Managing Meetings At The Timken Co.: Procurement Methods Save Time, Money

Procurement-driven policies and a new technology tool this year have helped industrial technology company Timken reduce per-meeting expenditures by an average of 20 percent, compared with hotel rack rates, and plan and source meetings 20 percent faster—all within one year of implementing the policies, the company's head of procurement said.

Timken does not yet have a dedicated meetings policy, but two new procurement policies already are having an effect on sourcing meetings. The policies centralize all contract-signing authority to a single source in the procurement department and mandate use of the corporate T&E cards for any purchases, with nonreimbursement as a consequence of noncompliance.

Steven Lee, general manager of global indirect purchasing for Canton, Ohio-based manufacturer of highly engineered bearings, alloy steels and related products, said meetings expenditures have doubled in the past two years thanks to aggressive growth of the company.

"Because of this continuously growing footprint, global travel and meetings spend management are also becoming increasingly important," Lee said, adding that meetings initially were estimated 25 percent to 30 percent of total Timken travel spend.

"Prior to any of this, there was also a lack of a mandatory T&E card program. Now that that's in place, we're watching that number grow exponentially," Lee said. "We mandated the T&E card so we can see every expenditure out there, and we also rolled out new contract policies so basically overnight we stopped rogue spend people from signing contracts. That really is the difference maker in how quickly we were able to get this thing going."

Timken has 27,000 associates in 27 countries, with 66 manufacturing facilities across the globe.

"When we say we're global, we really mean it. Aside from our global technology centers, we also have over 90 sales offices serving customers in different regions," Lee said.

The changes in policy likely are accompanied by the deployment of meetings technology. Once Lee and his cross-functional team of Timken managers set the initiative's goals, the team set two main objectives: to implement a centralized sourcing and planning tool and an online registration tool.

After issuing requests for proposals, Timken also conducted a "proof of concept" pilot of the technology and ultimately chose Philadelphia-based StarCite Inc. as a provider, Lee said. The investment paid off in less than six months.

"It was well ahead of our business plan," Lee said. "Productivity gains aside, because that's what we call 'soft savings' in purchasing, it's been able to capture an average of 20 percent cost savings per meeting just on the deployment, implementation and usage of the sourcing tool and process alone."

The investment in technology proved to be "negligible" compared to the productivity gains and cost savings, Lee said. The savings are calculated on rack rates.

To help in the research for a meetings tool, Lee asked for customer references and examples of the tools in action.

Armed with the new tools, Lee said his team is focused on compliance. The new policy is mandated, and currently needs further refinement to shorten it from a general procurement policy to a specific meetings document. The contracts policy is the key driver of the document, he said, as it channels all meetings contracts to a single authority in Lee's department.

"With the much-improved data availability, we can now put more attention on evaluating meeting and travel spend together to drive for more savings synergy," he said. Lee also produces exception reports, to uncover noncompliance with the new meetings policy. Timken has a zero-tolerance policy with suppliers, banning them from the approved vendors list if they offer any individual incentives or kickbacks to planners.

"Compliance on using the sourcing tool is high, I would say 85 percent plus," Lee said. "However, on the registration tool itself, it's not so high—probably in the 50th to 70th percentile. There are some folks that are still not comfortable with the technology aspect, but they're coming around."

After the U.S. program is fully implemented, Timken will expand the initiative to operations overseas. Existing technology providers on the market still lack effective solutions for global meetings programs, Lee said.

Lee also has considered outsourcing the meetings program entirely, and would still consider it in the future.

"I want some maturity to the program and higher levels of adoption. Plus, I don't want to scare the bejesus out of the meetings and travel department," he said. "Quite honestly, they embrace this whole thing from the standpoint that we're the bad guy. They can blame us. We force everybody to do this, while they reap the benefit."

Administrative support staff also now look like "professional negotiators" when sourcing meetings through the technology tool, and Lee's department reviews all contracts and accepts responsibility for liabilities.

Prior to implementing a new meetings policy this year, less than one-third of meeting spend was quantified and 80 percent of meetings were considered unmanaged. The existing meeting planning department was focused on large events, but the bulk of expenditures were meetings with fewer than 50 attendees and left to individual departments to manage, he said.

"The small and medium meetings, along with meeting sourcing in general, were not part of the Timken core processes," Lee said, "so we began to search for a better solution."

Double-digit savings opportunities helped to gain senior management support for a mandate. Procurement took on the costs for the initiative, also helping to drive compliance, he said.

Lee's core team—drawn from staff in purchasing, travel and meeting planners—were given six to 12 months to implement a new strategy for meetings management. Though at first the timeline seemed too "aggressive," Lee said he was pleasantly surprised to find implementation of meetings technology was fairly straightforward.

"The goals were simple," Lee said. "They were to improve our process efficiencies by reducing human touch; to generate savings via reduction of transactional time or sourcing itself; and to create an ongoing databank for future spend management and analysis."