While attending the annual ProcureCon Marketing Conference in San Diego this week, I’ve thought about the friction that can arise between Procurement and Marketing. Some in Marketing see Procurement as a roadblock and use sidestep maneuvers to get around their process. Others in Procurement view Marketing as uncommitted to using best practices for sourcing. Getting these two departments to operate efficiently in unison is key to better business results.
Part of the disconnect may stem from different employment experiences. Our colleague Philip Guiliano, the Day One chair of ProcureCon Marketing, asked attendees to raise their hands to indicate how long they had been in Procurement at the same company. Waves of hands stayed in the air as Philip called out 3 years, then 5 years, 5 to 10 years, and 10+ years.
You would never see longevity like this at a conference of mid-to-senior level marketers. Perhaps marketers need to make a quick impact as their tenure is more limited. Procurement is better able to take the long view. Having hundreds of projects under their belt at a single company gives Procurement a different perspective around the strategic value of process.
In any case, Procurement professionals are looking to change the nature of their relationship with marketing colleagues. Working together, they’ll be able to address some thorny strategic challenges. Agency relationships, in-house versus agency service models, and the ability to predict the ROI of marketing spend are topics near and dear to executives in both functions.
Panelists and the audience addressed these questions:
- Is in-house better than the agency services model?
Quite simply, no. Neither the in-house or agency services model is inherently better. This answer is based on a session featuring Larry Smith, strategic sourcing director at Mars and David Gallaer, Vice President, category management at MUFG along with comments from panelists and the audience during subsequent sessions. Most people recommend building in-house capacity for tactical and repeatable work—think email marketing or everyday collateral writing. Where there are risks—ceding ownership of customer data or tech stacks to agencies, for example—they can be managed through the terms of the contract. It’s about using a thorough assessment process with the goal of having an overall healthy ecosystem.
- How can we better project the impact of marketing spend on profit and loss?
Here’s a place where the interests of Procurement and Marketing clearly align. It was a key theme of Robin Vogel’s keynote – she’s the vice president of Commercial, Americas at Mars. Robin is looking to vendors and the industry at large for ways to quantify the benefit of individual marketing services contracts on P&L and brand valuation.
Think how much easier it would be to talk to the CFO with data in hand that shows a clear and credible impact on the bottom line of the company. With that said, I don’t ever expect to be able to apply a formula to every single dollar of marketing spend. But better models for assessing the impact of branding activities on brand equity, for example, would make it easier for executives to make better choices.
- Is the RFI/RFP dead?
It’s not, but maybe it should be. It’s often a one-size fits all solution, and the same 90 questions are used in most bid documents. This process can be mind-numbing for bid respondents and unhelpful to evaluators. This may be a case of the procurement process run amok. Mithun Sharma, vice president, global strategic sourcing at Visa had a radical suggestion: Provide vendors with the objectives of the program and then ask each to provide the top five reasons they would be great at delivering on the goal. This can foster an environment where the strongest contenders rise to the top and everyone involved—Procurement, Marketing, and the vendors—is able to spend their time more wisely.
- Should we even call it Procurement?
Perhaps this term gets in the way of greater collaboration as the word “procurement” means “the act of obtaining or buying goods and services.” That just doesn’t sound strategic, does it? This term limits the scope and the nature of the relationship Procurement wants to have with their Marketing colleagues. I checked, and Merriam-Webster doesn’t even list a synonym for procurement. The contest is on for the best alternative!
- Should Procurement walk a mile in Marketing’s shoes (and vice versa)?
To promote understanding, one panelist suggested that Procurement and Marketing institute an employee exchange program. Selected Procurement and Marketing staff members would swap jobs to learn the ropes. This cross-pollination would increase not just understanding, but respect. Procurement would be in a better position to offer strategic counsel and Marketing would learn the reasons behind and the value of Procurement practices.
During this conversation, Rubina Malbari, executive director, global advertising and promotions at The Estee Lauder Companies, championed the value of spending time as a procurement generalist. Having experience across different categories and with different groups helps you learn the business.
During this conference, I learned a lot about how to get Procurement and Marketing to work together in harmony. And that increases the overall ability of Procurement to deliver smart, strategic solutions that make the organization more efficient.