When the Spend Controllers Meet the Creative Innovators
You don’t have to look too far to find a large amount of commentary and views on whether Procurement should be involved in marketing services spend or how organisations want to ensure they get value from their investment in this area. Some have the view that the Marketing department are the best to achieve this, whilst others argue that Procurement should take the lead. Having been both a Procurement Director and also had involvement in many marketing initiatives and brand development plans, I can sympathise with both views.
But, if you’ve witnessed similar scenarios to below, then it’s time to take a different approach:
Marketing – “Procurement, unless you’ve been a marketer, you do not know Marketing”.
Procurement – “I don’t need to be a marketer. Category management and value creation is a discipline, with principles that can be applied across functions”.
Marketing – “We don’t like to be restrained by costs and are driven by creative specification”.
Procurement – “I think I’m going to faint!”
And the two sides of the same coin discussion………
Marketing – “We want the best agency creativity”.
Procurement – “We want supplier value”.
However, in my experience, once reservations on either side have been overcome, even modest levels of collaboration between Marketing and Procurement can result in improvements to spend effectiveness, greater value gain from marketing agencies and/or substantial cost savings.
A short while ago I was asked to assist the Procurement department of a top FTSE 250 company. A marketing services supply tender had been stagnating between both teams for nearly 8 months. The brief from the procurement director was: ‘I want you to go and sort those Marketing people out, they are not playing fair and trying to hide savings from us. Beware as they are not very friendly or forthcoming”. After less than 24 hours of being in the company, I realised that it wasn’t the Marketing department that was the problem! When suspicion of each other’s motives had been overcome and greater collaboration between the two teams started, then real value and savings began to occur. The result in their case was nearly £2.6m of savings and additional value.
Viewing the procurement/marketing relationship more as a partnership – where both parties understand and respect each other’s role and how all parties, including agencies, can work to deliver value to an organisation – is eminently sensible, but not always in place. So what actions can be taken to overcome this?
Procurement professionals do value the right things in agency relationships but are often accused of being overly focussed on costs. They can assist the process of collaboration and help overturn this view by:
- Alleviating Marketing’s fears about losing control over critical decision making.
- Help Marketing to define a fair and competitive process, set the supplier evaluation parameters and help draft the contract.
- Help to educate Marketing about procurement disciplines.
Marketing can really gain benefits from collaborating with Procurement by:
- Inviting Procurement to the table in more areas, e.g. agency performance reviews.
- Inviting Procurement to the table sooner in the process, e.g. to help design the process and better define the needs.
- Taking the time to educate Procurement about marketing and brand developmen strategies.
There are still too many procurement managers who approach marketing with an attitude of arrogance or even naivety. This can make them act too aggressively or defensively. Equally, there are some marketing executives who act as if marketing is a ‘dark art’ which only they can understand within the company. Don’t be one of those people. These days, both departments work in complex environments and categories and should take the time to engage with their colleagues to understand the challenges involved. For these two teams, this includes not trying to measure success by simple savings measures alone.
When all colleagues understand each other’s needs, understand what constitutes as value, and know how to work together more effectively…then you’re on the road to brilliant collaboration and execution of plans.
Just the tip of numerous small alignment changes that can be made that could make a large difference to both you and your company’s performance.
We can help you manage innovative purchases. Contact us.