In his seemingly tireless quest to unite the supply management blogging community, Sourcing Innovation blogmaster Michael Lamoureax has encouraged the usual suspects to post our thoughts on the subject in the “What I Learned from Conference Season” series. Being that I spent most of this year’s season developing and hosting events, rather than attending them, I thought it best to take a different angle on the topic: How to Negotiate and Manage Best-Value Events.

Luckily, I have had some help from my teammate, Ariba category and sourcing expert Justin Falgione. According to his latest analysis, the meeting and events management sector is a $120 billion industry, split almost evenly between corporate meetings (like President’s Club), conventions (like Ariba LIVE) and association meetings (like IACCM Americas). In fact, Justin estimates that about 1% of a typical company’s sales is spent on meetings and events. Spending is even higher in certain sectors - pharmaceuticals, technology and financial services for example - that rely more heavily on events to reach new and existing customers.

That’s no small change, particularly in today’s tightening economy. Unfortunately, if your company is like most, events are one spend category that is outside the control and influence of the procurement organization. As a result, it is unlikely that your company is negotiating the best deals or getting the best value from its events.

So what can you do about it? Well, first it would help to understand the key cost drivers that go into the event. With Justin’s help, I have assembled this chart to indicate the major cost drivers associated with meetings and events.

In an article on event management sourcing in the latest issue of Supply Watch, Justin shares some valuable insights into the market attributes underlying these cost drivers. For example, Justin notes that hotel and lodging costs are primarily driven by location (both overall and relative to airports and metropolitan areas), amenities, seasonality, and meeting space availability. He also warns that food and beverage costs must be purchased from the hotel or venue provider and there is often a food and beverage minimum spend negotiated with the room rate. So be aware of these hidden charges and negotiate them down, along with labor charges for wait staff and other associated costs.

Another area of hidden charges to watch out for is in the area of event management providers. These companies often source and manage the cost of event-related services, such as audio-visual, staging or site selection. Justin advises that “it’s important to understand any commissions or rebates that your event management provider is receiving from venues or properties” as it will effect pricing and is an area for negotiation.

Soon I’ll share best practices for negotiating and managing events. In the interim, read Justin’s full assessment of the events management category in the latest issue of Supply Watch.

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