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WFA has published a first of its kind guide to transforming the actions and perception of marketing procurement.
Adding Strategic Value
“The future of sourcing is in adding value beyond savings. It should be not just a business partner that shares objectives with colleagues but also a source for growth within the organisations”
Based on two years’ intensive research and co-authored by procurement leaders at some of the world’s biggest companies, Project Spring: Revolutionising the perception and contribution of marketing procurement is the most detailed guide yet to making the shift from a simple savings approach to value.
The publication is particularly timely with marketing departments under pressure to reduce spend as a result of Covid-19 driven budget cuts. Written by the 12 founder members of the WFA’s Global Sourcing Board, many of whom work for some of the world’s biggest advertisers, the goal is to ensure that marketing procurement teams have the tools to take a value-based approach rather than revert to a race to the bottom on price.
The report was triggered by WFA research in 2018, which found that although 87% could not imagine a world without marketing procurement, 92% of respondents feel that the way marketing procurement is perceived by their organisation could be improved.
Since then the Global Sourcing Board has been working to identify solutions and practical steps that marketing procurement teams can take to improve internal perceptions and transform their role from primarily driving savings or negotiating contracts into a more strategic role.
Ever since marketing procurement emerged as a discrete discipline more than 25 years ago, there has been a suspicion that the traditional procurement approach cannot be applied to marketing agencies where outputs are not repeatable and the impacts are hard to quantify and thus value.
Project Spring, launched by the WFA in 2018, was designed to help the industry solve these challenges, identifying more meaningful and aligned KPIs and approaches and outlining how the profession can provide strategic value to their marketing counterparts as well as the finance department for the benefit of the whole company.
Being recognised for delivering a wider set of benefits than mainly cost saving depends on different factors. The key areas for a value-based approach outlined in Project Spring are:
Process: Marketing procurement needs full visibility on total marketing spend because increasing visibility enables the team to view the company’s marketing investments as a whole and enlarge the value marketing procurement can bring. Around half of global teams to do not get involved in projects that are worth less than $75K. However, lowering the threshold for involvement of marketing procurement boosts interaction between marketing and procurement teams, leading to a closer and more collaborative working relationship. Finally, just under a third get involved in budget planning. Research shows a clear correlation between the point at which the marketing procurement team is involved and whether the business sees the team as adding broader value.
People: Half of marketing procurement teams report into Supply Chain and 34% report into Finance. Data shows that marketing procurement teams who report into Finance are less likely to be seen as adding broad value to the business. However, as organisations adopt a more flexible matrix management approach, the importance of reporting lines is becoming blurred and the creation of cross-functional teams is recommended to overcome these types of challenges.
Teams need to ensure relationships within an organisation are not siloed. Companies that organise training programs for stakeholders perform markedly better than those that do not when it comes to appreciation by those stakeholders. Identifying gaps and striving for larger investments in learning and development, for all functions (marketing/procurement/finance), correlate with better perceptions.
Performance: There remains a significant reliance on cost reduction and cost avoidance as core metrics. Procurement must ensure that their metrics look beyond price and capture wider, often less tangible benefits brought to the business such as a contribution to top line growth sales, the development of successful agency relationships or the reduction of business risks.
Procurement metrics do not always resonate to marketing as they seem to serve an isolated goal from theirs. Data shows that working towards bridging the gap, talking in joint performance language, and sharing business goals dramatically increases the positive perception of marketing procurement.
Finally, creating a procurement metric that supports an overall business challenge and drives meaningful changes within the industry, such as a metric assessing the compliance to human rights within the whole supply chain or the amount of supplier diversity spending, boosts the credibility of the discipline.
Partners: Changing the way marketing procurement perceive agencies is essential to evolving the perception. Agencies are not simple vendors; they are an extension of the internal marketing team and can have an important impact on the company’s business KPIs. Marketing procurement should play an active role in ensuring the success of the work performed by agencies working on their account.
A well-managed agency is an obvious competitive advantage for clients and is a mirror of a successful marketing procurement function, able to orchestrate top-level enterprise discussions. Investing more time in Supplier Relationship Management programs to unlock value will demonstrate to marketing counterparts that the team wants to help them get better outcomes from their agency partners.
“The future of sourcing is in adding value beyond savings. It should be not just a business partner that shares objectives with colleagues but also a source for growth within the organisations. It can only be these things if there is a shift from a primarily savings outlook to a value creation approach. Project Spring brings together the best thinking on marketing procurement and should be an essential handbook for all practitioners, whatever the size of their organisation,” said Laura Forcetti, Marketing Sourcing Global Lead, WFA.
First Published by WFA