Historically, the relationship between marketing and procurement has been fractious - and the relationship between procurement and agency even more so. All marketing and the agency want to do is to be creative, to grow the company, to progress. Procurement, so the story goes, hold them back, with their lack of marketing knowledge and their overly tight purse strings.
Reputations are difficult to shake off, and this one seems particularly difficult. But look more closely and you’ll see that procurement are increasingly a department with a focus on strategy, creative and financials. They want what’s best for the company, and they want it to deliver the best possible return for the business. This is exactly what brand managers and marketers should also demand of themselves.
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Also, they get a bad rap for bureaucracy, but procurement themselves are constrained by a lot of red tape, a lengthy and complicated contract process, and the restrictions involved in being compliant - especially in industries like pharma and financial services.
For many businesses, the stereotypes are changing: as our interview with Romain Delpech of British American Tobacco revealed, the BAT procurement team is trying to shift its image away from ‘the team holding the purse strings’, and towards ‘a supporting function for all aspects of the business’.
It’s a shift that we’re seeing across a range of industries - and one that can only be a good thing. But in order for it to work, what are the best practices that procurement, marketing and agencies need to adopt?
Procurement are the bean-counters, and it’s the marketing team and the agency who bring the creative spark to the table - or so the roles are traditionally defined. But times - and the relationship - are changing.
One of the overarching themes of Procurecon 2018 - a recent procurement conference we attended - was that part of the role of the modern procurement team is to look for what’s new and report back what they find to marketing, as much as the other way round.
Some companies are going further still. Diageo’s global category manager for advertising and content, Marie Collings, told Marketing Week that, “it is often the case that individuals within the marketing procurement team will have previous experience in marketing. This, combined with the commercial skills developed when working in procurement, mean we are able to unlock opportunities that enhance value and bring with it innovative commercial thinking.”
Romain Delpech sees part of procurement’s role as enabling creativity to flourish. He explains how their focus is not just on costs: it’s relationship management too, acting as a go-between for marketing and agencies to ensure a great balance between a successful creative project and the necessary budgetary and other constraints.
As GSK’s consumer procurement lead, Emma Howcroft, explained in an interview with Marketing Week: “Marketing and procurement can often be sitting on two sides of a fence, driven by opposing objectives: growth versus savings”. The key is to make sure that these goals are complementary - and the best way to do that? By involving all parties from the outset.
From the very first meeting, procurement should be involved in all discussions between the marketing team and the agency staff. It gives all three parties the chance to be clear, honest and open about their goals, their constraints and their concerns, creating a genuine strategic partnership. Some - like Mondelēz International - take this approach one step further, with agency partners working from the same office as internal procurement and marketing teams.
A collaborative approach can also help to break down existing stereotypes. Romain Delpech explains: “We get frustrated when we hear ‘oh you guys are just focused on saving money’. We want people to realise that’s not what we do — that’s just a small part of what we do”. What better way to show it than to work as a team?
The role of a procurement team isn’t easy. Working with a multitude of service providers, contractors and suppliers, the onus is on them not only to manage external costs but to ensure - alongside the legal team - that every single one of these third parties meets with the relevant compliance regulations.
These could include GDPR for suppliers that will be handling personal data owned by the company. It could be mitigating the risk of unethical conduct. It could be a question of liability should copyright or other issues arise. In the pharmaceutical world, in particular, marketing regulations are so strict that agency suppliers are subject to a huge amount of red tape.
Vice-president of marketing procurement at Bayer, Malik Akhtar, says: “The amount of compliance and rigour expected of me and my colleagues in terms of thoroughness is very high. It is all about a business partnership and relationship and about being really transparent. But if we haven’t got that thoroughness pinned down we are in trouble”.
This focus on compliance can make procurement teams feel constrained. Building a relationship between them and their agency partners helps us to understand their frustrations and concerns around compliance, and to realise that they really are just doing their job.
Transparency is not only needed for compliance but when it comes to project costing, too. While agencies often complain about procurement, there are two sides to every coin.
Allowing an agency airtime with procurement upfront can allay the latter’s fears that agencies are all trying to pull the wool over their eyes. Procurement want to be sure that they know exactly what the quoted price will include - and that it’s the final price they’ll pay.
It’s why we at Rare use a contextual pricing model, which focuses on outputs rather than inputs: no additional charges for builds or changes (unless there is a complete re-brief once we've began work, of course), no need for procurement to worry that we’ll suddenly send an invoice for an extra hundred hours - and for us, no need to track the hours spent on a project or to issue burn reports. It removes the “having the meter running” mentality that has limited the client-agency relationship in the past - and with such fixed, results-based pricing, it’s easier for procurement teams to sell the project into their senior colleagues, too.
Traditionally, the relationship between marketing and procurement has been fractious - but things are changing. Stereotypical views of procurement’s function are receding deeper into the past, with strong working relationships between the two teams - as well as between procurement and external agencies - now more important than ever. As an agency, we see this shifting relationship as a good thing for all parties involved, and with a focus on creativity, collaboration and compliance - as well, of course, as on cost - we embrace working together with both functions to ensure that every project is run efficiently, to the brief...and within budget.