Marketing Math

Guest Article by Katherine Wang, Senior Project Analyst at Source One Management Services, LLC

How would you describe strategic sourcing and procurement? Source One’s company website demonstrates, for instance, that a variety of solutions and services are involved in the day-to-day responsibilities of a specialist in this growing field. I, for one, tend to prefer utilizing the terms “consulting” or “subject matter experts” when explaining to others what I do to, in order to capture the multidimensional nature of my activities. Never have I heard of my work being described as “Vegetarian Haggis.”

When I think of Scottish-related stereotypes, I think fondly of things like rugged terrain, tartan, and James Bond, so I will leave out any negative comments about haggis until I try the dish. However, due to the nature of haggis being a hearty and meaty dish, Rob Guenette’s comparison of procurement to a vegetarian version* humorously captures the common frustration and ambivalence agencies often feel towards the division that handles the RFP, negotiation, and contracting processes.

A common point of contention appears to be the perception that the only objective procurement is concerned about is cost reduction, regardless of the shop’s creative ingenuity or type of work, and as a consequence, parties habitually develop unreasonable expectations of themselves and of their partners.  Another concern is the idea that procurement departments do not have a clear enough understanding of the sales and marketing industry to make the best judgment calls. Digiday’s interview with two digital agency leads indicate how their greatest concern is that procurement develops scorecards and “scientific systems” to evaluate shops and disqualify candidates for incorrect or irrelevant reasons. These perceived impediments are only exacerbated by the fact that pitch processes are lengthy and costly, and according to PRWeek, increasingly drawn out thanks to the procurement department’s increasing involvement in marketing-related decisions. When considering those factors, it’s no wonder procurement is as appealing to the agencies as vegetarian haggis is to Sean Connery (or anyone else for that matter).

Nevertheless, it is unlikely that marketing teams will exile the procurement division any time soon. Putting aside company regulations and bureaucratic hurdles, procurement is, as discussed by Alan Wexler, EVP of SapientNitro, and James Gross, co-founder of Percolate, utilized as the “investigative layer that takes the workload off the buyer when making a purchasing decision,” and help add accountability and structure to a company’s buying decisions. This is especially important when large firms with a multitude of divisions and products seek marketing services and are faced with a daunting number of choices from different agencies.

To allay the qualms engendered by the agency-procurement relationship and to emphasize the benefits that such a partnership would bring, I conclude with a few notes on best practices observed in the business. All paths point to how clear communication is integral to the process. Forbes’ recent exposition on the 2013 ANA Advertising Financial Management Conference in Scottsdale Arizona illustrates the gap as well as constructive links between procurement, agency and marketing teams. Brett Colbert of MDC Partner’s quip about procurement at the conference, “…It can’t just be about procuring or buying…. We have to move the conversation beyond savings, talk about value not price,” deftly sums up the ultimate goal. To meet this target and derive value from business engagements, parties should increase the flow of information to better comprehend each initiative’s needs.

Similarly, ISBA and IPA provide six useful principles to make the most out of an agency pitch. The lesson to be mastered sounds simple enough: procurement, agency, and marketing teams should work to ensure that there is effective communication and transparency among the three parties. Collaboration is important to understanding the ultimate objectives and nuances of selecting an agency that fits well, in terms of capabilities and chemistry, and to avoid using the RFI/RFP as a blunt instrument. As they say, “Quality, not quantity.”

To learn more about how strategic sourcing may bridge the disconnects between marketing teams, procurement, and advertising agencies and obtaining value, contact guest blogger Katherine Wang at [email protected].  Katherine Wang is a senior project analyst for Source One Management Services LLC and a key contributor to the company’s sales and marketing services group. Her unique experiences and insights are leveraged daily as the group develops innovative and effective sourcing strategies for a client list of global leaders in industries including pharmaceutical, health care, and manufacturing. Source One Management Services is a provider of procurement services, helping clients with strategic sourcing and supplier management solutions. The company is based in Willow Grove, Pa. 

*A final note on vegetarian haggis: according to The Guardian, it’s actually pretty good, all things considered.

Tags: ANA Advertising Financial Management Conference, Forbes, IPA, ISBA, procurement, strategic sourcing