Procurement has long-since tried to be the knight in shining armor who saves marketing by slaying the proverbial dragon, implementing cost-reduction tactics to slash costs and save money. But what may have been a well-intended happily ever-after has evolved into a Brothers Grimm plot twist. Read on for actionable insights Procurement can take today to transform this tragedy into a fairy tale.
If measuring success based on cost-reduction, you’re on the wrong quest
The irony in this tragic tale of procurement and marketing is in its room for interpretation. Procurement defines procuring as saving, while marketing defines procuring as killing: killing their talent, creativity, and brand. As history would have it, Procurement began working alongside Marketing in more tactical categories such as coupons and commercial and operational print, but as Procurement pushed harder for cost-reduction and savings, a divide was created and the seeds of conflict began. What was once a united effort is now the Marketing vs. Procurement dichotomy. So, what’s the resolution to the age-old conflict of procurement fighting the wrong battle? The quest for procurement is not to kill the beast, but instead to tame it and train it. In other words, the goal is not cost-reduction, but investment and reinvestment to achieve harmony.
To revert back to our knight in shining armor example, you wouldn’t buy a wooden sword to ward off a dragon just because it’s a cheaper alternative to a steel sword. Similarly, evaluating a marketing agency focused solely on the immediacy of cost-reductions and ignoring the consequences of long-term sustainable quality and market impact is like battling that dragon with your wooden sword. It’s crazy, and will utterly fail. When you make an investment decision based solely on costs, the outcome is grave at best. If you’re measuring success based on increasing marketing ROI, you’re on the right track. Increase agency value through supplier relationship management and budget optimization to improve marketing efficiency and become the fairy tale hero.
Procurement must give up specificity and embrace ambiguity
Marketing is inherently creative and innovative, and is driven by elements like insights and intuition, which are difficult to quantify, difficult to track, and yet absolutely essential to growing the business. Simply put, marketing is focused on the intangibles. Procurement on the other hand is analytical, metrics driven, and almost entirely focused on tangible, quantifiable values, such as cost reduction and spend under management.
In marketing, quality is often a variable, and creative agency evaluation and selection may not always be the apples to apples comparison procurement is used to. Direct materials sourcing is static, but marketing agencies and marketing suppliers are in a highly fluid marketplace. Direct materials sourcing employs cost reduction strategies to cut costs associated with the annual fixed budget; however, the budget associated with marketing isn’t always so concrete. So how can Procurement add value to the marketing team? Procurement must relinquish the need for control and learn to find creative and innovative solutions for problems across marketing’s network of agencies. By demonstrating a complete understanding of the investments marketing wants to make and helping marketing determine how agencies fit into their overarching strategy, Procurement strengthens the marketing procurement alliance. Therefore, Procurement needs to be comfortable with ambiguity, and respond to it accordingly.
Ultimately, Procurement can become a collaborative "hero" to Marketing if they focus on delivering the right message, and track success with the right metrics. While cost-reduction is still an important component of any sourcing strategy across any spend area, its importance is second to overall quality, brand differentiation, and customer loyalty for Marketing. Source One’s contingency cost-reduction experts are committed to driving brand value and optimizing the marketing category by increasing marketing ROI, and can help your Procurement team implement Marketing Procurement best practices today.