Procurement is often seen as the team that mainly focuses on cost cutting, going in for the most affordable service that is beneficial to the company in terms of dollars and cents while sometimes foregoing the creative element. However, as the industry becomes most cost conscious as a whole, there is an opportunity for procurement teams to position themselves as an in-house service that helps marketing succeed while at the same time containing costs.
To do so, marketing needs to gain confidence that it does indeed have the authority to make decisions and that procurement’s role is to in fact support marketing, instead of stand guard as a watchdog, said a report by R3. As marketing teams seek to achieve more and innovate in this fast-paced world, procurement can play its part by offering the tools to help in decision-making.
The report identified three challenges that procurement teams will face in their journey to be regarded as a valued in-house resource. At the beginner level, procurement teams face a culture of mistrust between them and brand marketers, with the impression that procurement exists to cut costs. To rectify this, procurement can start by evaluating the current state of activity as well as streamline and reduce costs by consolidating jobs to preferred suppliers that offer competitive pricing, strong account management, and high quality.
At the intermediate level, procurement’s value is acknowledged but its involvement is limited to tactical spend categories. Reason being, marketers feel that procurement still lacks understanding of agency relationships and overall marketing needs, the report explained. This provides procurement with an opportunity to carry out a spend analysis to paint a clearer picture of existing agency relationships. This information can then be used to identity tactical spend areas versus strategic ones and highlight where better terms and rates can be negotiated.
When procurement and marketing teams have achieved an advanced level of integration, procurement can offer relevant data and analysis, as well as a process that is transparent for both marketers and agencies. This helps when marketers and agencies struggle to handle issues concerning transparency and trust when it involves data and value. R3’s report explained that the strength of strategic sourcing is in its ability to use metrics to drive value in the short and long-term.
Furthermore, to ensure procurement and marketing can work in harmony, both teams need to view their partnership as a collaboration. This can be done with procurement assessing how they score across five sectors that form the foundation of successful collaborative programmes.
1. Strategic alignment: Ensure that both marketing and procurement are aligned on the company’s overall strategic goals and objectives, as well as scope of initiatives.
2. Cross-functional engagement: Consider the breadth of relationship across the organisation, quality and outcomes of engagement, as well as the ability to navigate across organisations.
3. Organisational governance: Create an incentive structure and have agreed-upon metrics. There should also be a specified type and frequency for mutual feedback.
4. Communication and trust: Build mutual trust and have tools and supporting mechanisms to build the foundation for communication and trust. The type and timeliness of information should also be specified.
5. Value creation and sharing: One of the crucial ingredients to a successful partnership is having rewards for positive performance, as well as having room for healthy financial health. There should also be fair value sharing.
At the same time, procurement teams can also help add value to marketing by mitigating disruption and understanding how access to talent and resource might impact marketing’s ability to deliver locally and globally. Procurement teams can also obtain transparency on how marketing aligns with the business on issues of ethics and business practice.
Also, they can also value-add by creating unity and generating more insights into the supply chain by knowing where data is sourced and stored. Procurement teams should also plan for interruptions and ensure work can still carry on with good communication, clear workflow and technology.
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