From sourcing stone for the Egyptian pyramids to fueling the success of Fortune 500 companies, procurement has played a key role through 5,000 years of human history. Tell that to meeting professionals, however, and they might grumble. Sure, they’d say, procurement is important, and we even share some of the same goals — like finding the best providers at the best price — but why does procurement have to get involved in our work so often?
“When I hear my industry counterparts talking about it, they want to understand how they can better educate their senior management to say, ‘Hey, I can do the same thing that they can do, and I know my industry better,’” said Megan D. Tate, CMM, senior manager of finance and events for Petco Animal Supply Services. “‘I know where my negotiation points are, and where I can bring expenses down to create more value for the company.’”
Tate is one of the lucky ones: Because Petco’s events department predates its procurement department, her team is mostly left alone to spend their multimillion-dollar budget how they see fit. But they’ve also had to prove their skill and abilities over time — and Tate has developed a solid working relationship with her procurement colleagues. “Every few years the question comes up as to whether or not [procurement] should be handling our contracts,” she said. “We don’t have to work directly with procurement, but a lot of that is due to us ‘earning’ the ability not to.”
However, as an avid networker (Tate was one of PCMA’s 20 in Their Twenties honorees in 2014), she hears from industry colleagues how much time can be involved working with procurement.“On the meetings side, how do you make sure that you’re not spending all your time educating your procurement partners on our industry instead of getting work done?” Tate said. “[Procurement] does great on indirect spend, on IT contracts, and many other purchasing activities for the enterprise, but when it comes to hotel contracts or technology for meeting spend, they might not have a clue what they’re doing, and we do.”
Someone who works in procurement, such as Seth Balsam, global director of corporate procurement for technology provider Ciena Corporation, might not necessarily agree. “We’re always asking, how do we make this happen in a fashion that works, and makes people successful in their goal at the end of the day?” Balsam said. “Old-school procurement was, where’s the buck? My team has always said, what’s the total cost of ownership? How do we fit that in with the business needs in the context of what we’ve got?”
About a decade ago, corporations began involving their procurement departments in the meetings supply chain, giving them ultimate say over goods and services such as venues, hotels, travel partners, catering, technology providers — basically, almost every aspect of live events. For meeting professionals who work hard at building relationships and excel at negotiation, requiring sign-off from a procurement team — or even having procurement run the RFP process — can be a hard pill to swallow.
When you’re able to go in and speak their language, that’s a lot of it. A detailed scope of work may be the best weapon in the quiver.
Is the strategic focus on the big picture that Balsam describes helping to guide the relationship between procurement and events teams down a higher road? Possibly. “I was on the board of MPI in the mid-[2000s], and I remember the wringing of hands about procurement,” said Michael Owen, managing partner of EventGenuity, a meetings-management service provider. “It was the big issue that was upcoming — the role of procurement — and you don’t hear that anymore. I don’t mean that it’s not something that we have to deal with, but clearly, progress has been made.”
Are events and procurement seeing eye to eye in a way that wasn’t possible in, say, 2007? If they take time to listen to and learn from one another, the answer might be yes.
LEAN AND (NOT SO) MEAN
McDonald’s Corporation has been undergoing a major restructuring since 2015. Kelley Butler, McDonald’s director of meetings and events, said her department now works with procurement more closely than ever. “Part of our organizational strategy for our department moving forward was to determine what expertise was needed internally for executing the critical meeting and creative work for the business,” Butler said, “and then determine what should be done on demand or through a managed-service provider.”
Like many meeting professionals, Butler sees procurement as being especially adept at negotiating commodities, but thinks her profession might have the edge when it comes to negotiating services. “The events side of it is something new that [procurement] has taken on and bitten off,” Butler said. “When it gets down to a service level, and a service level that involves creativity as part of the process, then all kinds of things escalate costs.”
Butler invited the internal procurement team to see the behind-the-scenes goings-on at McDonald’s Worldwide Convention 2016 in Orlando this past April, and thinks it was a constructive strategy toward bringing the two sides closer together. “In order to collaborate as a group to reach the end result, you need to understand the critical decision points for each side,” she said. “Upfront, it’s also about establishing how important relationships [with suppliers] are when you are trying to buy and leverage your spend the best possible way. Those transparent relationships with suppliers are critical. If you don’t have those, when business goes up or down — which we know it does on a consistent basis — you can’t adjust, because you’re just another dollar in the bank.”
Butler also realizes that the numbers and intelligence that procurement compiles can be immensely useful to her work. “Data analysis is so important — to know what is right on the street from a rate-card perspective, and then challenging where some of those folks are doing markup upon markup versus cost-plus-fee,” Butler said. “That’s where it’s helpful having [procurement] at the table, to be able to help you to assess the best pricing model to offer for your stakeholders to meet your objectives.”
LOOKING FROM THE OUTSIDE IN
While planners such as Butler are often trying to advocate for their suppliers to procurement, those suppliers can get caught in the tricky spot of selling themselves to both sides — giving them a unique perspective on the procurement process. “We’ve had to work harder at proving our value, but the truth is, so have meeting planners,” Event-
Genuity’s Owen said. “I no longer see procurement as the evil empire but [rather as] another internal client, let’s call them, to win over occasionally.”
From Owen’s perspective, knowing how to talk to a client’s procurement department on their level is the cornerstone of a symbiotic relationship. “If you’re able to go in and speak their language, that’s a lot of it,” Owen said. “A detailed scope of work may be the best weapon in the quiver. And a term that procurement people understand is ‘value.’”
Proving that value is not without its challenges. “We had one client whose procurement department planned a conference, and we handled everything for them,” Owen said. “I will tell you that our first year with them was extraordinarily difficult, because they looked at everything as a commodity, and we provide a service — we’re not a commodity. There were trust issues. Until they get to know you, they have really no reason to trust in you, so you have to earn the trust. Earning the trust is also demonstrating your value.”
Persistence and open communication eventually paid off, however. “If we could have fired them the first year that we worked with them, we would have,” Owen said. “They were miserable, and so were we, frankly. Everything was questioned. But they have turned into an excellent client. “
Trust likewise drives and bolsters the relationship between procurement and events at Ciena. “My personal philosophy is that a category manager who runs a specific category has a solid grounding in that category,” Balsam said. “If [Ciena] is all about velocity and making things happen fast, where does it make sense to pare back my involvement?” And he walks that talk, giving Ciena’s global events department free rein when it seems most beneficial to company operations.
Robert J. Wilson is president of Meeting Evolution, which offers software systems that track meeting-services sourcing and costs — so he has a dual view, from both vendor and tech-support perspectives. “Procurement cannot buy venues or meeting space for an event like they buy paper and pencils and tape,” Wilson said. “You can’t push the price as low as possible with an expectation of getting the same level of service at, say, a hotel.”
Wilson often has to sell to both corporate meeting planners and procurement officers, and sees mistrust on both sides. “Procurement is strictly numbers, dollars and cents, and procurement’s going to have a totally different perspective on how a [software] system is being used,” he said. “Each uses the systems differently in regards to how to get their jobs done. A planner is more focused on the events that they’re responsible for, versus procurement, which wants as much as possible to have an aggregate picture of all spend, from sleeping rooms, to food-and-beverage, to airlines, travel, and Internet.”
Actually, the aggregate picture can be like treasure for the planning side — if procurement shares it, which they might not always do. In the end, it is transparency that both sides should strive for, according to Wilson. “A planner may not have the visibility to the aggregate spend that the organization does,” he said. “Is there a way that the two could work in concert with regards to sharing information, so that planners can be more proactive in negotiations with the supplier community? Because if the planner understands that total spend, the relationship, and the value of the organization to the supplier, that’s important. If the two could share more information, they would be able to leverage their information better.”
“The truth is that the only thing attendees leave these meetings with are memories,” Owen said. “It’s not necessarily about saving money, it’s about investing differently. That’s a conversation that I love to have with procurement people — talking about what they do, and talking about that spend in terms of an investment rather than a cost.”
PREACH — AND TEACH
Even though she operates independently of the procurement department, Petco’s Tate appreciated a recent education effort on the part of her colleagues there. “Our procurement department brought in one of their supplier partners that helps them assess and negotiate large IT contracts, and they talked about different negotiation strategies from the supplier perspective,” Tate said. “When you talk to a sales rep in any industry about what gives them leverage over you when you’re purchasing something — that was something that could easily translate to what we do. It was a nice tie-in between our group and what the procurement team does.”
I think our industry is a little dated in that we rely heavily on relationships, and we think that that’s going to get us the business, or it’s going to be the prevailing factor in determining who we work with.
It also helped Tate see how malleable professional dynamics can be. “I think our industry is a little dated in that we rely heavily on relationships, and we think that that’s going to get us the business, or it’s going to be the prevailing factor in determining who we work with,” Tate said. “From a corporate standpoint, the business doesn’t care about that. It’s an expectation of my role that I wouldn’t hesitate for one second to choose a new vendor who’s providing a better deal over someone that I’ve worked with multiple times if there was compelling reason to do so.”
McDonald’s Butler agrees that meetings “is very much a relationship-based business,” but that those relationships, more than ever, need to evolve with and serve the bottom line — always. “I think procurement has been very helpful,” she said, “in the sense of sitting across the table and helping us think about it differently.”
‘What’s the Best for the Business?’
Last year, when Michael Greto joined Georgia-based Ciena Corporation as director of global event marketing, he came from a Fortune 100 company — and discovered that within Ciena’s smaller structure, he was often trusted to source suppliers directly for some of the 200-plus meetings, customer experiential events, and incentive programs his department leads each year.
“For all of the smaller internal events and meetings that take place, where we churn through them, that’s small dollars, and we really don’t have a whole lot of exposure to the world, so to speak,” said Seth Balsam, Ciena’s global director of corporate procurement. “It’s internally focused. The thought was, from a velocity perspective, it made sense for Michael’s team to run these smaller events with very little input from the procurement team.”
Lines of Communication
For Ciena’s larger programs, such as its SKO (sales kickoff) event, procurement handles the supply chain, but keeps the lines of communication open. “Six months out,” Balsam said, “Michael’s team picked up the phone and said, ‘Hey, we’re six months out, and we want to understand what’s going on in the market right now,’ and they gave us basically a list of the requirements that they had for the services.” Procurement then runs the RFP process. “We’ll pull the input back from the market and sit down with Michael’s team, vet the results, and give them the information they need to make a smart and informed decision.”
That collaboration can continue right up to the event. “Michael and I were on the phone late one night before our sales kickoff last year. It was like Friday night at 10:30, 10 days in advance of this thing,” Balsam said. “It’s chaos, because we’re working probably eight agreements in parallel. We’re double-checking the work that a third party had done for us that neither of us was really that pleased with. We were eyeballing this stuff and going back and forth, and there were just some silly things in the hotel contract that we both agreed on had to come out immediately. We had that dialogue, and it happened that night. There were tens of thousands of dollars’ worth of savings associated with it, and boom, we agreed on it, it was done, it was executed in a couple of days. It just worked.”
Greto appreciates that Ciena’s procurement team respects the relationship-driven nature of his work. “From our side of the fence, [meetings] have to do with relationships with our vendor partners, specifically our hoteliers, production companies, and our DMC partners and our production teams — the people that are the feet on the street, working around the clock to execute a successful program, and the intensity that it takes to execute something like this,” Greto said. “Your relationships are key in getting what you need to get the job done. I haven’t met anybody with whom I have a strong, respected relationship in this industry where we haven’t been able to work together and come to a resolution on price points and total cost.”
Greto sees his legal and procurement departments as partners, too. “Growing up in this industry over the past 23 years on all sides of the business, I think procurement and legal are huge components of successfully setting yourself up to mitigate risk to the company and execute a successful program,” he said. “Whether that’s an internal employee program or an external customer-facing program, legal and procurement are really your right and left hands, helping guide you along.”
At Ciena, procurement definitely doesn’t work in a vacuum. “What’s the best for the business? How do we make this happen in a fashion that just works and makes people successful?” Balsam said of his team’s internal dialogue. “That’s the goal at the end of the day. At Ciena, it’s all about velocity. What you don’t want to do is build a juggernaut that’s so unwieldy that it just blows things down. There’s a balance to be struck.”