It's Time to Take on Marketing Procurement

The approach you take depends on your organization's marketing procurement maturity


At organizations with a medium level of marketing procurement maturity, Procurement staff typically have sourced the lower-dollar, lower-strategic value spend categories, and have benchmarked agency costs and renegotiated contracts. Often these organizations include staff that have held line roles in the marketing function or at advertising agencies, and they might have experienced marketing procurement staff members that can mentor junior staff. By the time an organization reaches this level, Marketing and Procurement will have taken steps to align their functional performance evaluation metrics.

At this level, too, companies will be using some form of automated spend management and management reporting tools. This allows them to aggregate and manage spend centrally, at least within each country. These organizations may already be adding sophistication to their supplier management practices, for example, through audits, segmentation and supplier risk management.

 

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Action Plan

These companies should build on investments in procurement personnel's marketing and marketing-sourcing knowledgebase through advanced continuing education courses and industry conferences. At the same time, staff should look to take their supplier management sophistication to the next level, for example, through regular, structured senior-level meetings with strategic partner execs, regular supplier evaluations and continuous improvement summits.

Leveraging the tools that the companies have deployed, Procurement should focus on consolidating the supply base within country borders and then selectively sourcing some services globally. This will set the stage for moving toward a global sourcing strategy. In addition, continually look for process automation and standardization opportunities, for example, by adopting creative briefing templates.

High Marketing Procurement Maturity

Advanced organizations typically have aligned performance objectives across Marketing, Procurement and the enterprise as a whole. They may hire professionals capable of playing marketing or GM roles, and they will organize their teams for optimal effectiveness, whether that means decentralized or centralized, center-led or co-located. They are usually in-sourcing or outsourcing marketing procurement expertise strategically and cost-effectively.

These advanced organizations apply sophisticated demand management strategies to their consumption of services, first determining the most effective media mix for resource allocation, auditing programming-mix cost optimization to identify alternate efficient portfolios, and assessing ad production efficiency (for example, offshoring, simultaneous production or remote streaming). They also will typically be seen sourcing select categories globally.

In addition, these organizations may deploy decoupling strategies and establish preferred suppliers deeper in the spend, while also adopting Lean concepts with a continuous improvement orientation and communicating up and down the supply chain. Finally, in collaborating with vendors, advanced companies will often develop strategic supplier partnerships at the "C" executive level.

Action Plan

High maturity marketing procurement companies must still ensure alignment on functional performance evaluation goals and objectives on a continual — not "one-off" — basis. They also must not become complacent in terms of their organizational structure; as the market changes and the company itself grows or evolves, marketing procurement must be organized optimally to support Marketing business partners and the company as a whole by regularly asking questions like:

¦ Does a centralized, decentralized or center-led approach make the most sense?
¦ Should marketing procurement be co-located with Marketing or maintained within Procurement?
¦ Should this function report up through Finance or through Marketing?

The answers to those questions will vary over time, and companies must be prepared to make the organizational changes necessary to adapt to the current environment.

Staff skills must be kept up to date through attendance at industry conferences and keeping current on trends through journals, online forums and so forth. Executives should stay active in industry associations and play leading roles in functional peer networks, too. Companies also should look at hiring talent at all seniority levels, versus "renting" talent through expensive consulting engagements.

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