There are “significant opportunities” for procurement to improve efficiency in the purchasing of marketing services but in only a quarter of organisations are the two functions partnering, according to a report.
The report, by the CMO Council and KPMG, said a survey of over 200 marketing leaders across B2B and B2C industries found prior attempts at collaboration between marketing and procurement had been challenging. Just 26% of marketing leaders actively partnered with their company’s procurement departments.
However, tighter budgets, leaner staffing and increased expectations of tangible returns creates potential for procurement to improve “quality of sourcing and its impact”, including smarter decision making, robust sourcing processes, and speeding up time to value.
But the survey also found 71% of respondents said procurement didn’t understand marketing. To remedy this, it suggested collaborating to create a framework for identification and selection criteria and performance metrics.
For example, 86% of marketing leaders in “very effective” relationships with procurement said they had formally-defined RACI – responsible, accountable, consulted and informed – models. These defined roles and responsibilities in cross-functional projects and provided clear guidelines for efficient and effective implementation.
Amy Lund, vice president of creative and communications at E&J Gallo Winery, who took part in the research, said: “We needed to modernise our marketing organisation three years ago and agency procurement and management was one of our pillars. The quality of work and the ideas we’re getting now are much more superior than what we were getting before.”
The survey found chief marketing officers who more actively involved procurement in marketing sourcing experienced positive impacts on maturity and quality of marketing sourcing decisions. Organisations with effective marketing-procurement relationships had improved procurement cycle times, vendor price competitiveness and vendor innovation capabilities.
Procurement demonstrated value mostly during the vendor selection phase, as it helped with standardising language and processes across brands, lines of business, and geographies. These selection capabilities led to a “smarter and faster process”.
Post-selection, procurement value emerged from improved performance management, with increased average metrics helping to unlock agency and vendor value.
The study found 83% of marketing leaders who actively involved procurement tended to have standardised and documented management processes, compared to 51% or less who didn’t actively involve procurement.
Jason Galloway, US marketing consulting lead and customer advisory leader at KPMG, added: “Our study indicates if CMOs involve procurement more actively at a strategic level, they will witness a faster and a more robust marketing sourcing process.”
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