Tail spend management took centre stage this week in an address by BT’s head of marketing procurement, Paula O’Reilly, to the ProcureCon Marketing conference currently underway in London.
While procurement professionals are all too aware that ethical cost reduction is a perennial feature of their role, O’Reilly brought home to attendees just how much of an organisation’s spend can be found in the tail. She revealed that 80% of BT’s marketing expenses went to 15 “strategic agencies”, adding that there were hundreds of others in the tail.
Explaining that 95% of the company’s spend was in Britain, she went on: “We have to get the best agency for every category.
“Simplification has to be a good thing because you have accountability but more importantly you have the right agency that delivers what you need.”
On being asked what her key priority as marketing procurement boss was, she stated that it was “Tackling tail spend – we have hundreds.”
In a subsequent panel discussion addressing the issue of simplification, head of marketing procurement at the French luxury goods conglomerate LVMH, Valérie Revol, highlighted how arduous this task was in reality. With 70 brands in the group, she revealed, each of these took full advantage of LVMH’s “DNA” which privileged independence. As a result, she said, all of the group’s brands “do what they like.”
According to O’Reilly, while BT had “dabbled” with placing relatively lower risk marketing functions in-house (e.g., website design and copywriting), two other contributors were less convinced that this was a wise strategy, especially when applied to higher-end marketing functions.
Damian Ellis, Mondelez’s Director of Global Procurement (Trade Marketing and Band Activation) questioned whether it was possible for in-house marketing professionals to provide the freshness that third parties deliver, while Bayer’s VP of Marketing Procurement, Malik Akhtar, was even more blunt, stating (in a separate debate), “High-end strategy, I would not see that being done in-house.”
Source: Supply Management
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.