3. Extinction or Revolution of Marketing Procurement ?

EXTINCTION OR REVOLUTION OF MARKETING PROCUREMENT?
 
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TEASER

The marketer of the future is expected to do very different things than in the past. So, this is the right time for us as marketing procurement leaders to also challenge ourselves and define what is marketing procurement, and what do we want it to be in the years to come.

GENERIC

Magid Souhami, homegrown marketing procurement leader, who turned president of a global business marketing procurement has gone mainstream but remains and charter, misunderstood and sometimes undervalued. This podcast aims at better codifying marketing procurement.

INTRODUCTION

Hello, marketing procurement family. Let's try to answer together to a simple yet powerful question. What is marketing procurement, everyone in the audience may have their own definition. So it seems important for us to come together as a community, and define marketing procurement. Procurement, as its origin was established in the automotive and military industry. So, it's a discipline that at his core was focused on direct procurement or the acquisition of materials and goods, and the fact to move them from supply-chain and manage the risk associated with that. More recently, large companies have started to look into their marketing spend in the research for similar optimization and risk management opportunities. Small and mid-sized companies may be in the process of doing the same. Some of them don't have yet a marketing procurement organization. 

DEFINITION

One definition could be the practice of core procurement skills, apply to the marketing spends, if we think about it, the core procurement skills are things like negotiation, commercial agreements or contracts relationship management sourcing strategies, etc. 

THE DUALITY BETWEEN MARKETING & PROCUREMENT

I fought for many years, about the duality being those two terms, marketing, and procurement. On the one hand, marketing, to me, is about creativity, agility things resulted from the mind and the heart in a flawless environment. Procurement, on the other hand, to me evokes processes systems rigidity framework of operating that allows things to be predictable and repeatable. So how do we reconcile those two terms, that seem mutually exclusive? 

MARKETING PROCUREMENT IS ART AND SCIENCE

With many years of practicing it, the best definition that I created for myself, is marketing procurement is art and science. Marketing Procurement is a subtle way to reconcile the differences between Marketing and Procurement disciplines and to extract value out of it. 

WHAT IS MARKETING PROCUREMENT?

Over time, I also realized that it's very important to identify which spend do we consider on scope, when we talk about marketing procurement, having conducted benchmarks, and being in touch with many marketing procurement practitioners, across various industries, I realized that there is no one way to look at marketing procurement. My suggested approach is looking at marketing own budget and marketing related budget. What I mean is the marketing own budget, are the ones directly under the responsibility of the marketing function that usually includes media creative and production agencies, digital, etc... Marketing related budgets are the ones that impact the marketing plan, the way to reach the consumer or the customers for b2b, but falls within an over function within the company. Things like PR that resides with the communication group trade marketing instore activation events that are managed by the sales organization market research or consumer knowledge or consumers & insights that usually falls within a consumer insight organization. Lastly, there are more and more apps, marketing technology data related spend that falls in the boundaries between IT and marketing. So I'm just offering up that framework of thinking of marketing, own budget, and marketing-related budget. When summing up both, it results in many categories, up to 25 and more that usually leads to a very large number of vendors suppliers and agencies, a large number of internal stakeholders across all the functions that I just mentioned, a wide range of industries to know inside and out and to manage. 

NO ONE SIZE FITS ALL MARKETING PROCUREMENT

All that complexity and fragmentation usually results in a very large opportunity for marketing procurement organizations that can conduct integrated thinking, and connect the dots, across industries across functions across geographies sometimes to create value for their companies. All of this complexity fragmentation stage of maturity of the company may explain why there is no one size fits all marketing procurement organization. It just depends on what type of industry, organizational set up as procurement reporting to finance supply-chain or marketing. What are the business priorities, is the marketing spend a priority for the company? 

THE MATURITY SCALE OF MARKETING PROCUREMENT

I, therefore, like to think about marketing procurement by drawing a maturity scale. There could be, for example, four categories. It's either inexistent, fundamentals, value-adding, or transformation. Some companies do not have a marketing procurement organization. 

STAGE 1 - INEXISTENT

It's inexistent in their organizational setup yet they could be doing very well from a business standpoint, I would argue that having a marketing procurement organization is not always necessary. Sometimes you have commercial skills that are trained to marketing leaders that have a lot of experience that knows inside out their industry, and they can do on their own. A significant portion of the acquisition of marketing services. I would also argue on the other hand that it will never reach the level of professionalism that once may bring using or the core procurement skills. 

STAGE 2: FUNDAMENTALS

Some marketing procurement organizations focus on fundamentals. By that, I mean the acquisition of marketing services in the right value, with the right total cost of ownership, and with the right risk mitigation when it comes to commercial agreements and contracts. Those are just basic requirements, where you can start adding benefit to the marketing organization. 

STAGE 3: ADDING VALUE

Higher up on the maturity scale, some organization is value-adding those marketing procurement organizations do have access to the brands and marketing priorities. They understand what are the KPIs, the outputs that are desired by the marketing function, and they can connect them efficiently to the procurement KPIs and priorities. 

STAGE 4: TRANSFORMATIONAL

Finally, some marketing procurement organizations are transformational. Usually, it requires first to be able to do well, the fundamentals and the value-adding piece. And on top of that, conduct major disruption major transformation that could not happen. Otherwise, here I think about marketing procurement organizations that partner efficiently with their marketing counterpart to drive some digital transformation. Most of the marketing procurement team out there, have the skills required to do so because they're in the best position to know and to be on the lookout for the trends in the industry to secure the best capabilities from the agency, and therefore, bring some big transformation for the company. 

FEW TIPS TO MOVE FORWARD

Few tips that I'd like to offer here. First, is being able to answer the question, how would you describe your own marketing procurement organization. Are you clear on what's on the scope and what's not? What is its level of maturity, getting those questions, clearly answered, usually helps because you can then align expectation internally with your large number of internal stakeholders, and externally, with your core supplier and agencies. Once the positioning of the marketing procurement organization is crystal clear. It helps to be more efficient and extract value from the relationship around it. 

What I'd like to leave with you is my own definition of marketing procurement over time I came to realize that it's art and science. It's important for us in the way to train marketing procurement to insist on the added value of the structure it brings the processes, the repeatability, and the predictability, but it's also important to touch on the art, the non-scientific part of it, the understanding of the brands the understanding of the creativity, all those industries that require some boundary fewer ways to proceed to get the best outputs. 

NEXT STEPS

In the coming weeks, I would encourage you to define for yourself, what do you think is your marketing procurement organization, what is on scope, and what is not. What is your level of maturity? Once you have your sub definition. I would also encourage you to ask for feedback from your key internal stakeholders. Let them describe it. Let them describe marketing procurement through their own eyes. Once you have the gap between those two definitions, you will be able to realign expectations, and then going for one, figure out where do you want your marketing procurement organization to play.

First of all, if it's inexistent in your company, and you want to create it, what is the case for change. What is the added value you and the team is going to bring versus the marketing organization operating on its own? 

If it's operating at a fundamental level on the extracting commercial benefits, and contracting benefits, are you getting the most out of it? Can you look into more than only the marketing own spend, but also start going into the marketing-related spend. 

If you want to take it to a value-adding level. Do you have the right connections internally with the marketing leadership and the brands to understand their priorities, their own KPIs, their own business, output, and then connect them to a marketing procurement agent? 

Lastly, if your organization is already mature covering the fundamentals and the value-added piece well. What would it take to make it a transformational organization? What are the big trends transformation disruptions out there that you could be bringing to the marketing function to help it deliver to a higher level? 

EXTINCTION OR REVOLUTION?

We're seeing across industries the transformation of marketing as a discipline, the marketer of the future is expected to do very different things than in the past. So, this is the right time for us as marketing procurement leaders to also challenge ourselves and define what is marketing procurement and what do we want it to be in the years to come. Some are predicting the end of marketing procurement if it does not reinvent itself. I am not. I think marketing procurement has been evolving over the years, taking more and more responsibility together with or for the marketing function, and is on the right way to continue extracting value and helping as the marketing function transforms itself.

GENERIC

Hey Marketing Procurement family. Thank you for tuning in and listening to this episode. If you'd like it, give it five stars on Apple podcast. We have another great episode coming up next week so remember to subscribe and feel free to invite others to join our marketing procurement community. I look forward to seeing you again next week. In the meantime, take care of yourself, and take care of each other.

Transcribed by https://otter.ai