Where Revenue and Cost Meet: Procurement and Marketing Collaboration

Spend Matters welcomes a guest post from Shweta Shanker of GEP.

Procurement and marketing by definition have different strategic objectives and operational focuses. Marketing’s objective is product design and driving revenues, whereas the expectation from procurement is reduction in spend and savings realization.

However, in the current economic situation, organizations of all sectors and sizes are looking for ways to drive efficiencies and optimize spend. As a result, they are tightening marketing budgets, critically evaluating spend and reassessing level of services required. Procurement plays an increasingly vital role when it comes to driving an efficient marketing budget.

It is crucial that marketing teams realize what their procurement counterparts can bring to the table, while those in procurement need to acknowledge that sourcing marketing services come with a completely different set of rules.

Procurement is not all about savings. Their involvement can provide various other benefits, such as the following:

  • Visibility: Procurement, being a central function across all business units within a company, is able to ensure that all spend with a particular supplier is visible and is being leveraged to obtain optimal value from suppliers.
  • Variety: While marketing is the best judge for what is required from a service point of view, procurement can assist by bringing more suppliers to the mix, which allows for a more well-rounded view of the marketplace.
  • Systematic evaluation process and supplier reviews: Procurement can help implement a transparent and structured supplier evaluation and review process. This gives marketing the reassurance that they have chosen the right supplier after having considered all relevant aspects and that the continuous review process to ensure high level of service is maintained.
  • Contractual coverage: Procurement teams are efficient at identifying areas of improvement in contracts and making sure that marketing needs are met through efficient contract management.
  • Handling any unpleasant discussions: Procurement is able to have the more difficult conversations with suppliers regarding performance or pricing issues.

 

Procurement also has their work cut out to understand the world of marketing:

  • Listening and understanding is key: Taking the time to understand what marketing values in a particular service or supplier relationship is key to building trust.
  • Balance is critical: It is essential for procurement teams to toe the line carefully by influencing supplier selection while keeping marketing in control of the ultimate decision.
  • Sourcing marketing is not all about RFPs: Procurement should be flexible and open to understanding the situation and identifying the right approach to meeting marketing’s requirements whether it be through strategic sourcing, renegotiations with suppliers, contract evaluation, rebate/discount structures, process efficiencies, etc.
  • Educate marketing: It is not all about cost cutting. Educating marketing teams on the value that procurement can deliver will help build a more collaborative environment.
  • Invest in relationship building: Proving value through smaller engagements will help build confidence with the marketing stakeholders. Continuous engagement with marketing to understand their way of working and handling supplier relationships will take time but will help transform stakeholders into champions.

 

Starting off on a positive collaborative note while trying to understand the other team’s role and what matters to both sides will help lay the foundation for a successful partnership. For more interesting thinking on procurement, visit the GEP Knowledge Portal.

Voices (2)

  1. Pierre Mitchell:

    There are some good data points on Procurement involvement in Growth / Innovation here (presentation on some research I did back at Hackett). See slides 8-10; 30-33;… http://www.ism-florida.org/wp-content/uploads/2010/01/Hackett-Group_Procurement-Excellence-How-World-Class-Procurement-Optimizes-Global-Performance_061412.pdf

  2. Tony Fross:

    Great post, Shweta. We’ve been talking about the idea of Concept-to-Customer collaboration between Marketing and Procurement at LogicSource and so I’m going to think about how I might build on your post for my post next month!

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