Finding the right location for your meeting or event is essential to its success. When selecting a hotel, many planners may only weigh the tangible elements, e.g. the meeting space, sleeping rooms, amenities, etc. and the basics of the contract like the room rate and block. But this approach does not give you a complete view of the location and its potential impact to your event and budget. This is why strategic sourcing and contracting is key to your success.
So, what is strategic sourcing and contracting exactly? Strategic sourcing and contracting is just a piece of a larger puzzle, Strategic Meetings Management (SMM). 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 through the creation of preferred networks, standardized contracts and addendums and processes around sourcing and negotiations. The goal is make certain each and every property selected and contract signed aligns with the goals of your company’s overall meetings program.
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 taking a strategic approach to sourcing yields savings of 10-25% during the first year of application.
Reduced risk: By standardizing contract language and clauses such as liability, attrition, cancelation, 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.
Higher service levels: When you develop relationships with preferred suppliers, they begin to know your company culture and attendee expectations and can proactively anticipate your needs. To take it one step further, you can work to develop mutually-agreed upon service levels and include them in contracts to make certain expectations are being met and exceeded.
Although the benefits of strategic sourcing and contracting are clear, there are still a few myths circulating about what this means for each event. Check out the table below on common myths around strategic sourcing and contracting.