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Category Management

Six Best Practices for Procuring Marketing Services (Part 2) [Plus +]

marketing

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on marketing services, which originally ran on Spend Matters PRO. 

In Part 1, we pulled together a number of key learnings (and some personal experience) to come up with six best practice suggestions for CPOs or marketing services procurement leads to consider. We previously looked at three recommendations around category strategy and suppler management. Today we’ll take a look at three more that focus more on the procurement function and individuals in it, how they align with marketing colleagues, and the skills they need to succeed in this area.

Six Best Practices for Procuring Marketing Services [Plus +]

marketing spend

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

My personal involvement with procurement functions trying to get to grips with the marketing spend category goes back some 25 years, and I had some successes and failures in my time as a CPO in several large organisations. It’s a category where procurement has been slow to increase influence, but according to figures from the World Federation of Advertisers, we have gradually reached a position where the procurement function is estimated to have between 50%–80% spend coverage in the category (depending on the geographic maturity, with firms in Europe at the top of the scale and South America at the bottom).

This is starting to feel like a coming of age for marketing services procurement, with some very impressive people in senior category roles speaking and a general air that clear best practice is emerging. There are still tensions between procurement and marketing staff in some organisations, but relationships seem to be improving and a sense of where and how procurement can contribute is certainly developing.

In this Spend Matters Plus article, we’ve pulled together some key learnings to come up with six best practice suggestions for CPOs or marketing services procurement leads to consider. We’ll have three around strategic category and sourcing issues today, and three focusing more on engagement strategy and people in Part 2.

A Critical Look at Category Management (Part 4) [Plus +]

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

In the last few weeks we’ve looked at some of the drawbacks related to what we might call “traditional” category management (Part 1, Part 2, Part 3). However, we should stress that they’re all aspects of the process that can be overcome by appropriate thought and management effort. The lack of stakeholder involvement we’ve sometimes seen — the overly procurement-centric approach — can be addressed by ensuring that the right engagement takes place. The risk of over-standardisation of approach can be mitigated by being aware of that issue and ensuring it doesn’t happen. But today’s discussion will consider an alternative approach that perhaps challenges more fundamentally the conventional steps in the category management process.

A Critical Look at Category Management (Part 3) [Plus +]

We wrote in the last article about the standardised nature of category management process and practice, and the dangers inherent in approaching different categories via that standard approach. Now let’s consider another failing of much “traditional” category management methodology and philosophy. We might define this as an overly procurement-centric approach to the whole task in hand. The buyer is placed in an almost deity-like position, controlling the whole process and with other participants fitting into their scheme and doing what they are told to by the all powerful category manager.

A Critical Look at Category Management (Part 2) [Plus +]

category management

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

As we wrote in Part 1 of this series, category management (“CatMan”) has been perhaps the most powerful sourcing tool in the procurement armoury for some years. But 20 years on from the beginnings of its widespread adoption in the general procurement world (it has earlier origins in retail), we think it s a good time to review the state of CatMan and ask some fundamental questions. Is it still relevant? Has it outlived its usefulness? Does it need radical updating? Or is it still fit for purpose?

A Critical Look at Category Management [Plus +]

category management

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

CatMan’s main impact was in the indirect spending area. Procurement in a manufacturing environment was run on what we might call a category management basis for many years, even if we didn’t call it that, probably since the beginnings of the function. I was the “Raw Materials (EU controlled materials)” buyer for Mars in my first functional role, then Head of Packaging Buying. We would now see those as first a fairly junior then a more senior CatMan role, but that was well before the days of consultants such as Kearney and McKinsey popularising the approach and the associated terminology.

How to Attack Marketing Spend (Part 1) [Plus +]

Torchlite

Like MRO, packaging and logistics, the marketing category straddles the boundary between direct and indirect spend. And we all know (or so marketing folks claim) that it has a substantial impact on sales — allegedly, at least. The direct commercial impact is notoriously difficult to assess, although the new breed of analytics-driven spend analysis tools targeted specifically at marketing spend (e.g., cross-channel, competitive insights, etc.) and campaign performance can help. But put these in the agency parking lot for a minute. We’ll get into them later in this analysis and series.

For now, let’s focus on the marketing category as one among many — what makes it unique, what makes it similar and what are important trends.

Legal Sourcing and Billing: Category Sourcing, Maturity Models and Services Procurement Linkages (Part 1) [Plus +]

UpCounsel

Around 2005, while working for Procuri, one of the authors of this article was involved in a large legal services e-sourcing project (with reverse auction at the end) for a Fortune 10 firm that spanned law firms across the U.S. At that time, we included a substantial amount of spend segmentation into the event. From my experience and research, we were one of the first to engage in a procurement legal sourcing effort of this magnitude.

Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 1: Do This, Not That) [Plus +]

category management

We had a question from a client of ours about whether there were any guidelines or an overall methodology to coming up with a spend category taxonomy. It’s a simple question, but there isn’t a simple answer. So, we thought we’d offer some insights to help guide your efforts. But before we say what to do, there’s a quick recommendation on what not to do. In this first of a two-part Spend Matters Plus series, Chief Research Officer Pierre Mitchell explores how to think about creating a spend category taxonomy, pitfalls of incorrect approaches, and how to embrace an approach that cuts across categories and spend types.

Rethinking and Reclaiming “Tail Spend”: 6 Key Variables to Consider [Plus +]

AnyData Solutions

The idea of “tail spend” doesn’t seem very complicated at first.

Run a Pareto analysis on your spend categories and suppliers to make a cutoff at, say, the 80% that represent only 20% of your spend. Your numbers will, of course, vary, but the idea is to find a way to better manage such “nuisance” low-dollar spend that doesn’t detract from your efficiency, or worse yet, from spending time managing the truly strategic spend categories more deeply.

You might think of this as the spend in the lower-left quadrant of the famous Kraljic 2x2 matrix, which describes a strategy of “purchasing management” to manage non-critical, abundant supply that can be sourced locally in a de-centralized manner for maximum efficiency. And, maybe, if you manage this nuisance spend properly, you can even extract some value from it (e.g., a “quick source” process to gain some speedy spend savings).

Sounds straightforward, right?

Well, it’s not, and I have purposefully led you astray to prove a point.

The problem is that I never really defined tail spend in the first place – and if you can’t define it or see/measure it, you can’t manage it. And herein lies the rub (and the opportunity):

Tail spend could better be described as “nuisance spend” or “tactical spend,” and is comprised of many sub-segments — not just one or two.

Let’s return to our examples above. Segmenting on a spend-per-supplier basis, like in our Pareto diagram, is by no means perfect. What about low-spend, sole-source suppliers tied to large revenue or profit? OK, well, you might then refer to the Krajlic matrix as the solution. It’s better, because it helps profile the categories into complexity vs. impact (or risk vs. reward if you view it as such), but again, these are only two variables, and do not factor in any others.

Which ones? Let’s list six of them and ask whether you’d consider the resulting spend segments as ‘tail spend,’ or at least ‘nuisance spend.'

Top 10 Ways to Radically Expand Category Management Value Creation [Plus +]

category management

In the never-ending quest to deliver more value, procurement organizations are trying to squeeze more savings and innovation out of spend categories. But, eventually the well starts to run dry, and when that happens, you need to either get more out of that well (fracking for spend savings, perhaps?), dig a deeper well, find another place to dig, or find another way to get the water.

My point? To improve category management, which we sometimes affectionately refer to as CatMan, you sometimes have to expand it or blow it up completely. Here are some ideas that I’ve seen work elsewhere that can hopefully give you some inspiration and raise your category management game.

North America Truckload Market Update – Q3 2016 [Plus +]

This is the first monthly installment of Accenture's Spend Trends category insights that we're making available to our Spend Matters Plus readers. Although this category insight is more direct spend oriented, we chose this category update because of its relevance relative to the immediate opportunity in the truckload market. It provides an analysis of multiple data sources, including Accenture's own sourcing operations for its clients, and highlights recent changes in market capacity, utilization, pricing, and strategies. It's a good time for shippers to be bidding freight right now, but there are some important key caveats related to spot buying, market timing, and shifts in the market relative to large carriers versus smaller regional/specialty carriers. From a procurement process standpoint, the article emphasizes the importance of a deliberate and active management approach to such a dynamic category. From a procurement technology standpoint, the use of combinatorial optimization-based bidding tools for truckload bidding is absolutely key for such active management of large market baskets of truckload lanes. By doing so, shippers can tap the best capabilities of smaller carriers and larger core carriers in order to optimize costs and service levels for increasingly volatile demand profiles.