Marketers split on role of procurement amid UM CEO’s call to ‘put them back in their box’
Dempsey
The role of procurement in agency negotiations has split a panel of top marketers, with their involvement branded damaging by one expert but described as beneficial by Visa’s local marketing chief.
The debate at Tuesday’s Secrets of Agency Excellence forum in Sydney followed remarks by UM chief executive Mat Baxter who said powerful marketers with influence in their businesses could “put procurement back in their box where they belong”.
Caroline Dempsey, Visa’s head of marketing for Australia and New Zealand, said her recent first experience of working with procurement was a positive one, suggesting they can “add value” by asking pertinent questions.
Her views contrasted sharply with those of marketing consultant and former Goodman Fielder marketing director John Chatterton, who revealed his three encounters with procurement staff were dismal.
Responding to questions from Mumbrella about the role of procurement in marketing functions, Dempsey said she was working with procurement for the first time on Visa’s plans for 2015.
“We are going through our planning for 2015 and for the first time I have had someone from our procurement department as part of that and it’s been fantastic,” she said. “I do think there is a sense from marketers of ‘Oh God procurement is involved’ but it comes down to the style of the procurement person you are working with.
Chatterton
“They can add value because they do ask very good questions that marketers wouldn’t think to ask, about structural things for example. They do have a skill set and if you get good people it can add value without being aggressive or making the agency feel uncomfortable.”
Chatterton disagreed, telling delegates the procurement department does not have the skill set to make judgements on marketing activity when its overriding responsibility is to make cost savings
“When procurement got involved I would say it was a very negative experience for all the agencies involved,” he said. “The KPIs of procurement teams are all about cost savings and efficiencies.
“Their job is to buy product for less money, so when they get involved in marketing services the conversation quickly becomes about the hourly rate. If you have roster agencies they will ask how do the rates compare or why is that agency asking more for that role?
“What I find them to be very poor at is judging, and to some degree caring, about the quality of the work because it doesn’t fit with their normal KPI.”
To ask the same team which purchases petrol, warehouse pallets or flowers to assess the quality of an agency does not work, Chatterton said.
“I have done it three times and it was negative. I will always try to keep procurement out,” he added.
LG Electronics general marketing manager Lambro Skropidis suggested the conversation around cost only emerged when the service offered by agencies was identical.
“I don’t think it ever truly comes down to cost. That’s the discussion you default back to when you are talking about a commodity service and I don’t think our industry is about providing a commodity,” he said.
“If an agency can say I am doing something different and providing something different that cost discussion never really happens. When you get to the point when you cannot explain how or why you do it differently then the cost will come in to the equation.”
Dempsey encouraged delegates to regard procurement as “efficiency drivers, not cost cutters”.
Steve Jones
Secrets of Agency Excellence comes to Melbourne next Tuesday, December 3. Click here for more details and to book tickets.
Procurement is about efficiency, less about costs. There will always be a certain point where costs cannot be cut any further without causing damage. The role of procurement is to find ways of doing something better, to automate certain processes while also reducing costs in other processes. As a result procurement can have a lot of value for all parts of a business’ operations. Not to say all procurement operates efficiently as it can be a case by case basis, but good procurement processes can help a lot of departments operate better.
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Given there are many procurement specialist consultancies, I would who decides which procurement consultant to use.
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Could not be more wrong John.
Procurement is interested in value for money and value based relationships. Tarnishing a whole global profession with the far out of date “they are only interested in cost” is just an easy excuse.
Global brands and leading organisations globally employ, develop and insist of qualified marketing procurement skill sets. Perhaps, in this instance, it’s the marketeer who needs to broaden the horizon rather than the buyer.
Personally I would relish the challenge of making it work for agency, buyer and marketeer rather than disregard the value.
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