AV Procurement

I recently attended a seminar on procurement trends for the meetings and events business. It was an interesting program and the presenters, representing several large accounting corporations who had already established a meeting and event procurement process, were clearly committed to the concept. But I must confess, I left unimpressed.

Now, I am willing to concede right from the start that as both a consultant and vendor to large multi-national corporations I may be biased in my thinking. I also conceed that I am basing my viewpoint on only one experience in this area. But let me just say upfront that from my perspective, leaving AV hiring decisions to the procurement department results in an AV package that generally costs more than it should while at the same time providing less overall value for the money spent.I am equally unconvinced that a standard procurement process results in better value for venue selection, catering, decor, or anything else. But again that is just my opinion.

The basic problem as I see it, is that the procurement process is focused solely on controlling the costs. To achieve this, it seeks to reduce everything to a standardized, measurable commodity. This shifts the focus from “What do we want the meeting to accomplish?” to “How much is this going to cost and how cheaply can we do it?”
To me, such thinking is the antithesis of a successful meeting. To have any impact, a meeting must be more than just cost effective. It also must be memorable. I have never known anyone who was able to go back to a dissatisfied client and successfully use cost savings to justify a lousy meeting.

For anything beyond a basic breakout meeting, the audiovisual support is too diverse and too complicated, to be viewed as a commodity. There are too many variables that cannot be easily factored into the fixed price equation. And this is the basic problem.

But as I said, I am willing to admit that I may be biased. My only experience with the corporate procurement process occurred recently with one of my regular clients. For the past seven years, GRP has been designing, sourcing and managing the audiovisual and staging portion of an annual series of 15-20 conferences for this client. The events ranged in size from single day, single room meeting for 30-50 attendees to multi-day, multi-room functions for 1500-2000. We were charged with maintaining the overall AV quality while at the same time managing the AV budget to ensure that the client was getting the best value for each event. Even though the same events recurred each year, they often changed venues or formats, so there was no consistency in the AV requirements from year to year. So, every year we would review each meeting with the event planner and determine the specific AV requirements for that year's event. We would then prepare a detailed RFQ based on those needs. Bids were solicited from 3-6 different AV vendors. The bids were carefully reviewed and the events assigned individually to the vendor or vendors which offered the best value for that event.

Granted, up to this point it sounds very much like a standard procurement process. And that is what the new management team thought as well. During the latest round of cost cutting initiatives at the company, they decided that they could save a lot more money by turning the entire AV contracting process over to their procurement department to handle.
So, the final six conferences of the year were to be combined into a single "winner take all" bid. After initially consulting with me as to how I was handling the bidding, they took my RFQ's for the same events the previous year, inserted them into their standard corporate RFQ format and sent them out for bid.

Without going into all the details of their procurement process, their 30 page, per event RFQ taken from one for contracting document shredding services or their electronic quote submission process, or the inability of the vendors to get answers to questions about the RFQ's or the fact that the RFQ focused more on determining the financial viability of the company, whether or not they were minority owned, whether they practiced discriminatory hiring practices, than how they manage AV resourses, etc, I'll jump right to the result.

Ultimately they received six quotes which covered a very wide range. They selected the lowest bidder, assigned the job and congratulated themselves on the $75,000 they had saved by selecting the lowest rather than the highest bidder. When the last of the conferences concluded, someone decided to total the actual costs for the six events and compare them to the costs for the previous year. They were shocked to discover that instead of a cost savings, they had actually spent $50,000 more than the year before for the same meetings!

So my thoughts on how this happened and how an AV producer can do better job saving money than the corporate procurement department will have to be the subject of a future post.

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