In an effort to restrict the number of meeting and event suppliers its decentralized meeting planners and sponsors use without instituting a mandate, The Thomson Corp. last month finalized a list of approved vendors in five meeting-specific categories—the first time the company has done so.
Thomson, an integrated information solutions company with headquarters in Stamford, Conn., in December notified selected suppliers of their approved status. These vendors include audiovisual, shipping, installation and dismantling, premium and promotion and meeting planning firms. At least two suppliers were chosen for each of the five categories, said Thomson vice president of global sourcing strategies Christopher Staal.
The approved vendor notification culminated an 18-month sourcing process in which 10 meeting planners and sourcing executives, representing each of Thomson's five operating companies, researched the companies' use of suppliers in those categories, determined the companies' business requirements and solicited bids.
The result is a roster of approved vendors—Staal specifically uses the word "approved," not "preferred"—to which Thomson officials hope to drive all applicable meetings business.
" 'Preferred' makes it sound like people have a choice," Staal said. "We want to put a fence around the number of suppliers we're using. We don't believe in a sole-sourcing approach and we want people to have good choices, but we don't want them shopping hundreds of suppliers. The vendors we have chosen can meet 80 percent of our needs, and in no category is there only one supplier."
Despite Thomson's move to restrict supplier usage, however, the company will not go so far as to mandate their use, Staal said. "We want to push compliance, but we will not mandate," he said. "Meetings are a complex area, and there is no one-size-fits-all solution. There are too many variables, including the meeting purpose, the venue and the objectives and desired outcomes of the event. I can't handcuff people from having a successful meeting by forcing them to use suppliers that may not have the depth of experience needed for that specific meeting. We have a wide enough area, but we have to make sure all needs will be met."
Instead, Thomson will rely on extensive communication to administrative assistants, department heads and other meeting sponsors from meeting planners and sourcing executives as to the wisdom of following meeting guidelines and using approved vendors. The same holds true for contracts: There is no mandate that sponsors must contact an internal Thomson planner or a dedicated planner from the company's consolidated global agency, American Express, and it is incumbent upon Thomson planners to communicate the pitfalls of attrition and cancellation clauses. "We have to over-communicate so people understand the ramifications of their choices," Staal said. "We have to show that it is silly for someone who is not a meeting planner to sign a contract. We have to leverage the sourcing team, since they are meeting planners within their operating groups, to communicate the resources that are available within the groups."
The sourcing team in 2002 began work on the current initiative, as part of an overall corporatewide strategic sourcing initiative. Meeting and event planning was one of 19 corporate expenditures targeted by the movement, Staal said.
The company already had preferred airlines and hotel chains with global networks, but no such agreements with meeting suppliers. Thomson holds more than 5,000 meetings of at least 10 attendees annually and attends numerous tradeshows, at a cost upward of $30 million. "The sourcing team solicited feedback from each of the groups about the vendors they used and put together a Reader's Digest version of requests for proposals," Staal said. "We were able to get baseline information and understand our own business requirements and the vendors' capabilities."
Agreement on the approved vendor roster was reached in November, he said, with notification the following month. "We are now just beginning large-scale communication," Staal said.
Success of the initiative will be judged by cost savings and program compliance, Staal said, but noted both are moving targets. "Compliance and spending are both key indicators," he said. "This year will give us a true baseline with which to go forward. Can we expect to get 3 percent to 5 percent savings? Sure, but so much of this is a moving process, and we'd rather see spending go down because we didn't need to spend than to spend a certain amount to get a savings number. This is supply management, but we must watch the demand side too."
Staal said the new program will reap less quantitative benefits as well. "It's very difficult to measure, but one other benefit is an increase in the company's ability to be effective and efficient," he said. "This will help process efficiency regarding planners' ability to do their jobs. Suppliers will become more familiar with Thomson's needs and will help us execute. It's hard to put a number on, but we'll know it when we see it."
Staal also tries to push—again without a mandate—meeting sponsors to use the company's preferred airlines and hotel chains. "We try to keep a consistency," he said. "We push our two largest worldwide hotel chains as the ones to work with first, before niche hotels are used. Both chains have resorts and boutique-type properties so, chances are, our needs will be met."
Staal has pushed preferred hotel chains to work with Thomson's transient and meeting business as a unit. "We're one customer, and we want them to look at us that way and not treat every meeting as if it's the first time we've ever done business together," he said. "We try to have a contract where we have most-favored-nation status, but it's relative. We're not a Fortune 50 company with that kind of spend."
Thomson, which ranked 61st on BTN's 2003 Corporate Travel 100 index
(BTN, July 21, 2003), with $52.1 million in U.S. booked air volume in 2002, has developed internal technology to better track meeting site selection, which has impacted negotiations, Staal said. "We're doing a decent job internally capturing where meetings go," he said. "We're getting better at tracking that information and sharing it with meeting planners. When they call hotels, they can tell them that we've had three other meetings there in the last six months, for example. And we can help find opportunities to fulfill a contract if there's been a cancellation. It's worked out favorably."
The initiative comes at a time of other changes in Thomson's travel program, as the company is in the midst of transitioning from five American Express onsites throughout the country to a single call center. The move should be complete by the second quarter of 2004. "This will give us access to state-of-the-art technology," Staal said, "which was limited by our own technological infrastructure."