Talia discusses how, when in search for a procurement solution, companies often give up either flexibility or visibility.
“During the last six or twelve months has had a lot of talk about payments. We are hearing about payment in the world overall and even more in the consumer market. Examples like Bit coin, Apple Pay, E-payments and all types of others. People are starting to look at it that it does not have to be done in the traditional way that it was done before.
Also, there is a huge move for companies to move away from paper check and away from processing. So when it comes to the meetings an events category this issue has been raised in conversation. The challenge with business is that there has been the traditional pay process and the payment has been the final and controlling peace.If you could ensure that the boxes have been checked with data and proper approval, then that is easy to control. If you do it the other way around and initially give the credit card followed by checking the boxes, you start looking for where everything is and it gets mixed up which creates challenges.
In our industry, there’s a battleground that some people don’t even notice: Innovators vs. the status quo. Attend a conference and ask the simple question, “are you willing to invest and partner to solve your problems or is what you do and how you do it okay for now?”
What are the different answers you’ll get?
Innovators are looking every day to get better and find better solutions for their current processes. They’re willing to take the risk and put a solution forward, even if it may fail. Being a trailblazer means you’re constantly trying and innovating.
The status quo is typically happy with the way things are and don’t want to ruffle current practices. They wait for others in the industry to do the heavy lifting and then adopt new practices once it’s mainstream. I don’t think the status quo even realizes or admit they’re in the status quo.
Great companies are innovators, not status quo. And they’re employees are innovators. I’m starting to see that companies who stand out as innovators cultivate innovative employees and management who are going to continue to look and bring new solutions to improve their company.”
“Talia discusses preferred supplier programs from the supplier perspective.
“A supplier program will create efficiencies, improve qualities, and create cost savings. Some of the ways that this would happen is based on how the supplier engages with others.
When I had my event company, I sought out companies that had preferred supplier programs for one main reason. Rather than having to hit every single stakeholder within the organization and reselling them repeatedly we would sell ourselves as a company that wanted to be a preferred supplier.
The efficiencies for a supplier to know that they are on a limited supplier program will in turn offer discounts and comfort knowing where they stand. A preferred supplier is only as good as their last event. Therefore, by giving feed back and allowing them to understand what they did wrong immediately, suppliers will benefit significantly for the future. Suppliers who receive immediate feed back after an event will improve their performance by over 30%. This improvement is due to two underlying reasons: One is that they need to know what they do and they need to know that you are measuring their performance. This allows them to continue their business while allowing you to continue building a strong relationship with these suppliers.
Overall, a preferred supplier program is beneficial to a company for these three main reasons: Efficiency, quality, and cost savings.
“Most importantly, true strong relationships are formed with customers through preferred supplier programs.”
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.