Feet on the ground

17 March 2011
Procurement works closely with marketing at Monarch Airlines to make the right decisions in high-flying creative contracts The marketing and procurement functions have traditionally had an adversarial relationship, with the idea of “creative types” working collaboratively with “cost cutters” seen as laughable. The marketer’s perception is usually that procurement does not understand relationships, is focused on the best price rather than the best value and is preoccupied by process rather than outcome. Buying capital equipment, outsourced services or commodities? Not a problem. But marketing? Better leave it to the creative types. Times have changed. Strong procurement disciplines should be central to the marketing agenda. As marketers in difficult times we need procurement’s rigour to ensure we get the best value from our budgets. Today’s marketing mix is complex and when you add in the alchemy that is social media, you have a situation where the procurement process can deliver huge value. Procurement ensures that suppliers are equipped with the right information to deliver the desired products and services at the right price and within the agreed timescale. From a corporate governance perspective, this enhances operational discipline within any organisation. It also removes the chance of procurement raising valid objections to promises made by marketers to suppliers – avoiding potentially relationship-destroying mishaps. On the flip side, this early alignment of marketing and procurement also assists the latter in understanding the ROI criteria of the former. It is marketing that makes the final decision and procurement that empowers it to make the best possible choice. Media buying is a good example. Marketing knows what it wants to promote, which medium is most appropriate and which supplier is best equipped to deliver the creative message. Procurement ensures the media agency is buying at the right time, place and quality, ensuring the biggest possible “bang for the buck”. To use an airline metaphor, if marketing is the captain, then procurement is the first officer – and the cabin crew. Everyone has to work together to ensure a smooth flight. Procurement at Monarch 1. Procurement is central to our operations given that we purchase extremely expensive pieces of equipment such as aircraft. We negotiate contracts worth millions of dollars so getting procurement right can make the difference between profit and loss at year end. 2. Over the past three years the relationship between the two departments has been greatly strengthened and they are now partners who understand and respect each other’s roles. The procurement team understands the value of making the right creative choice and is therefore less rigid in its approach than in many other companies. At the same time, the marketing team is grateful that procurement takes away the hassle of worrying about the small print of new supplier relationships. 3. At Monarch the procurement team is involved from the earliest stages in assessing value around areas such as IP, indemnity and payment terms. Once contracts are under way procurement remains involved and manages the commercial and contractual aspects of the relationship. ☛ Richard Hadfield is group managing director of retail and online activities, Monarch
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