Where is procurement heading for agencies?

 |  By: Steve Johnson In: Agency management | Financial reporting

Marketing Week summarises the procurement challenge this way:

“Procurement has always been a bugbear for both marketers and agencies.”

“Brands are now looking to their procurement departments to help find crucial savings in the months and years ahead.”

However PepsiCo surprised many by axing its marketing procurement department and giving purchasing responsibility to its brand teams. It said the move would enable them to work with greater speed and efficiency.

Although there has been little evidence of other major brands following PepsiCo’s lead, the impression is nevertheless given of procurement as a ‘slow, cumbersome process that prevents marketers from acting with the agility needed in today’s fast-moving digital world’, as Marketing Week put it.

But procurement isn’t going away. Chris Ross, MD of 28-strong advertising agency RLH told us:

“In recent years we've seen major corporate clients introduce comprehensive levels of procurement.

"But there are two sides to that. We believe procurement teams must appreciate what it is we offer. We see it as part of our role to help them better understand:

  • Exactly what we do
  • What they are buying
  • How we operate
  • What they should expect from us

"They also need to know how hard we work to forge strong partnerships with their brand teams to ensure they achieve their marketing goals and meet their business and budget requirements.

"We are custodians of their brands and budgets. We take this responsibility seriously."

"We totally embrace procurement-style thinking, which has paid off strongly for us. It includes:

  • Planning
  • Statements of works
  • Clear areas of responsibility
  • Evidence supporting time taken and costs
  • Prompt invoicing"

"Like it or not, procurement is here to stay. Fortunately, attitudes towards procurement have matured in many large organisations today. Procurement departments are therefore not the enemy.

"Once in the know, agencies can greatly benefit from the process and the deepened relationships that can flow from procurement."

"It is important to scope the deliverables in a detailed and clear way. Expectations around ways of working in both the 'input' and 'output' stages of the process should be highlighted, such as:

  • The approval process
  • Stakeholder involvement
  • Team composition
  • % of assumed time to be spent on delivering projects
  • Overhead recovery
  • Details of third party costs

"Obviously you need to have good data so you are on top of it all.”

"We chose Synergist 10 years ago. We now have data and reporting at our fingertips which help us make better and more informed decisions.

"Our client procurement teams are also happy. That's because we are transparent and so we're seen to be trustworthy.

"Our agency directors are happy, as they can instantly review any project and monitor the success of our teams. So it's a win-win for all.”