Procurement Relationship

The Relationship Of Procurement And Supplier

Industry Trends

Working with the best possible suppliers is essential for any organisation. The products or services being contracted will often be critical to its operations or will have a serious financial effect if they were to fail or fall short of expectations.

Get It Right

Knowing how to identify suitable suppliers – whether that is the best event management suppliers, the top conference specialists, or the finest provider in any other field – is critical to forming successful working relationships. The supplier assessment should embrace both their technical and operational capabilities, but also the “cultural fit” between the companies. Getting the best value from your business events and marketing communications will always be a priority and supplier procurement is a critical factor.

The role of procurement in any sector is important, as it often falls to these individuals to ensure suppliers fall within budget. However, a good procurement decision maker needs to be able look beyond just costs, and also identify suppliers with credible experience, intellect and capability. At an advanced level, procurement level employees need to look at all ‘costs’ – both monetary (the figure being charged for the product or service by the supplier) as well as hidden costs. Hidden costs can be positive or negative, and can come from criteria such as relationship, the above-mentioned cultural fit, the breadth of services available, long-term viability and even innovative thinking.

First stage indicative costs provided to procurement can of course vary wildly as each supplier views the initial brief through different eyes. It is important to understand just how the agency came to their projected figures but why – for example, if we were to look at an event quotation, are the suppliers suggesting elements that may wow guests, have they provided different levels of food, accommodation and travel for you to choose from, are they providing a low cost only to have lots of hidden extras later on down the line? Understanding how and why the initial quote was created will start to help procurement understand if this is the type of supplier they wish to bring on board.

The most important element

Within the event management sector – and indeed many other business areas – the supplier and the client must be able to work as a partnership to reach the all-important factor: the business objectives. As with any partnership, there must be the right chemistry for a strong foundation to be established, to drive towards achieving the required ROI.

Measuring the success of conferences, corporate hospitality and incentive travel programmes depends on first setting clear objectives for each event. If procurement receives costs that have no SLA’s, KPI’s or other objectives set against them, it is only logical that the particular supplier is not invested in helping the organisation reach its goals. Personally, at PAEM, we use the Event ROI methodology in the planning process to ensure our services are created around central objectives.

Measure ROI

Make it work

None of this is to say that the cost is unimportant – without procurement looking after the purse strings an organisation runs the risk of spiralling costs. However, the level of service provided can be just as important, if not more so.

Pay too much, and it is obvious that you may never reach the desired ROI as you cannot match your outgoings. But pay too little, and the service provided may lack finesse, vibrancy, or exclusivity – in the case of incentive travel or product launches, these elements are the absolute key in driving interest, repeat behaviours and organisational reputation.

Our years of experience have taught us that the combination of purchasing manager and procurement working together is the combination of success when planning an event. The two parties working together to clarify the context of the event, its purpose, its objectives and the desired outcomes can, in turn, make getting supplier approval a quicker and smoother process, as procurement can understand the exact criteria they are looking out for in quotes in addition to the bottom line figure.

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