Procurement's New March to Complex Categories (Part 2) — Making the Frontline Experience Alive

In the first post in this series, I mixed some metaphors and began to hint at how procurement can become a true, lasting force on the corporate and shareholder stage by shifting its focus to higher value areas once the basics have been learned. This shift will require pursuing new skills, technologies and capabilities in areas like telecom to create a lasting effect. But it brings the potential not only to affect a new level of savings in singular areas (e.g., it's not uncommon to see $15 million or more in annual savings in individual areas like telecom and marketing from better category and supplier management) but also possibly how frontline business is done. I know what I just wrote sounds wildly optimistic, but stay with me and I'll try to bring the example alive through a scenario.

Let's imagine for a moment that your crack marketing and brand management team managing the organization's fastest growing P&L is on the road in Europe meeting with their agency of record (they've decided on some stuffy British or French one for some reason or another). Yet the front line brand managers within your company (a leading domestic CPG organization) won't even have to think about what mobile plan they're on for voice, data or texting when they head to a new locale and end up getting snowed in at Heathrow or trampled by the angry -- yet still rich, by global standards -- labor mobs in France.

Their devices, which will feature software from vendors like Emptoris/Rivermine, will automatically map usage patterns to existing contracts, making dynamic changes to provisioning and related requirements as required, when workers touch down or even if their visits are unexpectedly extended for reasons outside of their control. And while they're on the ground visiting their WPP, Omnicom or Publicis Groupe-owned agency, they'll turn to capabilities in the marketing area to compare the competitive -- yes, competitive -- marketing ROI/ROMI from different campaigns with other brands and products in the market, while looking at actual creative in the context of data analytics showing costs, impressions, etc., allowing them to hold their marketing partners feet to the fire to perform better and quantify their existence.

When the whipping is complete and after the agency's account manager and creative director fess up for past campaign shortcomings, the crack marketing team is so impressed with new creative for an upcoming effort that they decide to overnight the marked-up materials and comments back to their CMO for his afternoon management team meeting in New York. Some junior marketing analyst on the team gets the joy of running to the local postal store just before the window closes to get the box of materials on the last flight back to JFK that morning. But what he doesn't know is that given the success of negotiating and auditing the costs and vendor performance for small parcel, that the (very, very expensive, normally) box is actually shipping for free -- thanks to the $200K credit the company has with the carrier in question, owing to procurement's efforts.

That night, one of our trusty marketing employees whose visit has been extended owing to snow or overpaid rioting government workers, will be able to select his favorite Michelin starred restaurant on his smart phone (which he purchased himself based on personal preference and expensed to the company) or other mobile device thanks to his travel Spend Management toolset. But automatically, without his knowing it, his employer will realize a rebate from the total bill, owning to the discount program in place with the dining establishment.

He'll also be able to show Zagat ratings to all his European friends who marvel at the dangers of culinary democracy in action. The horror of it! Sacre bleu! Oh yeah ... his T&E report will also seamlessly file itself as well with a few clicks, a fact he'll be extra happy about when that extra bottle of Cote du Rhone hits hard at 7:30 in the morning when the alarm goes off.

What's changed in this scenario, aside from an employee who is otherwise more effective, satisfied, successful and smug than he could be under the circumstances? The answer is that his organization is saving a small fortune without the marketing group knowing much of what's transpired behind the scenes. Procurement has become a true superhero owing to its ability to impact frontline actions including both small and large business transactions and decisions, leveraging clever machinations, tools and influence behind the scenes to get the job done. And it's all been made possible thanks to the right set of skills and technologies, which neither legacy procurement dinosaurs nor the vendors that focused on meeting their needs -- we all know who they are -- even knew existed. To be continued ...

Editor's note: this scenario is entirely possible today leveraging off the shelf technology from a range of best-of-breed providers.

- Jason Busch

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