In the area of procurement of goods and services, it is not only a matter of deciding on the product range, quality, quantity and price, but also on the supplier. By optimizing this decision, companies can improve their business success. In the following blog post, I would like to explain the three advantages and also the risks of single sourcing in trade fair construction.
In the area of supplier management, a make-or-buy decision is always made. If companies procure products and services from external service providers, they have to decide whether they want to purchase them from a single partner (single sourcing) or from several partners (dual or multi-sourcing).
Exhibition stand construction services are often outsourced by companies to specialist companies. The specialist company (e.g. stand builder) then designs and implements the corresponding projects. If you opt for just one stand builder, you have chosen a preferred partner from whom you can obtain all services in this area.
Interfaces and processes must be defined at the beginning of a business relationship. Once these have been implemented, all new stakeholders must internalize them. Projects sometimes get off to a bumpy start, especially at the beginning. However, the longer you work with the same stand construction company and its employees, the better and smoother the collaboration works. This is due to the following points:
Establishing a routine
Continuous process improvement
Less time-consuming research based on already known know-how
Faster establishment of new products and services
Less coordination effort for projects
Lower negotiation costs thanks to framework agreements
Easier identification and implementation of optimization potential
Shorter communication channels between stakeholders
Use of interfaces to the service provider
No isolated solutions
One of the biggest advantages of single sourcing is the possibility of reducing costs. With only one stand builder, direct and indirect costs can be reduced. We classify the purchase prices as direct costs. With a larger purchase quantity or a larger and long-term sales volume, the supplier is often prepared to grant a direct discount on the sales prices or a kick-back. This is then reflected in every sales invoice or at the end of the year in the form of a repayment amount.
The “exhibition stand and exhibition accessories for a trade fair are often supplied by different stakeholders such as stand builders, advertising material dealers, printers and caterers. Each stakeholder has storage and logistics costs that they charge their customers. Insofar as the chosen stand builder can offer the entire “trade fair service from a single source”, this cost reduction also has a positive effect on the company's earnings. It can also make sense for storage and logistics to be separate from the advertising material supplier. This is the case if the stand builder stores the materials independently and purchasing can take place where it is cheapest.
Many companies are so large that the various departments do not communicate with each other when planning a trade fair appearance and therefore synergies remain unused. This leads to the same advertising materials being ordered from different producers, for example. By stocking with just one stand builder, the analysis shows that the acquisition costs can be reduced by purchasing larger quantities from just one manufacturer. In addition, marketing materials (graphics, systems, etc.) can be used across divisions. As a result, only as many graphics are purchased as are in use simultaneously and company-wide. In another blog article, we showed you how to handle advertising materials in a relaxed manner.
Every marketing manager wants the company to present the same image to the outside world. This is especially true in the trade fair industry. All trade fair stands should have a recognition value, regardless of whether they are large, small or mobile. However, this is exactly where most companies fail. They hire a stand builder for important image trade fairs and a stand builder who builds smaller stands at congresses, HR events or trade fairs, for example.
Or the company even builds these stands itself and purchases them from a “display stand builder”. However, each provider of exhibition stands, modular stands or displays sells their own systems, which are usually different. It is then no longer possible to speak of the same brand image. With a strategic partner who knows how to realize large and small exhibition stands, this challenge can also be solved. If the same brand image is perceived again and again by interested parties and customers, the brand will be remembered and we can talk about advertising patterns that have a positive effect on your lead generation. Ultimately, the goal of every trade fair is to generate as many cost-optimized, new and valuable leads and inquiries as possible and thus increase the company's revenue.
In addition to the positive effects listed above, single sourcing can also involve risks. With single sourcing, you become dependent on a single supplier. If this supplier is not solvent, this can lead to supply bottlenecks or, in the worst case, to total failure in the event of insolvency. In addition, some products and services are not within the core competence of the service provider, which can result in higher costs and lower quality when purchasing.
When choosing a procurement strategy for single sourcing or multi-sourcing in exhibition stand construction, various aspects need to be weighed up. The advantage of single sourcing lies in the consolidation of a long-term and sustainable business relationship in which processes are constantly optimized. This in turn leads to harmonious cooperation and at the same time reduces costs as well as the outcome and satisfaction of employees, customers and interested parties. The result: increased revenue through cost optimization.
Do you want all trade fair services from a single source? Click here for more information on single sourcing: