nature of relationships in the meeting business. “Sometimes, planners feel a little bit disconnected from the relationship,” she says, particularly if preferred suppliers work through the procurement department. But overall, she says, the benefits of using them outweigh the negatives.