Why procurement is a dirty word

Surely Klout score must come into the process somewhere too?

That word ‘procurement’ conjures up a certain negative connotation and those experiences do just make it worse.

Marketing procurement of any kind is more than just the numbers and I feel that many forget this. It is a value judgment.

I find that when buying production services there is so much specialised knowledge that is needed to come up with value based solutions for clients and minimising this to just an audit of costs alone is totally undervaluing the real potential for cost savings across the business.

For example – if I was asked to save 25% across a brand’s production costs I could do it without affecting the quality of the creative output. But simply slashing rates by 25% is out-moded thinking that the types of procurement people you have experienced would no doubt employ! Horrid.

Procurement represents everything that is wrong and bad about the advertising industry in Australia.

It causes marketers to make bad decisions and it kills creativity within agencies.

Where the industry needs to be moving away from the broken ‘pitch’ process, procurement amplifies it and makes it worse.

In no other industry are professional services firms forced through such an absurd business acquisition process that is the ‘advertising pitch’. It’s a humiliating and unethical process.

Procurement highlights the gutless nature of marketers in Australia. Rather than taking responsibility for their own decisions and selecting a creative agency that will help promote and grow the brand they represent, marketers in Australia avoid being responsible for making decisions at all costs. When under scrutiny, it’s much easier to present that a detailed case of a procurement process where all the right boxes where checked, rather than a marketer standing up and saying ‘actually that it my call, my decision, and I stand by it’.

It becomes a self fulfilling prophecy, Australian brands and advertising campaigns are falling into a cycle of bland, same-same, fuelled by procurement that discourages out of the box thinking in favour of formulaic service offerings. Marketers will become under further scrutiny by management because the brand campaigns they run are becoming increasingly less effective, which further avoids marketers taking risks and hiding further behind processes such as procurement to cover their own backsides.

Correct me if I’m wrong, but I’d dare suggest that in the rare case an Australian campaign goes gang-buster viral and has people talking about it everywhere, I’d be guessing there wouldn’t have been a procurement agency in sight.

The most frustrating part comes after jumping through all these hoops. The familiar refrain from procurement is “drop your rates, give us exclusivity and sign up to our other onerous administrative and contractual requirements and you will be a member of an intimate panel that will share in our substantial budget (we won’t tell you how much ‘though)”. After you sign procurement has absolutely no power to police the panel and the marketing team continues to brief whomever they please. The empanelled agencies have done “the right thing”, invested a heap of time and money and taken all sorts of hits but then watch outsiders who have made no concessions come in and take the business. For our category I reckon this happens on 75% of panels. We have heard rumours that the primary purpose of some of these panels was to lock up the good agencies so they couldn’t work for competitors. Wouldn’t surprise me.

I feel your pain!

The best procurement professionals are those who are prepared to adapt their process to meet the needs of this category. Not only does this bring speed to the process and a better outcome but their marketing stakeholders will suddenly hold them in higher regard. They should also be prepared to admit they don’t know everything!

I have worked in a variety of businesses for the past ten years as a tender writer / bid manager and I completely agree with your article Darren.
The beast of procurement is poorly managed at the best of times, and the larger the organisation, the more likely the guidelines will be onerous and the timelines rediculously tight, and in the end the evaluation is based on the all mighty dollar.
These days procurement is often done by people outside of the line area, with only a small amount of input from the teams within an organisation that will be using / utilising the service once contracted. This leads to extensive ‘compliance’ based questions which mean nothing to no one, and yet cause a lot of bother for the tendering respondee to organise. Often too, the questions do not allow for the tendering respondee to describe the quality that they can provide, just the ‘nuts and bolts’ which is what all of their competitors can do also.
… but procurement normally equals long contracts, and chance of decent earnings … therein lies the dilemma – and the power to the procurement ‘professionals’.

Put simply, if you allow yourself to be treated badly, you can be treated badly.
It’s not rocket science. It’s just that very few agencies these days have a backbone.

But I do hava one question:
“I know this may seem overkill – to go through an RFP process to select a consultant to run and RFP process. But that is the nature of business these days.”

If this is true, who does the procurement for the procurement pitch?

Absurd.

As a Procurement Professional who is focused on Marketing & Creative Agencies, we are not all that bad (only 15 months Marketing exposure so still lots to learn). In the Creative Tenders that I have been involved in, price wasn’t part of the selection process, it was all about the idea and creative. Retainer negotiation was around the overheads not salaries. We used the standard tender documentation and processes as a starting point and modified things as required. For future pitches, we will be improving\simplifying the documentation to make them more creative focused as Business Continuity Plans are not required.

In response to question 3, that is the norm for most tenders. You don’t tell who or how many people are in the mix to ensure a competitive bid and the evaluation scoring\weighting is kept from the bidders. Q&A sessions are a must, i think we had at least 2 rounds of sessions.

Can’t agree with Mr Woolley more – with big companies, procurement is a nightmare to deal with and I am the marketing manager at said big company.

They have such bureaucratic mind numbing silly rules which make the whole pitch process a hundred times worse than it has to be.

Darren – Procurement processes like the above suck but ,seriously what can agencies do?

Decline to pitch? Not a chance.

Every single large/major piece of business runs a procurement-led pitch process, even if you are the incumbent and have been doing a good job for 10 years.

So unless you are willing to only have small clients, we agencies always have to jump through the ridiculous hoops in 5 days and wait 2 months for a decision.

Your article doesnt give any answers..

Came here to say what Jeremy said.

I lead Marketing Procurement for a large global organisation and I unfortunately have to agree with much of your article Darren. Alas it is all too true not just for Marketing Procurement but for Procurement folk in general. They stick to a pre-defined process, often do not think outside the box or take a creative approach to each category of spend, and often forget that when they’re asking up to 100 questions of a potential supplier (of which I suspect at least half the answers should be known, are already known, or are irrelevant) that they then have to read every single answer – something that is incredibly time consuming and arduous when you are reading 3, 4, 5 or god forbid more RFx responses. And if they’re not reading them then they’re not doing their job. So it comes back to what does the organisation want to get out of doing this, what do you hope to find out that you didn’t know already, and is an RFP the most appropriate format in which to acquire this information or could you do an RFI, RFT, RFQ, or something else altogether. While Procurement is gaining prominence at a board level and features in many medium to large organisations, it can also be inhabited by dinosaurs of a bygone era who feel that suppliers are at their mercy and will make them jump through hoops to get the business. But then if you’re the supplier once you’ve got the business you then have to be prepared for what I fear is a one-sided relationship, being beaten over the head occasional with the contract, unreasonable demands being placed on you….and the list goes on. I think focusing on the sourcing component is important, but developing and maintaining the relationship once you have it is even more so.

I agree Procurement and the processes they follow need an overhaul. I do have to pull you up on one small point however and that is I would not tell you who has been invited to bid but I would tell you how many. My experience tells me that when a suppliers knows who the other respondents are in a competitive process they draw conclusions about what you’re looking for which are often unfounded or misguided. Aside from that its also not relevant to a respondent and it worries me if you’re more focused on who your competition is rather than what the organisation is actually after and how you can work with them to achieve that. In fact who is invited to respond can be due to incumbency (obviously), through referral or because we’ve seen or heard good things, but also for internal political reasons – yes nepotism is still at work (ie: we have to include the CEOs brother in law or best mate even when we know they’re not suitable). Separately I would tell you the top level selection criteria (which should be relatively easy to gather from the questions being asked anyway), but I wouldn’t tell you the weightings (but I admit I am going to think about this a little more – I may have fallen prey to the process demons here). In reality if questions are being asked in RFP they’re all important and if the client/organisation has done their job they should have met with you, had one or more conversations with you about what your capabilities are and what they’re looking to achieve, so you should already have a strong sense of the purpose and what’s important and can tailor your responses in a RFP/RFT appropriately. But again this relies on Procurement taking an inclusive and consultative approach with potential suppliers which I think we all agree is part of the issue.

Some good points here and mutual sympathy which is refreshing.

I thought I’d add a comment to @Nathan’s post about sharing competitor information. I see the reasoning by not sharing suppliers and at the same time having been on both ends of the procurement chain I do feel that it is not so much about you as it is about being oranges with oranges if you know what i mean?

Suppliers know where they sit and where their unique position is by comparison to the competitors and it does make it fairer and easier for each of the businesses to be able to express to you their value when they know who they are up against. There are so many stories to tell with some businesses that it is hard to know which one to tell unless there is a clearer picture. I feel that if you have several businesses competing and you want a supplier to show their strengths in a certain way that is different from the others competing then it is in your interest to tell them what in particular you like about them too. eg. I’ve asked you to quote because you may have solutions that are more cost effective than the competitors, or I liked the specific work in your portfolio X and Y – I don’t think this is unreasonable at all and saves a lot of wasted energy.

I feel that if you ask someone to quote in context with other suppliers then there is good reason that the combination of suppliers is chosen. It is good for suppliers to know how you see them – they need to either confirm that or change your mind. If they’re running blind then it is much more hit and miss and wastes everyone’s time IMHO.

Sometimes I pitch to three suppliers at three different price brackets intentionally and other times I pitch three against each other that are all similarly priced but it becomes all about best value then. I never have an issue disclosing who they are quoting against and certainly appreciated it as a supplier.

I’d be interested to hear what others do around this issue.

Boo hoo

every other supplier needs to go through this process

ad agencies, it’s not 1985 anymore and you all aren’t Da Vinci or Van Gogh

grow up and meet the market or get out of the game

NS get’s their timing right if they otherwise miss the point.

It’s no irony that government has driven the development of the counter-productive tendering processes Darren bemoans. In particular, a former Executive Director of Clemenger Direct who the Director of Strategic Communications inside Premier Kennett’s Department of Premier & Cabinet is credited with developing the framework for these communications tendering processes. In fairness, it was done under the umbrella of Kennett Government reforms to get value for tax payers from government tenders.

Perhaps Mumbrella could host a discussion between Darren Wooley and Andrew Hockley who is now Executive Director of Strategic Policy for the Gillard Government.