The typical approach to controlling meeting costs in pharmaceutical companies is to do so externally — that is, to manage expenses through relationships with suppliers and by negotiating. But Bristol-Myers Squibb Co. has taken an unusual and forward-thinking approach, implementing a system called consumption and specification management (CSM).
“In addition to cost-savings as a result ofnegotiations, you need to step back and look at why you're doing things, how you're doing them, where you're doing them, and who is attending,” says Lynn Ridzon, director of global meeting management at Bristol-Myers Squibb, Princeton, N.J. By asking these questions, Ridzon has been able to place meetings at less expensive venues, combine multiple meetings, and shed costs by implementing per-person meeting caps. That, in a nutshell, is CSM, Bristol-Myers Squibb's system of assessing internal meeting and travel consumption patterns to identify needs and eliminate unnecessary expenditures.
In the first year of implementation, the company has saved more than $6 million on meetings alone — this on top of the negotiated savings that the company realizes annually through its consolidated meeting management processes. For 2005, about $10 million in incremental savings is targeted.
The concept of consumption management is not new within procurement circles, but as a formalized travel and meetings policy, it's cutting-edge, says Anna Flynn, vice president, Institute of Supply Management, based in Tempe, Ariz. “I really haven't seen but a few companies where people have actually put a program together and formalized this initiative.”
Earlier this year, Flynn took an in-depth look at the initiative in a case study called, “Consumption and Specification Management: Bristol-Myers Squibb Company,” published by CAPS Research, which is an arm of ISM. “The consumption and specification management program is a key piece of BMS's evolution toward procurement excellence,” writes Flynn in the report.
Here's how this simple, yet progressive cost-avoidance strategy was implemented at BMS.
More Clout for the Meetings Team
Two years ago, the procurement department at BMS approached Ridzon with the concept of CSM — which it was ultimately planning to roll out company-wide. Meetings were on the first wave. “Meetings and travel were kind of our flagship departments for this initiative, because we have a lot of spend in those areas,” says Bill Stirling, senior director, global strategic sourcing at BMS. Subsequently, global sourcing and group meetings brainstormed ways to implement savings through consumption management without impeding productivity.
It helped that BMS already had had a centralized meeting department for 10 years and a proprietary system of tracking meeting spend called MARRS (Meeting Analysis Registration and Reporting System). “Data is key,” says Stirling. “It's fortunate that's Lynn's team has a pretty robust data repository,” he adds, because without a centralized process of tracking meeting expenditures, CSM is less effective and more difficult to employ.
The first step was to give Ridzon and her staff more authority. “She needed more clout in terms of compliance,” says Stirling. So, it became policy that all meeting requests had to go through [the] group meetings [department]. Previously, it wasn't a mandate and in some cases, administrative assistants within a particular department were booking meetings. “As much stuff as we can push into Lynn's group to manage, the better off we are because she has the team in place and the reporting,” he says.
Ridzon has a staff of 15 that is divided into three areas: internal meetings, external meetings, and the resource center, which sends out the request for proposals, does site searches, negotiates the, produces budgets, and tracks expenses.
In the past, Ridzon's staff would have worked within the parameters of the meeting request to negotiate the best deals on meeting space, hotel rooms, and airfare. Now, they are supported by the CSM policy to take a closer look and ask the right questions to figure out ways to avoid costs.
The process of probing for more information — and having the authority to do so — is at the heart of CSM. “It's really about needling down to what are the objectives of the meeting and what do we need to do to meet them,” says Ridzon.
For example, when a request for a meeting comes in, one of the first questions Ridzon asks is: “Is this a national meeting or a regional meeting?” By looking at the audience and what part of the country they're from, she can determine the most cost-effective place to hold the meeting. If a group from the Northeast requests a meeting in Florida, Ridzon might suggest a more regional venue to save money on airfare. Or, if a request comes in for a training meeting at a resort in a top-tier destination, she might funnel it to an airport hotel or a smaller city.
“Do you really need a resort if you're going to have a training meeting that runs from 7 o'clock in the morning until 10 o'clock at night?” she asks.
Another cost-saving measure is to use meeting space that BMS owns. The company owns space outside of Princeton, N.J., where one of its main offices is used for sales training meetings. “We found that the utilization rate was only about 30 percent,” says Stirling. Now they use the space for smaller meetings that would have normally booked space at an external venue in the Princeton area.
“There is a lot more scrutiny,” adds Stirling. Not only are venues challenged, so is attendance as head count is reviewed to determine which, and how many, people really need to attend a certain meeting.
Spending Caps and Meeting Combos
As part of the CSM initiative, Ridzon instituted per-person, per-night caps with different spending limits for various types of meetings. “We have eight different meeting types and every meeting goes into one of those buckets,” she explains. From training meetings on the low end to incentive trips on the high end, each type of meeting has a maximum allowable per-person, per-night rate. While not set in stone, these guidelines put a stake in the ground and help the staff determine budgets. For a company that runs about 300 meetings annually, the measure has saved thousands of dollars in the past year.
The caps have gotten a lot of attention in the organization, particularly from senior executives. “Often times we found that senior management didn't know the number of people that were going to meetings, they didn't know what the overall expenses were per-person compared to what they spent they year before,” says Stirling.
Another lever Ridzon uses to reduce consumption is combining multiple meetings. “In our consolidated meetings environment, we are able to review disparate meeting requests and recommend that certain meetings be joined together because they [have] the same audience,” Ridzon explains. “So, you're saving thousands of dollars, minimally, by combining two or three or even four meetings into one.”
Her meetings group has done this several times in the past year, most recently with a training meeting, a national sales meeting, and a marketing meeting. They were all national meetings, scheduled around the same time, and had crossover attendees. So, meeting staff picked a site in the middle of the country, Dallas, and booked a venue for a week with meetings scheduled back-to-back-to-back. By limiting travel expenses, hotel room nights, and venue costs, they saved thousands of dollars and all three groups' meeting objectives were met.
As the meetings department reports up through corporate travel, there is coordination between the two areas. Within travel, consumption reduction policies include mandating 14-day advance airfare bookings, eliminating first-class travel, and reducing one-night business trips.
So far, the feedback from both executives and departments heads has been positive. “I think everybody's on the same page here,” she says. “How can someone say, ‘You're wrong, I really want to spend $50,000 more,’” she asks. “From a business perspective, what we're doing makes all the sense in the world.”
Governance is paramount, says Stirling. “We don't want to slip back to where we were, so we have spent a lot of time putting a structure in place.” In cases where department heads have objected to meeting recommendations — which has happened, but on a limited basis — there is an appeals process. But change requests must go through the proper channels and be supported by a justifiable business reason.
“We are not the meeting police,” says Ridzon. “We're just making good, sound business proposals.”
In fact, a big challenge is imposing such a program without upsetting the internal clients and meeting attendees, states Flynn. If the accommodations or the venue or the transportation is inconvenient or unsatisfactory and impacts the meeting program, worker morale, or productivity, these kinds of cost-avoidance measures can backfire. “The real danger is not fully capturing all the intangible costs,” she says. “If you start cutting back on things that may seem like a luxury but may be essential to creating the right learning environment, you'll have a much less effective learning environment.”
The best way to get buy-in from attendees on changes to meetings is to identify and consult the “power users,” or people who attend a lot of meetings. “Get their input upfront on what is it that they really care about. Then you can begin to see what kind of resistance you're going to get and learn from them,” Flynn says.
Embedding the CSM concept into the organization is critical, says Stirling. “When people spend money, they need to feel like they're spending their own money,” he says. That's not always easy, particularly since there's always been a “spend it or lose it” mentality towards budgets. But BMS provides training for all staff asked to employ CSM, and involves employees by asking them for their money-saving ideas through an “idea bank.”
An effective CSM program also requires a symbiotic relationship between procurement and meeting planners, states Flynn. “The big idea is to bring a lot of structure and discipline, from a sourcing standpoint, to meetings and travel. Meeting planners have to really be the subject-matter experts — they have to bring to the table all those intangible things that can really add a lot of value.”
At BMS, meeting planners run the program but maintain a close working relationship with procurement. “There was a lot more interaction when we were rolling it out, but now it runs pretty smoothly,” says Stirling. Now they talk on a weekly basis and Ridzon attends monthly review meetings with Stirling and his staff. She also participates in quarterly reports to the chief financial officer.
When procurement came to Ridzon with the CSM initiative, she embraced the change, but not without impressing upon procurement the nuances of meetings and events. “Meetings are a different a type of category. You are not just purchasing a commodity, you are really purchasing a service,” she says. Then there is the whole supplier-relationship management part of the job. “We were able to communicate that sourcing meetings is something that's different from transient travel and does require expertise in the area.”
While CSM requires consistent processes and procedures for placing meetings, Ridzon says it's important to look at each meeting individually.
“Each meeting has its own personality and needs,” she points out. “So you have to understand what the objectives are.”
Ridzon Says No to
The push in the meetings industry these days is for planners to measure ROI — assess and demonstrate the value of meetings, and thus elevate their own status within their companies. Meeting Professionals International has thrown its support behind the ROI Methodology, developed by Jack Phillips, founder of the ROI Institute, Birmingham, Ala., as a tool to accomplish those goals.
But Lynn Ridzon, director of global meeting management, Bristol-Myers Squibb, Princeton, N.J., is bucking the tide. She thinks the ROI system is impractical for meeting planners for several reasons. For one thing, she is not interested in taking responsibility for meetings' ROI based on meeting content. “I wouldn't even know where to begin, and believe me, I have a lot of experience in meetings management,” she says. In addition, Ridzon says the ROI system is just too unwieldy. “The processes they're suggesting people use to measure ROI are so convoluted that nobody who manages a substantial number of meetings would ever have the time or resources to be able to implement the process” she says.
MPI brass, as well as Phillips, acknowledge that the methodology is not for everyone. Monica Myhill, president, Meeting Returns, Littleton, Colo., who has a partnership with Phillips to conduct ROI impact studies, concedes that the methodology is difficult to implement without some say over meeting content. Certainly, planners can provide input on content or suggest venues or setups for certain types of seminars. “But we're not in a position where we are setting the objectives of meetings; we are supporting the communication of that message through a meeting program,” says Ridzon.
Nonetheless, Ridzon thinks the CSM initiative makes more sense for most planners than ROI and is a more efficient and effective way for meeting professionals to prove their value. (As explained in the main story, with the CSM system, planners develop cost-saving strategies by changing the way meetings are produced; for instance, by combining multiple meetings.) “It is something you can control. And it's right in your own backyard — you know this stuff,” she says. “You don't need to worry about the content of the meeting. If logistics management is your primary responsibility, you are there to support the ability of the meeting host to get their meeting objectives and message across in the best possible way.”
Industry leaders often talk about the need to raise the profile of meeting planners within their companies and the business world. Well, having saved her company an incremental $6 million in 12 months, Ridzon has certainly caught the attention of company executives: “When they're looking at a huge spend for meetings, and it's being managed appropriately, and you're showing great cost-savings, then you're definitely at the table.” Bill Stirling, senior director, global strategic sourcing at BMS, says he is working to raise Ridzon's profile within the company. “As we find more and more benefit (to the CSM program), we're looking to expand her influence to meetings around the globe.”