New Report: Obstacles in Advancing Marketing Procurement’s Strategic Value

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In late 2015, when PepsiCo announced that it was axing its global marketing procurement division, many industry leaders, including Spend Matters UK/Europe managing director Peter Smith, saw it as a sign of more job losses to come.

With speed and flexibility becoming increasingly valuable in the marketing and advertising world — we all want to get in on the latest trend, after all — what brand manager can afford to sit tight while procurement goes through its traditional process of sorting through competitive bids and negotiation?

“PepsiCo will no doubt be looked at by other firms,” Smith wrote, “and we suspect a lot of CMOs are licking their lips at the prospect of getting rid of procurement teams, which many marketing executives feel constrain their activities.”

A little constraint earlier this year would have saved PepsiCo millions of dollars and the rest of us a lot of secondhand embarrassment. Yes, I am speaking of the infamous Kendall Jenner ad. In April, Pepsi released and then quickly pulled an ad depicting a peaceful protest — complete with parallels to Black Lives Matter imagery — that culminated in Kendall Jenner handing a can of Pepsi to a police officer.

Of course, a dedicated procurement team likely would not have made a difference in that debacle, but there is still a case for marketing procurement, as a new report on the function’s obstacles and opportunities shows.

Globality, which connects clients with small service providers, commissioned a survey of 300 senior procurement professionals from around the world. It gleaned eight major takeaways from the survey, which are presented in the report, Marketing Procurement 2017: Key Opportunities and Barriers in Advancing Procurement’s Business Impact. We’ll look at a few of these more closely.

A number of the survey respondents told the researchers that today’s advertising and marketing world is like an “arms race.” With the speed at which digital marketing evolves, it can be difficult to separate what’s truly innovative and promising from what’s not. How do you put your finger on what makes for “effective creative work”?

And so it’s not surprising that digital ranked highest in the most difficult marketing spend areas to manage, followed by research. On the opposite end was public relations. As one head of procurement at a U.K.-based retail company put it, “digital technologies are confusing and difficult to implement, [and] risks from disruptions are high if we do not implement them well.”

Source: Globality’s “Marketing Procurement 2017”

There is also the matter of speed, the reason PepsiCo did away with its marketing procurement team altogether. The challenge here is for procurement to speed up its process without increasing risk — much easier said than done. Going through a big pile of RFPs decreases the chance of getting the wrong supplier, but the time costs are high. Consider how one to four months is the most typical length of time it takes to settle on a short list of vendors, as the graph above shows.

Being risk-averse can act at the expense of innovation. As the report authors point out, procurement is incented to use established and/or previously vetted vendors. And in fact, more than half of the survey respondents said that they use a pre-approved supplier list for new projects. This may inadvertently shut out an unknown supplier that would have been a best fit for a particular project.

So how can marketing procurement deal with these obstacles and turn them into opportunities? Most of the survey respondents said that they’re testing out changes to the traditional sourcing process. Those may include a short trial period for new vendors, conducting more informal vetting and — you guessed it — automation. Seventy percent of the respondents said that they use technology tools to help automate and accelerate the RFP process, and the vast majority of them have been pleased with the results.

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