Reflective practice 9.2 Consider Case study 9.1.
1. What other services might Star Events Group consider adding to its portfolio?
2. Would the company need to look for forward or backward integration?
3. If the company were to outsource part of its organization, what would you consider to be an area that is not core?
122 Management of Event Operations
Making a choice to buy out a supplier, or to make/provide those products and serv- ices in-house, would be known as backwards integration. In the event industry that might entail buying out a lighting specialist or a catering company, or making all the props for themed evenings in-house rather than using an external company. This may be worthwhile if that specialism is being used a great deal within all events, and if the cost of acquisition and integration into the company would create savings and increase a better provision of what is needed. Other advantages include preventing competi- tors from gaining control of key suppliers.
Forward integration, as its name suggests, is when an organization buys out or actively completes the work done by a customer. In the event industry, an example might be a lighting or catering company which, instead of always waiting for an event company coming to them to ask for a quotation to supply certain goods and services for an event, proactively seeks out customers and puts on the event itself.
Trends in the style of supply networks
Slack and Lewis (2002) identify three trends in the provision of goods and services and the way that these are sourced. These trends can be seen very clearly in the event industry, possibly because it is a relatively new industry, and possibly due to the diver- sity of suppliers that are needed and which are not always a part of a small entrepre- neurial organization. The trends are:
1. An increase in the proportion of goods outsourced. This enables the organization to concentrate on a few important activities and outsource the rest. This could offer greater competitiveness and efficiency. In the area of technology, in particular, out- sourcing enables the company to use up-to-date equipment and specialisms rather than outdated resources. Outsourcing also reduces the amount of capital tied up in assets that might seldom be used.
2. Organizations are reducing the number of suppliers. When you consider the decision points outlined in Figure 9.3, later in this chapter, you will see that there are many activities involved in buying goods and services. If these can be reduced, money and time will be saved. An additional benefit includes building relationships with suppliers that you can trust. Trust develops through past experience and working together.
Generally, organizations are developing partnerships with suppliers and customers. In the event industry this may take the form of long-term contracts and an openness of costs and prices between the supplier and the event organization. The suppliers should feel that they are contributing to the success of the event. With this in mind, actively lis- tening to the other party’s expectations and needs is a skill. Hearing and giving subtle indicators to each other during negotiations and discussions is an experienced art, and the lowest cost need not always be the driving force (O’Toole and Mikolaitis, 2002).
3. Partnering methods can be taken from other industries, such as construction, which rely on organizations developing a process of mutual trust and understanding within their supply chain. This then opens up the possibility for suppliers to work together in a non-adversarial way and to cooperate on areas such as strategy, benchmarking, process, equity and feedback to develop an integrated supply chain within which all parties can agree to be members (Bennet and Jayes, 1998).
A fourth trend is that of e-commerce and Internet usage. Use of the Internet can pro- vide organizations with up-to-date pricing and availability using on-line ordering. It
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eliminates paperwork and can speed up the many processes that would previously have relied on telephone calls, postage systems and person-to-person communications.
The Internet also opens up a greater choice of providers.
It can be seen that there are different styles of companies – those that fully own all the parts of the supply chain, and those that regularly outsource and subcontract parts of their services to other specialists.
The major concern is that all parts of the service delivered to the final customer should be managed and integrated. Wild (2002) believes that the strategic objectives of the company will influence how the organization is managed, and that often the inte- grated flow of materials and services through and from the operation is a prerequisite for achieving high-quality, rapid and low-cost provision for customers. Therefore man- aging the supply chain is a major concern and of major importance for event organiza- tions, where a high proportion of their products and services often come from different suppliers or different parts of the organization.
In delivering this well-managed supply chain, the aim of the event company should be to diminish obstacles between functions and departments within the organization,
1. Need for a resource • Prepared in-house?
• Subcontract?
• Supply through partners?
3. Lists of preferred suppliers based on
• reputation • flexibility • conformation to requirements
Review 2. Prepare a specification/brief
4. Approach and locate suppliers for a specification • Can the exact specification be provided?
• Flexibility of provision?
5. Examine the received quotations and fitness for purpose
7. Prepare a purchase order/
create contractual relationship between event manager and supplier
8. Receipt of goods/services, and consumption
9. Review: Was it as required/
expected?
6. Comparison of in-house and external provision
Figure 9.3 Chain of decisions and decision points