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By Toby Codrington
Marketing and procurement are usually treated as distinct business functions; yet by working effectively in partnership, the two can drive greater business value. So what are the five areas where they can jointly make a real difference and add value?
Solutions not Prices
The RFP process can often be a major roadblock to innovation…….as evidence of this, we are beginning to see clients shift from RFP to RFS (request for solution)
Marketing and procurement are usually treated as distinct business functions; yet by working effectively in partnership, the two can drive greater business value. So what are the five areas where they can jointly make a real difference and add value? Toby Codrington, APAC CEO at Tag explains.
1. Demonstrating ROI
Marketing is often the largest indirect spend category in a business, and with budgets contracting, the pressure is on marketers to show tangible results. Procurement’s role in driving cost-efficiencies is invaluable in the current climate. Effective procurement leaders can support strategic decision-making for marketers on the hunt for greater value.
There is now constant pressure for marketers to deliver greater impact on a lower budget. Rather than viewing procurement as a hindrance to creative vision, marketers must recognize the supporting structure that procurement provides to their budget and ROI. Content marketers are always striving to deliver content that is more impactful, more effective and more efficient, and by ensuring transparency of spend, procurement teams can help to identify ways in which marketers can get more bang for their buck.
2. Cross-functional efficiencies
To identify cost and operational efficiencies, marketing and procurement should work together to establish clear shared data flows, enabling both departments to effectively cooperate on projects and gain a broader overview. By removing data siloes, the teams can achieve valuable efficiencies and identify further opportunities for partnership.
Establishing a centralized database is key to achieving greater interdepartmental efficiencies. Businesses may seek to adopt digital asset management technologies that can help integrate their departments and create a unified process across creative production, sourcing, automation, analytics and beyond. By doing this, businesses will see the benefits of more efficient collaboration, and greater transparency over data, leading to more actionable insights across the entire business.
Not only would such a system unify your in-house marketing and procurement teams, but also the many partners and agencies that sit alongside these teams. By increasing visibility across your network, businesses can realize cost-savings, increase speed-to-market and manage workflows and assets more efficiently.
Brand purpose has become a key business proposition for businesses across all industries. Following a socially, economically and politically turbulent year, consumers have become more vocal about the impact they expect their brands to have on society, from providing relief to front-line workers during the COVID-19 pandemic to tackling systemic racism. Brands are now seen as key influencers capable of driving change.
An Edelman study showed that 65% of belief-driven buyers said that they would not buy from a brand that stayed silent on an important issue. The bar for consumer brands is high, with 53% of consumers thinking that brands can do more to solve social issues than the government. Purpose clearly has a strong effect on a consumer’s perception of your brand, and we expect this to grow in the wake of this year’s turbulence.
Vague statements of support for social movements are no longer accepted. Today, consumers dissect business mission statements to make sure that their claims are true across their entire value chain. Your brand purpose should anchor everything you do. If demonstrated authentically and meaningfully, purpose is a strong driver of value, affinity and customer loyalty. While brand purpose was once a unique selling point, consumer attitudes are changing, and all brands are now expected to demonstrate authentic purpose throughout their entire business.
Sustainability is at the forefront of most consumers’ minds, and against the backdrop of COVID-19 the issue has only become more important. Marketing and procurement can become key drivers for business change from the ground up, effectively working together to reduce environmental impact across the entire value chain.
To bring your company’s sustainability commitments to life, your procurement team must find appropriate suppliers that share your values. McKinsey reports that only 25% of the companies that disclose their greenhouse gas emissions figures engage their suppliers in efforts to reduce emissions. Many businesses focus solely on consumer-facing aspects of their product offering rather than addressing their total impact.
Sustainable innovation is a major goal for businesses across sectors. Those who fail to adapt will lose out to those who are operating to the benefit of their triple bottom line of people, planet and profit. The greatest innovations come when clients and suppliers collaborate to develop new solutions. Procurement can help drive this innovation by promoting alternative sources, materials and processes across the end-to-end value chain.
The RFP process can often be a major roadblock to innovation. An opportunity exists for procurement to restructure the RFP process to include their overall business goals, rather than simply requesting an isolated solution to an immediate problem. As evidence of this, we are beginning to see clients shift from RFP to RFS (request for solution). The purpose of the RFS is to drive innovation while simultaneously solving a complex business problem that affects multiple functions. Working with key internal stakeholders across procurement and marketing, suppliers can identify immediate needs and long-term goals across the business.
Like climate change, diversity, equity and inclusion is another topic that consumers care deeply about and expect brands to act upon. Businesses who invest in fair and equitable business practices that support society need the support of both marketing and procurement teams to make this a reality and communicate this to consumers.
Building a diverse supplier base involves knowing exactly what each supplier is good at and what they stand for, benchmarking across savings and innovation to deliver a right-sized supplier mix that represents the brand’s business goals and values. By integrating key marketing ambitions into your procurement objectives, brands can minimize trade-offs between financial and societal benefits to drive greater overall value.
To maximize the shared benefits of a marketing and procurement relationship, establish shared objectives and responsibilities early on. Mature and effective relationships between the two functions can deliver strategic value that goes beyond cost savings, ultimately achieving more effective operations and a unified, transparent process that will help achieve your brand’s long-term ambitions.
About the author
Toby Codrington is APAC CEO at Tag