The decision by large companies, like Pepsi-Co, to do away with their procurement of marketing services has provoked debate and controversy in the industry. This is an expense which companies are trying to control for the sake of cost reduction. However, the big question is whether or not firms are getting rid of procurement of marketing services purely because they find it an unnecessary expense.
Procurement spend influence
There is no doubt that there are certain services spend categories that are complex, and marketing services happen to be one of them. In recent years, however, the influence of procurement spend in the marketing services category has increased. While it has not achieved the kind of sway that procurement would like, it has grown nonetheless.
Challenges of procurement of marketing services
In procurement, difficulties abound. How well sourcing professionals can address these challenges and make an improvement can hugely influence an organisation’s success over its competitors.
Some of the key areas that make procurement of marketing services challenging are:
- Fluid and ever-growing supply markets
- Too many suppliers to choose from
- A rapid turnover of suppliers and constant flow of new suppliers in the market
- Organisations and internal stakeholders give more importance to spend than anything else
- Decision makers are looking for value and not cost
- The nature of procurement of marketing services means personal contact between suppliers and stakeholders, not sourcing professionals
The nature of these difficulties means that procurement staff have to work extremely hard to overcome them. At the same time, they need to be knowledgeable about the market and to aim for value, not just basic cost reduction.
The future of procurement of marketing services
There is no doubt that C-Suite and suppliers often have a close and personal relationship. As a result, when it comes to procurement of marketing services, sourcing professionals may not be in the loop. This means that they need to strive harder to bring about procurement transformation so that all sourcing, including marketing services, is centralised, but still allows stakeholders their say.
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.