Driven by increasingly globalised communications, more and more companies are positioning themselves as global brands. Ford is just one example, having consolidated its marketing, sales and service operations into one team to further improve its brand image worldwide. Usually this global positioning means supplier consolidation and a big tender for one lucky communications agency.
While centralised procurement can lead to a more consistent and compelling message, and leverage economies of scale, these projects can come unstuck when decisions are taken to local markets. This is a major issue, as the pressure to sign up to big upfront cost savings can lead to decisions being made based on global objectives. Without considering the nuances between local markets, the promised savings can end up falling short.
Pressure to sign contracts quickly is also undermining the main benefits of global consolidation, including efficiency improvements. In effect, the need to act now is unwillingly leading companies to creating new kinks in their own supply chain. If local managers are engaged at the start, global category managers can avoid weeks of ineffectual negotiations with colleagues and agency suppliers. With pressures mounting on marketing and procurement to increase efficiencies and work with reduced budgets, no company can afford to lose this ground.
There are some fundamental differences that demand local considerations pre-tender. From a legal standpoint, contract and business law can vary dramatically between markets. Companies must appraise local regulations and developments to ensure that contracts are universally enforceable. Perhaps more problematic is the difference in culture from one nation to another. This can have a huge bearing on how procurement does business and builds relationships. It is important to act in an appropriate manner for all countries involved, to ensure a swift delivery at local level.
Local managers must be brought on board at the earliest possible opportunity to ensure that global decision-making will work in their market. If not, central buyers must work with them to take into account their particular needs. A five-minute conversation in the first instance could potentially circumvent months of lengthy discussions. Delays like this could severely diminish the upfront cost savings that drew the company into the contract at the start.
Global marketing and procurement teams must also be prepared for a shift in mindset. Old habits die hard, and the internal and external pressures to kick-start global consolidation are not set to dissipate any time soon. At the same time, the logic in research and planning is undeniable.
At this juncture of business recovery, what’s needed most of all is a considered approach to adapting business processes. Intelligent procurement can’t be sacrificed for promises of short-term savings. Now more than ever, global marketing needs to take a local perspective to avoid wasting time, money and effectiveness on necessary consolidations.
* David Fincham is director at Charterhouse