Talia explains why you would want a preferred supplier program
“Another hot topic for companies is creating a preferred supplier program in their non-hotel categories. There has been great technology that came out allowing companies to E-RFP and better manage their hotel spend. However, that is just a fraction of what companies are spending their budgets on for meetings and events.
You have your production companies, your transportation companies, your DMC’S, and there has not been enough visibility into what that spend is specifically. How can one efficiently aggregate that spend? How can a preferred supplier program leverage that problem?
I think the question is why is this coming now? Why do companies not install this preferred program? I think there has been a couple challenges until now.
The first challenge was our priority. We started with hotels and tried getting hotels preferred.
The second challenge has been the lack of technology that would support a preferred supplier program amongst suppliers and allow for communication across the entire organization of preferred suppliers.
Now that there is technology in the world that can manage these challenges there is truly an opportunity for a company to be able to build this intelligent and efficient program.”
Talia sheds light on one of the top challenges of the event industry, paying suppliers, during this week’s Tuesday’s with Talia.
One of the things that I’m asked about often and when I talk to companies and hear is one of the top challenges is the topic of paying suppliers. In this very unique category – the event industry – you’ve got hundreds of suppliers because you’re doing events globally, you need a lot of local suppliers, and it may be that you only use them once or twice a year. Onboarding them onto a typical company system is a very difficult process that is one challenge.
The second challenge is also the way that payments are made to suppliers. In events, you have a venue you’re procuring, or a speaking you’re procuring, you may have a deposit that is requested, and then there is a balance, but then there is overtime, and then there are these additions. So your typical ERP type purchase order process does not work well for anyone in this industry.
Companies then wound up going to meeting cards solutions, saying okay, there’s flexibility to be able to put the meeting cards, which are sort of like credit cards, in the hands of the event managers or someone central and when they need a payment they can simply go pay and don’t have to go through this onerous process.
Well now after having a couple years of that, there are some major challenges that come into play. The first is around the visibility. A meeting card does not give you the visibility that you need, they may be high level where you could say, “this is all food and beverage,” or “this is all non-food and beverage,” but if you truly look at any company that’s using meeting card and that data alone, it does not give them granule of visibility that allows them to negotiate.
The second issue is around compliance. I hear a lot of stories around finance people trying to chase planners afterwards to get the invoices, meeting cards don’t have individual accountability to it so the company has got to pay it and someone could theoretically be going and using their meeting card for anything.
The third issue is around budget compliance. You often have a budget that’s allocated and you’re using this card and then you don’t get your statement till 30 days later or more and then suddenly you’ve got these bills and you’ve already spent your budget and there’s all these issues with it. There are definitely significant problems with the meeting card and while it gave the flexibility of payment, we lost compliance and visibility.
People are always asking me for what solution there is to it, and there are solutions that are out there and I think people don’t just say, ok we need a meeting card and that’s the only option, or it’s a regular ERP purchase order system. There is that combination that gives you both and Eved is actually one of those offerings that is able to solve that problem.
We think about it where “how do we get everybody everything,” and that’s where our category specific platform comes in and says, alright we’re going to provide a purchase order solution but it’s going to be geared very much toward this business category that’s going to be simple and easy to use and allow the flexibility that’s needed for the payments. And therefore, it gives the flexibility of the meeting card, but the control and compliance of the purchase order.
Systems such as EvedPay enable both suppliers and buyers to eliminate event spend costs.
Spend management attempts to cut costs at the beginning of the source-to-settle process without considering the effects of saving further down the line.
Meetings and events have a lot of small transactions, which can cost more to process than the money being exchanged.This reality creates a sense of urgency to lower costs.
Many systems try to shift costs to the other guy, either the buyer or supplier, but the costs end up getting bounced back. Great solutions are able to look at the entire process and are able to minimizecosts from both buyer and supplier.
Cost savings is the ultimate goal of any spend management solution, but cost savings can come in a variety of places within the source to settle process within a category. So most people think of the sourcing part of the process as driving a lot of the savings, and that’s true; in other words, using good bidding practices to source a venue or an AV supplier, getting several bids, thus making it a competitive event, as well as making your specs biddable and understandable by the suppliers definitely drives a lot of savings.
But a lot of savings in meetings and events also come farther down the line in the source-to-settle process. The more a spend category has high transactional save costs, the more it can generate savings in the rest of the process as well. So meetings and events have lots of small transactions between lots of vendors, and the actual cost of processing that transaction, whether it’s the purchase order on the buyer side, or the invoice on the supplier side, or the payment in the remittance on both sides, those transactions are often as much to handle as the dollar amount of the transaction itself! So a great spend management solution doesn’t look just at one area, it looks at that entire process and thinks about how can we take costs out of that entire process for both the buyer and the supplier? a lot of systems try to end up shifting costs between the buyer and the supplier. So they’ll tell a great story to the buyer about how much they’re going to save, but they managed to do that by shifting the costs on to the supplier. However, this is not a real solution because everybody knows that the supplier is going to figure out some way to pass those costs back onto the buyer or they’re going to go out of business. The great solutions, such as Eved, look at the entire process and think about it from both party’s perspectives, and pull those costs out rather than shifting them from one place to another.
For example: the p-card or the meeting card is a really useful tool for some types of transactions, but it does have this cost shifting element to it, which is: it’s quite attractive to the buyer, but it can be very unattractive to the supplier. Whereas the EvedPay system balances those two needs to be attractive to both parties.
Talia Mashiach | CEO, Founder and Product Architect at Eved:
There’s over $500 billion dollars that are spent on meetings and events by large corporations, and there’s little to no visibility for these corporations to know what this money is being spent on. To not have that visibility, to not know what you’re truly spending and to not have the granularity, that’s just a huge problem.
Jeanne Trogan | Executive Director of Global Events at Dell:
We were losing track of money and spend, it was falling through the cracks. Quite frankly, the biggest consequence of that is that we weren’t running our annual budgets very well. Secondly, our event managers were spending way too much time on manual processes and working across multiple tools.
What Eved really does is the actual ordering, invoicing and payment process which happens on our platform. We are creating event commerce as a category, the automation of buying and selling of meetings and events.
I saw this opportunity to be able to automate the workflow within the planning process so that therefore you create the efficiencies, you also get the visibility into the data and you create compliance around a process.
Having visibility to where we’re spending and with whom we’re spending has allowed us to consolidate those investments with certain vendors. Which in turn gives us volume discounts, which in terms gives us bang for our buck. That’s incredibly important in an era where just about every company is expected to do more with less, and because of Eved, we’re actually able to do that.
Dell really partnered with us to let us come in and understand what their problems were, so that we could really figure out how to solve them. We wound up with a product that is solving a problem not just for Dell, but for all these other customers as well.
J.B. Pritzker | Managing Partner at Pritzker Group Venture Capital:
Entrepreneurs need someone to take a chance on them and Dell was willing to do that. Their reason to partner with Eved is the same reason we choose to invest in Eved and that’s Talia’s qualities and the fact that Eved has built technology that’s enormously meaningful to large enterprises.
Specifically in the case of Eved, it really worked out that a woman owned business had the best idea and solution, and both Dell and Eved are winning because of that partnership.
My name is Bob Solomon and I’m a Board Member of Eved. I’ve spent the last 6 years consulting to B2B software platforms and networks. Prior to that I spent 10 years building and managing the Ariba Network, which helps connect suppliers and buyers for major enterprises around the world.
So Bob: How can procurement, finance, and the business, work together to solve problems inherent in a spend category while also achieving their individual goals?
This is a great question because procurement, finance and the business have three entirely separate goals for any given spend category.
Finance wants to make sure that transactions are:
Allocated to the right cost centers/GL codes
Procurement is primarily concerned with:
Finding the right suppliers
Contracting with them
Ensuring that the business is using those suppliers, and paying the right prices
The business, or planner, is primarily concerned with:
Running greats events
Building a solution that meets those three divergent needs has been a real problem for a long time. In terms of the history of supply chain management solutions, the first solutions were all oriented to accounting. There was no Internet, so you didn’t have to worry about interacting with the supplier other than via phone or fax. Therefore, the ERP lead the way and these were solutions for finance. In the mid 90s with the advent of the Internet and procure to pay solutions, you had new solutions that were built largely for procurement and then integrated to the ERP.
The first generation of procurement solutions did a good job of helping the procurement department identify, negotiate, lock down contracts and transactions with suppliers. However, they weren’t really built with the user in mind. The latest evolution has been to solutions such as Eved that try to meet the needs of procurement, finance and the business.
So in category after category whether its travel, temp labor or in this case meetings and events, we’ve seen this third generation of solution that has many of the aspects of the first two generations. However, this new generation adds an interface that makes it easier for the business to use, and adapts to the particular needs of the category like meetings and events.