THE PUSH BY procurement to oversee travel and meeting sourcing is still relatively new at most U.S. companies. But in Europe, procurement has been involved with meetings and events for several years, with its influence ratcheting up over the past three or four. According to a study by George P. Johnson Co., Richmond, Surrey, U.K., about 65 percent of procurement managers in the U.K. say procurement's involvement in event services purchasing has increased over the past five years. Forty-six percent predict that events will become a high priority in the next few years. So there is a lot to learn by looking across the pond.
Case in point: At Organon, based in Oss, The Netherlands, the two have been working together successfully for more than four years — and it was meetings that drew procurement into the process.
That's when Birgit Roeterdink, who was then the head of travel and meetings, approached the global head of procurement at Organon about setting up a procurement arm for her department. Management liked the idea so much that they created a new position for her: global procurement director for travel and meetings. In that role, she has initiated some innovative programs, including an eight-member travel and meetings council of meetings, procurement, and travel professionals from various countries who work together to make buying decisions and set policy.
The council creates meeting- and travel-related policies, develops preferred-supplier lists for the company's major markets, and confers on contracts and RFPs. It also develops best practices and exchanges ideas from the members' respective countries, and watches industry trends.
Minutes of council meetings are forwarded to company management, and summaries are posted on Roeterdink's intranet site. The site also has sample RFPs, contracts and service-level agreements for suppliers, and other tools for people planning meetings and travel.
The council has been a huge success, she says, and it created “a buy-in for joint strategies and procedures across the company.”
While preferred suppliers are still fairly uncommon in the United States and are used mostly by larger companies with centralized meeting departments, they are commonplace in Europe.
Preferred suppliers are considered to be an arm of the company in many cases. For instance, at London-based AstraZeneca, procurement officials meet with preferred suppliers once or twice a year for what they call a “performance business review.” The meetings allow suppliers to understand the company's goals and gives the company a chance to hear about suppliers' expectations. They also hold “Awareness Days,” which, says Jayne Stephens, global buyer, conference agencies, “let our buyers understand the services provided and by whom.” AstraZeneca also schedules video- and teleconferences throughout the year when specific information needs to be shared with suppliers. It also has a Web site exclusively for preferred suppliers.
However, procurement's involvement with meetings does pose some potential pitfalls. As the next logical step in procurement's growing role in meeting planning, purchasing departments in European companies have begun to add staff with meeting backgrounds to gain better insight into buying in these sectors.
In addition, the U.K.-based Incentive Travel & Meetings Association is collaborating with U.K.-based Chartered Institute of Purchasing and Supply to develop best practices to help avoid common meeting procurement hazards.
One such hazard is making procurement officials the only contact for third-party agencies. Locking the internal planners who are running the event out of the discussions, says Charles Robinson, executive director, ITMA, is “a recipe for disaster.” Another mistake: Procurement officials parachuting in at the last minute to exert their authority over some detail — usually having to do with cost.
Robinson is also puzzled by companies that have preferred-supplier lists but consistently award projects to the same one or two suppliers. It's hardly worth a supplier's effort to get on a list if the company is constantly bidding on projects to no avail.
Finally, an unethical practice that concerns Robinson: when procurement takes a pitch from a meeting planning company, turns it down, and then takes that company's ideas and ask another supplier to do it for a lower price.