Strategic sourcing and contracting
Finding the right location for your meeting or event is essential to its success. When selecting a hotel, many event planners may only weigh up the tangible elements, such as the meeting space, sleeping rooms, and amenities, and contract the basics, such as the room rate and block. But you may be missing opportunities to leverage your company’s overall purchasing power or may even be exposing your company to risk. This is why strategic sourcing and contracting are key to your event’s success.
What is strategic sourcing and contracting?
Strategic sourcing and contracting is just a piece of a larger puzzle, an approach called strategic meetings management (SMM)/strategic meetings management program (SMMP) or managed meetings.
According to GBTA, SMM is “the management of enterprise-wide meeting-related processes, spend, volume, standards, suppliers, and data in order to achieve measurable business objectives that align with the organization’s strategic goals/vision and deliver value in the form of quantitative savings, risk mitigation, and service quality.”
When it comes to sourcing and contracting, these principles are applied by creating preferred networks, standardized contracts, addendums, and processes around sourcing and negotiations. The goal is to ensure that every property selected and contract signed aligns with your company’s overall meetings program goals.
Strategic sourcing and contracting has many benefits, but at its core, it provides savings, reduces risk, and provides for higher service levels.
Savings
Creating a network of preferred suppliers gives you access to lower negotiated rates and better concessions. Studies have shown that taking a strategic approach to sourcing yields 10-25% savings during the first year of application.
Reduced risk
By standardizing contract language and clauses such as liability, attrition, cancellation, confidentiality, and others, you are protecting your meeting and company from risk and potential financial penalties. Cost avoidance is essential to a well-thought-out contract and could add up to huge savings for your company should the unexpected happen. Although no one ever plans to cancel a meeting, things happen, and having standard clauses in place can prevent enormous fees from being incurred.
Duty of care and crisis management response
When a company has a strategic sourcing approach, it gives greater visibility into where and when all meetings are taking place. When disruption or risk events occur, this helps a company know if they have any people in affected areas. Additionally, in long-term crises, such as a pandemic, visibility helps manage the overall strategy for proceeding with or canceling each meeting contract.
Higher service levels
When you develop relationships with preferred suppliers, they begin to know your company culture and attendee expectations and proactively anticipate your needs. To take it one step further, you can develop mutually agreed-upon service levels and include them in contracts to ensure expectations are met and exceeded.
Sources:
MeetingsNet: Getting Smart About Strategic Sourcing
BTN/Cvent: Best Practices in SMM Strategic Sourcing
Cvent: Strategic Meetings Management Resources
GBTA: Building a Strategic Meetings Management Program
