Amway's Ardis Centralizes Mtgs. Program Worldwide

A worldwide firm with a nine-figure annual meeting spend, Amway Corp. has produced significant savings by internationally exporting a successful domestic meetings centralization program and generated extremely high compliance without a mandate, but not necessarily without the threat of one.

Craig Ardis, Amway director of global special events and leader of the centralization team, said the group has been able to quantitatively prove to affiliates of the large direct-selling company that spending will be lower with centralized negotiating than otherwise. "They've all bought into it, and we've really moved compliance," he said.

Ada, Mich.-based Amway, the primary subsidiary of Alticor Inc.—one of the 50 largest privately held companies in the United States with more than $4.5 billion in sales last year—segments its extensive international operations into what it calls affiliates, representing either world regions, countries or parts of countries. Prior to the international centralization effort, which began in late 2002, those affiliates largely managed their meeting expenditures themselves.

Cognizant of the 11 percent reduction in domestic meeting spending—more than $10 million in annual savings—generated by its mandated domestic centralization in 2001, Amway determined similar actions overseas could produce similar savings. "We could show the advantages of consolidation and leverage," Ardis said.

In several cases, Ardis' team felt the true advantages of centralization would lie not just in consolidating volume within individual affiliates but consolidating several affiliates' volumes together, if their planners were repeatedly booking business at a certain property or chain. Though some affiliates immediately bought into the plan, others were less than eager. "We wanted to consolidate a number of projects around the world," Ardis said, "but some affiliates would back out, leaving us hanging without all the volume we could have."

The solution, he said, was to show the benefits of centralized management and volume consolidation in the most abject way possible, by demonstrating the exact savings—using real-life examples from the affiliates—that could be generated by negotiating centrally.

Once Ardis' team analyzed the site selection history of the affiliates and discerned where repetition occurred, the team negotiated for several meetings from several affiliates at a single property. Afterward, Ardis' team created a spreadsheet that compared single-event and single-affiliated negotiating outcomes with the multi-meeting rates the team negotiated. With the hotel receiving a commitment for several meetings, the spreadsheet showed the savings that were generated by consolidated negotiations. "We were able to show the opportunity that was there and benchmark what we did against what they did," Ardis said. "Some of them said beforehand that they would be able to get a better rate, so we showed them our rate."

However, there were fluctuations among affiliates under the program, to the point that one given affiliate actually may pay more for an event under the terms of multi-affiliate negotiating than they had before the program, even though the overall cost to Amway decreased. In those cases, that affiliate is compensated. "If five affiliates use one location, it's possible that one pays more than they had been, but the whole cost goes down," Ardis said. "We'll give that affiliate credits for the cost so that it won't hurt the bottom line, since the whole company benefits." The overall savings generated by the program allow for such a move, he added, since Amway still will end up paying less for those meetings than they previously had paid.

The development of the spreadsheet was enough to cause the hesitant affiliates to buy into the program. Had they not, Ardis said, the company was prepared to mandate compliance.

Ardis' team is spreading the concept to Amway's 10 largest international affiliates, which involve several in the Asia/Pacific region, including Korea, Japan and China, and areas in Europe. About 100 international meetings have been sourced and planned centrally, with percentages of savings similar to the U.S. centralization effort. Domestically, Amway annually holds about 200 meetings.

The company has deployed several international teams to handle the planning and sourcing, all of which report to Ardis. "The push was not to establish one dictator, but one team guiding strategy," he said. "We want everyone driving toward those goals and objectives."

Amway's corporate culture is one that always has emphasized consolidation, leveraging and strategic procurement, Ardis said, leading to the generally easy acceptance of meetings centralization both internationally and domestically. Yet, mandates certainly help compliance, as evidenced by Amway's 2001 domestic centralization effort. Under the terms of that program, internal sponsors must contact Ardis' department at the onset of planning a particular meeting, at which point the event is placed on an internal calendar and assigned an event planner. The events department manages all negotiation and site selection. Meeting costs are paid by internal departmental budgets, so though Ardis has no particular direction over how that money is spent, he does require the use of preferred properties unless specific justification can be provided for the use of nonpreferred properties. There are no penalties for noncompliance since compliance runs at more than 90 percent. The noncompliant typically are new employees unaware of the policy.

With meetings centralized domestically and the international counterpart program generating savings, Ardis' department also is adding corporate travel management to its repertoire—a very rare move in the industry. While corporate travel departments sometimes assume responsibility for meetings management, the opposite is extremely atypical. Ardis said many of the philosophies deployed on the meetings side will be brought to the corporate travel business. "We're just touching the tip of the iceberg," he said. "We know what we have and what we need to do. We have developed polices and preferred suppliers, but it's a framework, and we're looking and evaluating now where we can save money."

The rarity of the meetings department head assuming corporate travel management responsibilities is not lost on Ardis. "We drove it," he said. "Often, the head of corporate travel is a finance guy, but we jumped on the bandwagon with numbers."