A world leading pooling solutions company specialising in the provision of reusable pallets, crates and containers and associated logistics services. In 2016 they secured revenues of $5.5bn.
The clients key challenge as a global brand that they do not have a board level CMO or global marketing executive, however the local marketing executives form a small unit of global stakeholders, operating primarily out of North America, Europe, Australia and South America. The annual spend in marketing indicated $17m with 80% of the spend generated through North America and Europe.
Procurement needed to engage with the clients marketing stakeholders and ‘win’ their support to attempt to negotiate with the two agencies. This was achieved through a series of meetings where procurement sought to understand the requirement and support that the stakeholders were looking to procurement for.
Having completed initial analysis of the spend data, it clearly indicated that the client was spending about $5m annually with two design agencies – one in each of the two major regions.
In North America, the C-suite executives had appointed an agency who had the client as there only client and had adopted a McKinsey style of strategic brand identification, brand design and global executional roll-out. Within Europe the marketeers were using a Tier 1 Omnicom group agency where the client represented the agency’s lowest billing client and one of only two Business to Business clients.
Historically, procurement had attempted to negotiate with both of the agencies, however this had not been successful due to the strong positions both agencies viewed themselves to be in for quite contrasting reasons. One had C-suite support and were the only agency who understood the brand, and the other agency was not that interested in retaining the client with lower billing rates.
It was quickly established that the stakeholders wanted procurement to create a global and regional preferred supplier list, simplify the vendor and purchase to pay process and deliver a supply chain across print, premia, translations and exhibitions that would save them money. Procurement then discussed the ‘fee’ opportunity with both agencies and secured stakeholder support and leverage to negotiate with both agencies.
Procurement met with both agencies and outlined the requirements to form a ‘commercially compliant’ global preferred supplier list, from which they could benefit from increased volumes and improved ways of working should they agree to the contractual and commercial terms outlined by procurement.
The final numerical outcome was a circa 15 – 20% reduction in rates across the agencies. However, the most important outcome was the improved way of working between the stakeholders and the agencies. This continued to improve throughout the year, with IFCO then moving it’s marketing spend of $0.2m over to the European agency. Agency reviews were put in place, and the stakeholders moved the relationship with the agencies to a stronger strategic level of high performance.
To further support this the marketing procurement team optimised the spend data to identify the global and regional preferred supplier lists. Placing commercials against the suppliers who were performing strongly, and introducing a global print on demand solution to globalise and digitise the marketing material workflows.
The global print on demand solution is saving up to 60% on production costs whilst giving stakeholder online access to materials and visibility of which collateral is being used in regions.
Finally, the marketing procurement team communicated the global and regional preferred supplier lists to stakeholders. Marketing stakeholders were also provided with a ‘how to’ guide for raising vendors and interacting with the purchase to pay system, which helped the marketing stakeholders save time, money and resource through simplifying the processes for them.
The marketing procurement category is moving to a stabilised ‘self-serve’ category which requires light touch management throughout the year and high levels for work any strategic pieces of work that may arise such as agency pitches.