This is your last chance to register for this morning's webinar on How Eli Lilly & Company Achieved Visibility Through Event Category Transformation. Beginning at 10 a.m. CST, Pierre Mitchell, chief research officer at Spend Matters, will join Roberto Ramirez, sourcing consultant, Eli Lilly & Co., and Talia Mashiach, CEO, founder and product architect, Eved, for a brief, 30-minute discussion on event procurement and sourcing. Register before time runs out!
Category Archives: Category Management
Complicated: Event procurement and sourcing. Not complicated: Attending our 30-minute webinar, Event Category Spend: Early Lessons Learned From Eli Lilly and Company, on Wednesday, Feb. 10, at 10 a.m. CST, with Pierre Mitchell, chief research officer at Spend Matters, Roberto Ramirez, sourcing consultant, Eli Lilly and Company, and Talia Mashiach, CEO, founder and product architect, Eved.
Our experience across procurement and supply chain design and engineering teams leads us to suggest that we can effectively segment the tools in the market into categories in a way that provides little overlap between each of the areas, at least today. In this post, we define and briefly describe six major solution areas before getting into specifics in our next posts. It is likely if your company is in the manufacturing business, or works with contract manufacturers to produce its products, that there are elements of solutions in each of these areas that you’ll be able to call upon as you consider your direct materials sourcing procurement capabilities and solution architecture. Just be sure not to ignore the touch-points between the various toolsets — not to mention integration with ERP/MRP, CAD/PLM, inventory/supply chain systems, supplier systems of record and third-party data enrichment, when available and applicable.
Direct materials sourcing refers to the sourcing of custom manufactured goods, and of course, raw materials from first tier suppliers that meet the particular needs of the buying organization. It is distinct from the sourcing of commodity goods and services in that the nature of the requirements are considerably more detailed than the requirements for consumables or low-value goods. If all you are buying is toner cartridges for the laser printers, cleaning suppliers for maintenance or commodity packaged goods to round out the low end of a product line, any compatible toner cartridge, cleaning detergent or aftermarket good will cut the mustard. But if the organization is buying components for a high-end laptop, looking for custom molded manifolds or building engines, the goods have to be precise. Sourcing these goods is considerably more complex than sourcing toner cartridges and detergents.
Marketing is all about generating demand for the organization’s products. Thus, value to marketing is any activity that has the potential to increase demand. The primary activity marketing undertakes to increase demand is advertising. This activity is primarily accomplished through contracting agencies with the creative talent (the “magicians”) that marketing believes has what it takes to produce the magic that will increase demand with the fresh and innovative campaigns and messages these creative types will generate. Thus, a big part of marketing is agency management. Often the greatest value that procurement can bring marketing, at least in marketing’s view, is any process, methodology, technology or resource pool to help marketing better manage its agency relationships. If marketing already thinks those relationships are good, procurement can still help foster more successful agency relationships. How will procurement accomplish this? In this installment of our six-part Spend Matters Plus series, we take procurement practitioners through how to clarify and pitch the value message of certain management processes for marketing, ultimately helping marketing close the loop between what was created and what was delivered.
How best to connect with the marketing team? As a procurement professional, you probably hear this over and over again from bloggers, analysts, consultants and even vendors who stress that a new initiative will not be successful without executive support, and engaging with marketing is no different. Even if you talk the talk and walk the walk (as we analyzed in the first part of this series), and come bearing great suggestions to address marketing’s value drivers and increase the overall return from the marketing spend (our point in Part 2) — even if you can use this newfound knowledge to get marketing to lower the drawbridge and invite you into the foyer, it doesn’t mean the wizards of wondrous words are going to take you seriously or invite you back to dine in the great hall. One has to remember that marketing has a right to be cautious, and maybe even distrustful, of your new value-generation messaging because the last time procurement came knocking, it was to cut costs, which is not necessarily beneficial to marketing. Thus, it’s only reasonable that they would want some c-suite assurance that this time it’s different. So how do you get the right executive support? That’s what we’ll tackle in our third installment of this Spend Matters Plus series.
In the first installment of this Plus series, we discussed how, despite the fact that we have known for almost a decade that the marketing category contains significant value that can be unlocked with good procurement practices and processes, in most organizations, marketing is still a “sacred-cow” category that is out of procurement’s reach. In these organizations, marketing still insists that it cannot be constrained by procurement logic in its quest for the best agency magic and that it’s not how much you spend but how much business value you generate. And while this is mostly true, it’s not entirely true. It’s about spending wisely so that every additional dollar of spend generates additional, measurable value for the brand. Marketing’s entire purpose — increasing sales and brand value — cannot be done without spending hard dollars, and, generally, success will correlate with how much is spent. As a result, the goal is to always increase, not decrease, the available marketing budget. This is one category where it’s not about savings but about value delivered. As a result, the money needs to be spent on agencies that produce campaigns that generate results, and on third parties that provide the products and services that support the campaigns (print, digital media, etc.). However, one cannot even begin to contemplate who the right parties are until one understands the value drivers that need to be considered and addressed. So how to make logic + magic = profits? First, in this installment, we will discuss the four biggest value drivers to marketing — understanding those will be key to gaining their trust and getting their spend under management.
Much like packaging, logistics and maintenance, repair and operations (MRO), the marketing spend category straddles the boundary between direct and indirect. And we all know that it has a substantial impact on sales and revenue — allegedly, at least. The reality is that, while every marketing dollar spent can have a huge impact if spent appropriately, the direct commercial impact is notoriously difficult to assess, and the value per dollar spent even more difficult to quantity. However, organizations can no longer afford to ignore this “sacred spend cow” category, as every dollar spent needs to count in an inflationary market. Marketing needs procurement to squeeze every penny of value out of agency spend to not just lower total costs but also maximize revenue uplift and brand enhancement. However, this won’t happen as long as a moat separates procurement from marketing. Thus, in this series, we have distilled the approaches and practices we’ve seen adopted by leading practitioners and present a step-by-step plan to help procurement gain marketing’s ear, trust and support in helping marketing manage its spend for maximum performance. In this first installment, we break down why you need to walk the walk, talk the talk, get educated and “live the marketing life” — all of which should help loosen marketing’s drawbridge and ease it down across that moat.
If you’re sourcing commodities this year, then don’t go any further before reading our 3 Best Practices for Buying Commodities in 2015. Jason Busch, founder and managing director, Spend Matters, and Lisa Reisman, CEO, Azul Partners, and executive editor, MetalMiner™, teamed up for this must-have FREE PDF for purchasing professionals everywhere. With it, you will: Learn why sourcing on the spot market is inherently speculative and therefore risky; know why using indexes is just plain bad strategy; and wring every possible bit of value from your direct material commodity spend. So stop speculating and learn concrete, tangible practices that will yield strong ROI, in addition to the most favorable outcome possible. Get your copy today!
When you think of electronic catalogs, do you get excited? Probably not. My colleague Jason Busch penned a piece on this last week that needed a retort. Although you might not find catalogs very sexy, if you look at the data on how the best procurement organizations use them properly, and the performance uplift those organizations get, you probably would.
Last Chance to Register for Tomorrow’s Webinar and Learn Advanced Case Studies in Smarter Catalog Management
This is your last chance to register for tomorrow's webinar, Teaching an Old Dog New Tricks: Advanced Case Studies in Smarter Catalog Management. Join us at 10 a.m. CDT as the Spend Matters and jCatalog teams walk you through how progressive procurement organizations are enticing stakeholders with more nuanced approaches to support complex category-specific supply chain requirements. The old-school catalogs that often get a bad reputation are history. Advanced smart catalogs are replacing them and promoting a guided buying process essential to the procurement and supply chain world. Register today!
Out with the old and in with the new ... catalogs. Join us next Wednesday, Nov. 4 at 10 a.m. CDT for the webinar, Teaching an Old Dog New Tricks: Advanced Case Studies in Smarter Catalog Management. The Spend Matters team and jCatalog will talk trends and highlights with case studies in using smarter catalogs for a guided buying process to make procure to pay (P2P) manageable for stakeholders and the procurement function.