Practical Tips for Closing the Procurement-Marketing Divide
SpendHQ welcomes the thoughts and insights of Real Sourcing Network president, Sarah Scudder.
Earlier this year, Deloitte published the results of its 2019 Global Chief Procurement Officer Survey. This survey polled 481 procurement leaders from 38 countries. The organizations represented in this year’s survey had combined annual revenues of about $5 trillion.
The central theme of the 2019 survey was managing complexity. In previous editions of the survey, Deloitte identified “high performing” procurement functions based on achieving cost savings targets and business partnering effectiveness. This year, Deloitte added a complexity index and used it to identify procurement organizations that had achieved a high level of performance in the face of high complexity. Deloitte called these organizations “complexity masters.”
One major type of complexity addressed in the 2019 survey was internal complexity, which Deloitte defined as “the challenges of managing inter-functional relationships and aligning procurement with broader business objectives.” The survey results clearly show that most procurement functions have significant work to do to master this type of complexity. For example, only 26% of the surveyed CPOs rated the effectiveness of their procurement function as a strategic business partner as excellent. By comparison, 73% of the “complexity masters” rated themselves as excellent.
Because of my work, I am particularly interested in the quality of the relationship between procurement and marketing. Almost every day, I hear stories that speak to the good, the bad, and the ugly of that relationship. In many companies, procurement and marketing professionals are working as a cohesive team to drive greater marketing productivity. But in too many companies, the relationship between procurement and marketing is still strained, if not openly contentious.
The Deloitte study confirms this less-than-ideal state of affairs. The survey asked CPOs how the leaders of other business functions in their company would rate the effectiveness of procurement as a strategic business partner. Only 15% of the survey respondents said sales and marketing leaders would rate procurement’s partnering effectiveness as excellent, and 11% said the rating would be fair. More concerning, 52% of the surveyed CPOs said their sales and marketing counterparts would give procurement a poor rating as a strategic business partner.
Truth from the Trenches
To get a better understanding of how procurement professionals can build collaborative relationships with their marketing colleagues, we recently hosted an online panel discussion that featured three seasoned marketing procurement executives. The discussion was lively and wide-ranging, and we have a recorded version of the session that you can access here.
During our discussion, we touched on a variety of topics surrounding the relationship between procurement and marketing. However, our panel of experts honed in on three keys to creating and sustaining a productive partnership between sourcing professionals and marketers.
Understand Marketing Objectives and Needs – All three of our panelists stressed how important it is for procurement professionals to invest the time and effort required to gain a thorough understanding of the needs and objectives of their marketing colleagues. All lasting and productive business relationships are based on trust and credibility, and our panelists unanimously agreed that the best way for sourcing professionals to build trust and credibility with marketers is to demonstrate they understand what their marketing colleagues are trying to accomplish and what is needed to achieve those objectives.
Be Prepared to Demonstrate Value – Sourcing professionals must also be prepared to show how they can create meaningful value for marketing. Demonstrating how procurement’s involvement will produce tangible benefits for marketing is a powerful way to overcome resistance and lay a solid foundation for a productive relationship. One of our panelists recalled that a major breakthrough in the procurement-marketing relationship at her company occurred when the procurement team was able to extricate marketing from a bad supplier relationship.
Focus on Optimizing Spending, Not Cutting Costs – Experience has shown that it is extremely difficult to build a collaborative relationship between marketing and procurement if marketers believe that the main objective of sourcing professionals is to reduce costs. Our panel acknowledged that it is primarily up to procurement professionals to address this perception. What sourcing professionals must do is convince marketers that their goal is to optimize marketing spending, not reduce it.
In addition to these three keys, our panelists offered several other tips for building a real partnership between procurement and marketing. For example:
• Procurement professionals shouldn’t move too quickly. It’s often more effective to develop the relationship with marketing incrementally, using what might be called a “land and expand” strategy.
• Develop a plan of action that describes the role procurement will play in sourcing marketing services, and then secure the support of senior company leaders for the execution of that plan.
• Have a governance system in place that establishes the framework for how marketing and procurement will work together.
Sarah Scudder is President of Real Sourcing Network (RSN), a print e-sourcing tool software company. Sarah is the youngest executive to ever serve on the board for the Print Services and Distribution Association (PSDA). Sarah writes a monthly column on print and marketing services procurement for the Sourcing Industry Group (SIG)’s Future of Sourcing publication and Institute of Supply Management (ISM)’s Inside Supply Management newsletter. Sarah hosts thought leadership ProcuremenTalk events around the country and coordinate events for the Global Women Procurement Professionals (GWPP). Sarah speaks at several annual sourcing industry events and hosts webinars. Awards? Sarah is a winner of the North Bay Business Journal’s Forty Under 40 award. Sarah won the Print+Promo’s Trailblazer Under 40 award. Sarah won the Print Services & Distribution Association (PSDA)’s Member of the Year award. Sarah recently won the Sourcing Industry Group Future of Sourcing Rising Star award.