Just How Complex Can Buying Direct Mail Be? Answer – Very Complex!

Hot Topic

Our Hot Topic this month is Buying Marketing Services. That covers a wide range of spend areas, form media and sexy stuff around social media, search engine optimisation and the like, through to more established products such as direct mail and newspaper advertising.

Even at this more traditional part of the market, there are some very interesting procurement challenges. We wrote about one a while ago in one of our briefing papers, which covered the topic of (as we call it) “market-informed sourcing” (also known as advanced sourcing, optimisation, etc).

This paper, sponsored by one of the leading tech firms in this area, Trade Extensions, used a handful of examples to show where highly complex sourcing tasks could be addressed with the aid of very clever MIS software. That uses advanced mathematical algorithms to solve what look like virtually impossible problems.

Anyway, you can download the whole paper here, free on registration, but this is an extract where we talk about one particular sourcing challenge that broadly falls into that “marketing services” category. This section does not talk about how MIS might offer a solution to the problem, but it does outline the complexity of this type of sourcing exercise, given the options in terms of how we might best use the market and different supply chain approaches.

 

Direct mail / fulfillment supply chain – not as simple as it looks
In this example, a firm requires a ‘direct mail’ printed product that will be sent out to clients or potential clients; perhaps an advertising mailshot or similar. (And let’s assume the quantities are such that one or more commercial printers are clearly going to be required rather than local use of network printers).  The product is required in large quantities across 30 countries; it then needs to be distributed through the national mail system or equivalent.

So, while the product itself is relatively easy to specify, the supply chain has a number of different elements, principally:

  • The base paper required for the mailshot
  • The printing process – ‘ink onto paper’
  • Fulfillment – getting the paper into the envelopes and making sure they are addressed correctly
  • The distribution process (which may also involve an element of storage at some point)

So what is the ‘best’ way of contracting for this requirement? A single contract with a supplier who will act as an integrator of the whole supply chain, using sub-contractors to handle the elements they cannot deal with themselves?  Would it be best to give that task to a printer as that is perhaps the most challenging part of the requirement?   Should the customer use their leverage or skills to contract for the paper separately and provide that to the printer? Would it be better to look at each of the elements as separate procurement exercises, and place multiple contracts? If so, is that best done geographically, or by capability, or some other way?

Whilst there are only a finite number of options, the task is certainly complex enough to cause uncertainty in anyone’s mind about what the optimal strategy might be.

 

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