Four years after implementing the "Cinderella story of strategic meetings" management programs, Bank of America in 2005 detected a flaw: Instead of following the established sourcing path, a 30-person event team in a New York office continued to source meeting venues and even negotiate contracts, and then ask the meetings and events procurement team responsible for contracting to put the contract on "our paper."
While the "very experienced, very qualified, very good event managers" negotiated good deals and contracts, they routinely bypassed the documented request for proposals process, Shannon Bucey, Bank of America vice president of sourcing responsible for corporate travel and food service, told National Business Travel Association conference attendees this summer. The bank's audit process for meetings begins with the RFP and is meant "to establish the baseline of savings," she noted.
The problematic sourcing and selection of nonpreferred properties "didn't support the spirit of the program because [the meetings and events management purchasing team] wasn't in a position to influence and leverage the spend, "Bucey said.
[PROFILE_1]"At the bank, if it's not auditable, it's not reportable," Bucey said of the process to validate savings. The fix, she said, was a Six Sigma Green Belt study to give those involved the "comfort that this was an objective project" and "take the emotions out of it."
The Six Sigma project studied 2005 meeting and event contracts requested by the New York event team that exceeded $10,000. "Their compliance rate was under 6 percent," Bucey said of the events. "So, 94 percent of the time they were working out their deal before they sent it to the meetings [procurement] team to put it on paper."
The Six Sigma project team relied on a bevy of standard tools as they mapped processes, created a cause-and-effect matrix, measured the cost of failures and eventually devised a new process. The goal was to "improve compliance to 70 percent, which we thought was a lofty goal," Bucey said.
As part of the process, the team used the cause-and-effect matrix to study the potential impact of adjustments to four key areas: the workload of purchasing managers, quality of information provided to the meeting purchasing managers, data capture and audit requirements, and the skill set of the purchasing manager.
The team also identified the failure models: the lost savings due to no RFP, poor client satisfaction, slow turnaround times due to unreasonable workload of meeting purchasing managers and inaccurate data coded by those managers.
The project highlighted the importance of using preferred hotels, Bucey said, as "we get 18 percent to 20 percent savings using preferred suppliers, but only 10 percent to 12 percent savings using nonpreferred suppliers. That represents a significant difference in savings for us."
[PULL_1]But the failures could be overcome, the study determined, with new standard operating procedures, communication, training and additional support staff. In 2006, "we implemented a number of changes, a lot of messaging" for event planners, suppliers and executives, Bucey said.
By year-end 2006, compliance to the purchasing policy had improved to 83 percent, and negotiated savings increased by $455,467. By 2007, compliance rose to 95 percent and negotiated savings increased $1.76 million, to more than $3.4 million, Bucey said.
To verify the success of its new process, a Six Sigma team later evaluated 145 events in 2006 and found only 43 defective items. By 2007, a study of 144 events found only 12 defects. While the 2007 Sigma level was dramatically improved, it was still below Six Sigma perfection, Bucey noted.
"Applying Six Sigma logic to a very simple process helped us make some great gains in compliance to our strategic meetings program," Bucey said. However, "in many cases, the cost benefit to get to Six Sigma is not worth it."