Amway Mtg. Mandates Increase Compliance

Global direct-selling giant Amway Corp. not only has impacted event lead times but slashed about 11 percent off its nine-figure annual meeting expenditure by centralizing all meeting functions.

The Ada, Mich.-based company, which estimates it spends about $100 million to $120 million annually on more than 200 meetings and events, last year mandated that all meetings of at least 10 attendees use Amway's special events department to source locations and negotiate contracts. Though there is no official penalty for noncompliance, more than 90 percent of Amway meetings now are handled by the events department, up from about 60 percent, said director of global special events Craig Ardis.

The events department already has realized significant savings through better avoidance of onerous contractual clauses. The department already pushes meetings to preferred properties in many cities, Ardis said, and now will attempt to negotiate wider, global deals with particular chains to save even more money down the road.

"Now that the policy is in place, we can negotiate contracts based on the actual volume that we have identified," Ardis said. "We'd like to narrow it down to chains on a global basis. We've been able to identify where our meetings have been going throughout the world."

Amway is the primary subsidiary of Alticor Inc., one of the 50 largest privately held companies in the United States with more than $4 billion in sales last year, and has offices throughout the world. Ardis' department has taken into account the preferences of international affiliates, negotiating preferred deals with individual properties overseas that already had received much of the company's meetings traffic. "If we look at Bangkok, for example, and we see that most of our business there is through the Hyatt, we'll move to include them in our list of preferred properties," Ardis said.

The new policy was born in mid-2001, a time when many companies took a long look at their meeting and travel expenditures, as part of a companywide focus on cost control and more strategic forms of purchasing all types of supplies and services.

"The whole company was focused on consolidation, leveraging and strategic procurement," Ardis said. "We looked at opportunities to reduce costs in the meetings program. It was easy to sell internal meeting sponsors on the use of preferred suppliers because these strategies were ingrained in everyone's heads."

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. 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.

"We have a lot of influence in that area," he said. "This strategy was presented with the new policy. Though they can use a non-preferred property, they have to justify why they are doing so." There are no specific penalties for noncompliance, Ardis added, but with compliance currently estimated at more than 90 percent, none seems necessary. Usually noncompliants are new employees or those otherwise unaware of the new policy, and a single explanation of the procedures is enough to assure future adherence.

One ancillary benefit of the new policy is the ability of the events department to better control lead times. Although Amway is not exempt from industrywide trends toward short-term meetings, and no policy mandates that a certain amount of lead time is required, Ardis said centralization allows for better communication between meeting sponsors and his department.

"When we receive a program in which the lead time is short, it gives us an opportunity to educate them that more time helps us, them and the property," Ardis said. "Lead times have been cut down a little and that's forced us to plan a little better. I don't know if it's leading to better deals, because rates are still high but they come down when we push."

Amway's policy changes are still new, and though the program is not yet where Ardis wants it to eventually be, headway has been made. The events department recently was assigned responsibility over other types of employee travel expenditure, as the company in August insourced its corporate transient travel operations and assigned their management to the events department. Ardis said the department is reviewing its processes with suppliers to make that transition efficient.