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April 5, 2008

PROCUREMENT 2: It's not just about the money

A very simplistic view of the role of procurement in our industry might be that they are simply making choices about live events based solely on the figures, without any indepth understanding of what we do. The truth is that if this is happening then any buyer is not likely to stay in their job for long. Love them or hate them, professional buyers are looking for value for money not just price. If you don’t believe this then you’re very likely to go out of business.

“If you sold baked beans, the theory is, you compete on price and not service - although Heinz may argue otherwise,” says Mike Bell managing director of live event production services company Clever Works. “If you, as a buyer, invited the best baked makers in the world to name their sales price in an online auction then you’ll end up with the best baked beans at the best price.

Show me the value

“We have been involved in online live communication bids in the past where such auctioning of events services have been hosted by major corporate players – where live events have been offered on a ‘numbers basis’. The key is, with bidding wars, just because you may end up offering the lowest price it still doesn’t mean you will win the work. We, as live communication experts, have to show value and explain added-value.”

Latta: "Only looking at one aspect of an event is
never going to provide you with the answers"

Norwich Union’s Head of Corporate Events & Hospitality, Andrew Latta agrees: “Only looking at one aspect of an event is never going to provide you with the answers. However, the ‘numbers’ are a very important element of any event and must be taken into consideration when planning. Procurement has a very important part to play here and can add significant value to the corporate planners tool box.”

So, if procurement is to continue to take a greater role in live marketing, should professional buyers receive formal training in the discipline, or are good buyers, good buyers wherever they work?

Good practice makes perfect

“A chef, in supervising staff, does not have to be the expert in baking a soufflé but he has to know how to do it and what to look for in the end product if he is to be responsible for what is served to the customer,” says Peter Rand, director of industry relations at events solution company Zibrant. “Similarly, procurement professionals can add much more value to developing good practice if they understand the industry and have experience of good and bad practices.”

This, Rand explains, is at the root of an initiative that is nearing its completion for a Focus Group of senior industry executives to advise CIPS (The Chartered Institute of Purchasing and Supply) on the content of a Good Practice Guide for procurement professionals as to how to go about procuring meetings and event services.

However, Elling Hamso, meeting management consultant and managing partner of the European Event ROI Institute, himself with a procurement background, believes that generally speaking a good buyer should be able to buy anything: “If the buyer is making the decision rather than being an advisor to the meeting planner, he will make sure to know what he needs to know about our industry in order to make the right decision. A good buyer will always make sure that the procurement team includes all relevant knowledge about the product or service being bought.”

Transferable skills
Latta feels that most procurement teams already have what it takes to buy in live events. “Procurement teams have excellent transferable skills and an industry that has been around much longer than ours. In many ways it may be the events industry that can learn from the procurement industry. In my experience, procurement is well aware of the difficulties of procuring the creative and financial elements of the events industry. They have great skills and experience working with a number of disciplines such as marketing and media where purchasing creative elements is as difficult.”

However, it would appear there is a darker side to procurement. “I think important relationships are being damaged in certain circumstances, testing agency commitment to the limit,” says Ian Irving sales and marketing director of brand experience agency Sledge. “It’s a very tight knit and competitive landscape out there. Everybody knows what they are up against in terms of creativity and fees. It becomes tiresome when the tendering process is drawn out by buyers playing the ‘drop your fees game’.

“Additionally, it is an insult when brands run a tendering process simply to see what is out there and ensure they are getting a good deal from their existing roster. I was involved in a tender recently with a major technology brand, when it became very clear (following inter-agency communication) that this was simply a costing exercise and in fact no roster position was ever up for grabs.”

Like any developing service, procurement, in the short term as a function, has to learn on the job – and it appears, for the most part, it is doing this well. It is not just down to procurement to understand live marketers, the industry in turn has to help all its clients understand and appreciate the dynamics of its bids – such as of the elements of a proposal that means it will go over-budget. For many live marketers this is proving a long and arduous journey, but if it’s approached in an honest way it will benefit all parties.

Next week we will be looking at how procurement end events can move forward together

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