Managing Meetings At: Novartis--Co. Consolidates Vendors, Centralizes Sourcing

An expansive meetings consolidation and sourcing centralization initiative is projected to save pharmaceutical giant Novartis more than $6 million in 2004 alone. The program, which began less than 18 months ago, successfully has captured nearly all major meeting and event spending throughout the corporation without the force of a policy mandate.

The initiative, part of a companywide effort to increase the value of its marketing expenditure, entailed the consolidation of meetings management vendors the firm used from 50 to four, the establishment of a centralized sourcing department to manage all meeting site selection and contract negotiation for all events and the creation of a small-meetings unit to manage all functions for short-term events of fewer than 50 attendees. Additionally, the data collected throughout the initiative will allow Novartis to approach vendors with combined volume from its meeting and existing—and highly managed—transient travel program, potentially enabling more wide-ranging and financially beneficial deals.

The program was part of a larger 2003 effort by Novartis to measure and assess its marketing spending, specifically in the "agency, promotional and events" realms, those three words forming the title of the firm's effort.

"APE is a global program sponsored by our CEO [Daniel Vasella] that mandates taking a look at all of the company's marketing spending and getting more value out of our investment," said director of strategic sourcing Steven Chyung. "We looked at all buckets of marketing dollars, and events is one of our major areas."

Novartis, a Swiss corporation with American headquarters in East Hanover, N.J., organizes its business by the products it produces, including prescription drugs, other medical offerings and consumer health products, like the Ciba Vision eye care and Gerber infant care brands. With each division managing its sales, branding and clinical investigations, event spending was both extensive and disparate.

"Historically, events have comprised a fragmented group of suppliers, including medical education firms," Chyung said. "We had not had a consolidation of logistical providers, and this effort was a lot about consolidating those suppliers, but also stressing our core competencies and important business." Before the vendor consolidation, Chyung said, Novartis used about 50 suppliers for standard meeting services, a number that nearly doubled when medical education firms were included.

Locating internal meeting spending data and the employees that managed it, required both a soft touch with employees and a great deal of detective work. "Not all of that data resided in one place," Chyung said. "There was a lot of grunt work involved in getting hold of it—looking at invoices, combing through accounts payable—just to get an understanding of what we had."

"We did it in such a way that our internal customers would feel like they were part of the process of choosing vendors and not like something was being imposed upon them," said executive director of business support services Paul Tomaszeski.

Added Chyung, "We spent a lot of time, especially with marketing departments, talking with them about building internal processes to meet the needs of their business, and not so much selecting suppliers."

With a long list of meetings, internal sponsors and suppliers in hand, Novartis issued requests for proposals to travel and meetings management companies for a share of the firms' meetings management business. Most were existing Novartis suppliers. "The strategic sourcing department put together a list of key users of meetings and which suppliers they used and requested bids from those companies, adding some that we felt could offer some potential," he said.

In March 2003, Novartis narrowed its list of preferred meetings management firms to four: Maritz McGettigan, WorldTravel Meetings & Incentives, CLT Meetings International Inc. and Fanizzi Associates. The meetings and events program now consists of a central department through which all meeting sites are sourced and contracts negotiated and approved. "We have people who specifically negotiate contracts and source availability," said associate director of meetings consolidation Margaret Knipper. "We've also developed a meetings operations center that tracks all spending and generates all reports."

When a request for meeting services is received, Knipper said, the meetings department forwards the logistical planning requirements to its operations team, which may involve one of Novartis' preferred vendors—the choice of which is based on the business requirements of the meeting and the particular division or brand requesting the event.

"Sales meetings require a little more involvement, for example, and branding events have to have approval from the internal management events oversight committee," Knipper said. "We'll conduct the appropriate venue selection, based on rate and a Carlson Wagonlit Travel air analysis. We help guide the meeting, but they own it."

CWT serves as Novartis' consolidated domestic travel agency and hosts a small onsite at the pharmaceutical firm's U.S. headquarters. Those agents, Tomaszeski said, frequently interact with the members of the meetings management team, including four Maritz McGettigan sourcing managers, to share information and best practices about contracts and vendors.

"Our sourcing managers source all day long," Tomaszeski said. "They dispassionately find the best rates. They've done a variety of vendor forums, and they work with the national sales offices. When they're presented with a set of objectives, central sourcing probably has been there before. We can offer sponsors that experience because we do it every day."

That experience, and the ability of the meeting and sourcing managers to communicate the potential savings opportunities it offers to internal meeting sponsors, is one of the reasons why Novartis has been able to centralize the levels of meetings it has without the creation of a policy mandating sponsors do so. "We don't have any mandates," Tomaszeski said. "It's not our culture. Our culture is about finding a business rationale for getting that business, and as we're ending the first year of this, there is no significant meetings spending that is not going through sourcing."

Novartis also has developed a team of agents specifically to manage small meetings of 50 attendees or less. Internally dubbed Meetings Express, the team has developed several processes apart from the standard Novartis meeting sourcing process.

"These meetings are less complex and often use local destinations," Knipper said. "They're turnkey, and they don't go through central sourcing. These managers do all the work, and they have local contacts." Tomaszeski added this team has developed standard meeting templates and contracts with hotels in and around East Hanover, for quicker negotiating.

The initiative thus far is on track to slice millions of dollars off the firm's meeting and event spending. "Our target was to drive 12 percent savings on all event spend, and we are on target to meet that in 2004," Chyung said. That percentage will translate to about $6.2 million in savings this year, he said.

Novartis defines savings as a mixture of hard-dollar negotiated spending decreases and also cost avoidance, Chyung said. "It's a combination of both," he said. "It's a calculation of what we would have spent if meetings weren't centrally sourced, but we also track what the savings was from the first offer to the final cost."

Novartis internally has developed an extensive database of meeting expenditures, Knipper said. The firm uses some of the capabilities of Maritz McGettigan's technology partner StarCite Inc., but much of its data management is administered internally. "We have all the data in one spot, and it lets us forecast trends," Knipper said. "One particular database breaks down the type of spending by type of meeting, for example, or by destination."

That data and its analysis will allow Novartis to approach vendors in ways they have not before. With the transient travel program already tightly controlled under the auspices of Tomaszeski's division, the firm plans in the near future to consolidate its meetings and transient volume for the purposes of vendor negotiations.

"That's all part of our strategy," Tomaszeski said. "We will be well-positioned to take advantage of that, but first we had to prove that we could manage this business as we do transient air and hotel. Now that we have, all of that volume coming together will be very lucrative in 2005."