Five myths about procurement
11 July 2012
There are myths involving ancient gods and fierce warriors and then there are myths involving marketing procurement. Hollywood has already taken care of the former so now it’s time to demolish a few myths about marketing procurement.
Many of these myths stem from the traditional three-way battle between procurement, marketing and the agencies they work with.
Surveys show that agencies lean towards the view that procurement looks at the marketing function as a cost to be minimized; procurement people disagree equally vehemently; and the marketing department’s view is somewhere in between.
What everyone might agree on is that procurement has traditionally had a bad press. Partly because it has been and sometimes remains an easy target and partly, perhaps, because procurement people don’t have the same flair for publicity – or access to trade press – that marketers and agency bosses do.
All this has allowed a number of myths about procurement to evolve. While some procurement teams have undoubtedly focused too much on savings rather than value or managed their internal and external relationships poorly, the fact is that the best performers confound all these myths.
The WFA’s latest survey of procurement practices at 45 of the world’s largest companies shows that many of the myths around the practice are just that, myths.
The first myth is that procurement knows little about marketing.
Our research shows that this is simply not true for the world’s best marketing procurement teams. By surveying 45 of the world’s largest companies, we’ve found that the more than half of the most advanced sourcing teams have staff with a background in marketing – usually more than five years.
The second myth is that procurement is separate from marketing.
Our research shows that the procurement team’s integration with the marketing planning process strongly correlates with advanced performance. The best companies have a much stronger culture of cross-functional working, with multi-functional teams (including procurement and marketing) involved in campaign development, goal-setting and post-evaluation.
The third myth is that procurement is simply dictating what happens in marketing.
Our research shows that there are four areas that can build efficiency within a marketing organization: managing money, finding the best agencies, applying best practice, introducing systematic approaches. While the lead role in areas such as managing money and finding the best agencies often naturally fall to procurement, areas such as applying best practice and introducing systematic approaches need to be driven by marketing. The most advanced organisations recognise the need for deep-seated co-operation between the two functions.
The fourth myth is that agencies and procurement mix as well as oil and water.
Our research shows that where companies have clear processes in place for cross-functional working between the trilogy of marketing, procurement and agencies they achieve a higher performance score. Procurement can be extremely helpful to agencies by helping clarify arrangements with suppliers, getting formal contracts in place, harmonising bonus arrangements across brands and geographies and consolidating business, for example.
The final myth is that procurement only focuses on costs.
Again, our research shows that procurement recognizes the importance of the other drivers of effectiveness and efficiency, including innovation, resources and transparency. Costs are only part of the equation and the best teams are focused on quantifying and qualifying the value delivered to marketing.
The WFA wants to showcase the value that procurement brings to marketing organisations. But it also recognises that not all procurement teams are as good as the best. Indeed some have plenty of room for improvement and that’s why we have developed a new benchmarking process in conjunction with Spire.
This benchmark aims to provide procurement and marketing with advice on how to improve their performance and make the discipline even more valuable. Ultimately those benefits will only be realised where there is collaboration with both marketing teams and agency partners.
The truth is that successful marketing procurement is so far removed from the myths that perhaps even Hollywood couldn’t make it into a credible movie.
Steve Lightfoot, senior manager, global marketing procurement, WFA