Procurement, marketing don't see eye to eye

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[Miami Beach, Fla.] Procurement has marketing problems.

Procurement executives insist they are delivering on the promise of cutting costs, improving processes and nurturing relationships, demonstrating the value the discipline brings to marketing.

But marketing execs aren't buying the pitch. Though they acknowledge that procurement whacks expenses, many say sourcing has failed on other measures.

This marketing/procurement disconnect is clear in a new survey of executives from both disciplines by the Association of National Advertisers. Rating procurement's impact on advertising and ad production on a three-point scale, the purchasing side gave itself a lofty 2.5 score; marketing gave procurement a dismal 1.6.

The results aren't shocking given that procurement is a recent-and often unwelcome-arrival in many marketing departments. "I wasn't surprised," said Jim Akers, manager-global sourcing for sales and marketing at Pfizer and leader of an ANA task force on procurement best practices. "I wasn't necessarily heartened by [the findings] either."

COMMON GROUND

Mr. Akers noted there is common ground in that most marketing executives say procurement is delivering some value. Among marketing executives who responded to the survey, 83% said procurement met or exceeded expectations for cost savings; 66% said it met or exceeded expectations for improving processes; and 59% said procurement delivered benefits in relationship management and stewardship.

The remaining marketing executives said procurement failed to meet expectations.

Companies are counting on sourcing professionals not only to cut costs and improve efficiency, but also to put systems in place to ensure that marketing meets the accounting and transparency standards required under Sarbanes-Oxley.

The ANA e-mailed its survey to 1,926 marketing executives and 334 procurement executives in March and April; 122 marketing executives (6% response rate) and 68 people from procurement (20% response rate) filled it out.

Marketing and sourcing executives disagreed sharply on procurement's role in marketing activities and disciplines. Nearly half of procurement executives said they played a role in ad-agency selection; only one in five marketing executives said procurement was involved.

Similarly, 98% of procurement executives expected to be involved in media planning and buying in 2005 or 2006. Just 44% of marketing executives expected procurement people at their companies to play such a role.

Procurement executives agree they need to do a better job of showing what they can do. "We can't just be all about cost cutting," said Sue Markowicz, global advertising agency manager at Ford Motor Co. "You've got to bring value to the equation."

Dialogue

Marketing’s advice for procurement:

"Do not try to take over agency selection."

"Accept that creating ideas is different from creating widgets."

"Understand that marketing resources are not commodities."

"It isn’t always about the money. Acknowledge that price is secondary."

Procurement’s advice for marketing:

"Realize procurement is trying to help, not hinder."

"Accept procurement as a team player and recognize the core skill set they bring."

"Remember that your suppliers (agencies) are not always your best friend. Think less about your relationship with them and more about how procurement can add value and expertise."

"Be more open minded and realize strategic sourcing comes to the table with expertise...and not as a threat to the process."

Source: Selected responses to the Association of National Advertisers’ March-April 2005 procurement survey

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