- 14
- DEC
- 2009
Missing a Trick? The art of marketing procurement
Author: Kevin Monahan - Categories: Procurement Intelligence
Are marketing and procurement really that far apart? A few colleagues may suggest I've finally lost it for attempting to compare the two, but marketing spend is certainly on many a CPO's festive wishlist, so let's persevere for a second.
In a recent PIU survey marketing ranked as the number two area providing potential for savings (IT came first), while a separate blog debate rages over at our sister organisation, the Procurement Leaders Network, about procurement's potentially negative effects on the creative industry, with margins being driven into the ground. In a recent benchmarking project, everybody wanted to discuss TV advertising, but very few could answer for it. Marketing is after all, as a top procurement executive stated at a recent PIU workshop, 'one of the last bastions of spend for procurement to get a hold of'. And we all know it's pretty intangible stuff when you get there.
However, let's look at the objectives of procurement versus the objectives of marketing. Unless I'm mistaken, one attempts to get the right products, at the right time, at the best total cost of ownership for the organisation, while the other attempts to get the right products, at the right time and at the right price for the organisation's customers. But don't take my word for it, that's just loose translation for the Chartered Institute of Marketing's definition of marketing - 'the management process responsible for identifying, anticipating and satisfying customer requirements profitably'. So, in other words, both require a deep, expert understanding of the needs of its stakeholders. And although we're comparing top-line vs. bottom-line growth, note the word 'profitably' in the marketing definition too.
Where I see a really important difference is perhaps what comes naturally to marketing, as it's part of the job spec - shout about the value you add and the way you're meeting the needs of your audience, both internally within the organisation and externally to the market. Tell the story of the clever things that you did and their positive effects, using soft skills along the way to shape behaviour and ultimately a brand.
We deliberately asked where 'marketing procurement's value' sat in the aforementioned 2010 CPO Strategy survey, with preliminary analysis showing 13% of 210 respondents saying it was their 'highest priority', while 32% said it was 'not a priority'. But imagine the effects of branding procurement, of measuring its value against the goals of the business, of having an internal communications strategy, of focusing on what the savings generated allowed the business and its various departments to do? Fast forward to a more viable and exciting option for graduates and cross-departmental high flyers, a highly motivating place for the procurement team itself to work and an empowering one when it comes to opening doors to other areas of untapped or unrealised potential.
The point is, both marketing and procurement go at somewhat similar, high-level objectives with a very different approach. Looking into that further, there is an argument to be made that both can learn a lot from the other for the good of themselves and the business. Some have bridged this divide already, some know it's another issue on the horizon and some dismiss the idea out of hand. Which one are you?
Comments
Richard Woodford
Tue 15 Dec 2009 09:48
This is very true. To be completely aligned to your Marketing Stakeholders means you gain access to areas of the business that Procurement have traditionally never been. Gaining entry then leads to opportunities that allow Procurement the opportunity to add significant value both to the bottom line in the nature of savings, but strategically in the form of better working process and smoother working relationships with partners.
Mark Perera
Tue 15 Dec 2009 11:12
Kevin, its an interesting point you have raised and although the figures from the survey don't show it a the highest priority, recent discussions with procurement execs indicates its an area of increased focus going to 2010.
I know at least four organisations that invested in bringing on a communications executive in the last 6 months, to purely work on the messaging of procurement to the internal customers and also the suppliers.
Bob Rodwell
Wed 13 Jan 2010 15:58
Kevin, there are a couple of interesting points here; ones that have been debated throughout the last decade. I have both led and been part of marketing procurement teams across a number of organisations in the last ten years and by far the hardest part of the job is stakeholder engagement. Mistrust by marketing execs is the main roadblock to successful negotiations with agencies as feelings are relayed across that side of the triangle.
This mistrust arises out of two factors: (i) CFOs often pocket the savings made by procurement rather than letting marketeers reinvest it; (ii) where there is a weak startegic marketing base the marketeers' role is mainly that of agency selection and management so marketing procurement is seen a a threat to their reputations or very existance. A clear and constant message of support is needed and is what I have been working on for a decade.
Mark Perera
Tue 19 Jan 2010 09:45
Bob - your point about CFOs pocketing the savings is where I see the biggest issue in trying to get the buy in from marketing. Do you think stakeholder management will continue to be the biggest challenge for next decade or are their other challenges coming into play?
Ralph Daniel
Thu 21 Jan 2010 13:46
Kevin,
As an advertising finance man (now in partnership as an independent ) my simple message to graduate training modules was that marketing services without shared commercial advantage to the agency and client alike will hardly ever serve the marketing objective. I hardly ever found a lack of interest in presenting the way it works and I know by comparison that awareness of the necessary link between procurement, agencies and marketing is ever closer. There are still traditional gaps in this realisation (which is how, unfortunately, I still earn most of my income) but these are diminishing. Marketing procurement execs that don't get it don’t tend to last long these days. Overall, I think your point is very well made and I believe it is an essential acknowledgement that our industry has to make rather than an ongoing debate.
Kevin Monahan
Thu 21 Jan 2010 15:37
Thanks Ralph, I think you're right that we're definitely getting there. With procurement's move towards collaboration and where possible, marketing's move towards value measurement, we might just meet in the middle. It's another example of the empathy required to recognise the objectives and challenges faced by both parties and whether a win-win scenario exists within this context.
Tina Fegent
Thu 28 Jan 2010 09:33
Hi Kevin,
A good and balanced article I thought. But I really do think it is time to stop being focused on the relationship between the three parties involved in this area (Procurement, Marketing and Agencies). Whilst without a shadow of a doubt it is a key requirement for success in this area, but there are many much more interesting areas for us to look at and get involved in in this category.
What about SRM ? This is a key area that lets all sides down - the pitch happens and then the parties never meet again until the next pitch. ROI - the COI have recently published a good paper on some key criteria on this, let Procurement take the lead in establishing and measuring the metrics. Data on the market place - establish solid benchmarking is key as well. I am trying to include this in my blog (http://theworldoffegent.blogspot.com/ ) to try and move away from focusing on the one topic of relationship and let's look forward and do some great stuff in this area.
Vinay
Tue 10 Jan 2012 17:44
I really loved this article...I kept on saying this to my marketing colleagues, but being from procurement they wuld think...I have lost it...