Budget-conscious marketers are increasingly aware of the potential for realizing substantial savings by honing their supply chains, but many companies have a long way to go to realize these benefits.

This is confirmed in a new report from the CMO Council's Marketing Supply Chain Institute, in partnership with the Business Performance Management Forum and Institute for the Study of Business Markets. The report, "Define Where to Streamline," details the results of a comprehensive supply-chain benchmarking audit of 311 marketers from multinational companies across 23 industries. The audit was sponsored by supply chain services company NVision, which also sponsored the project.

Most marketers (61%) said they are seeking to realize greater efficiency and cost savings by tightening marketing supply chain control, integration and accountability, and 45% also see messaging/brand experience consistency as a major, driving factor behind such efforts.

However, 63% admitted never having conducted a comprehensive supply chain audit. Furthermore, just 11% indicated that they are generating real economies and efficiencies in their marketing supply chain processes. And while 21% said their companies have achieved a "good" balance between centralized procurement and localized sourcing, 42% said that they are currently in the process of moving to a more structured and systematic approach.

Nearly half (46%) said they are continuously improving supplier management, but just 13% described their marketing supplier resources as "extremely well integrated and globally aligned." Nearly a third (30%) described resources as "fairly disjointed and isolated on functional levels," and another 8% said that resources are poorly linked, controlled and aligned.

One key finding: While many marketers have in past CMO Council research reported implementing exhaustive process improvement and vendor assessment campaigns in attempts to streamline and manage marketing supply chain costs, this supply chain audit found that many are not focused on the areas most likely to yield the largest, longest-lasting cost reductions.

NVision estimates that up to 56% of marketing costs are related to fulfillment, shipping, storage, inventory management and obsolescence of marketing consumables such as printed point-of-purchase and promotional materials.

However, "when marketers think about reducing costs, they tend to look at the usual suspects, like agencies and marketing communications," Liz Miller, VP programs and operations for the CMO Council, observed to Marketing Daily. Much of this involves marketers' own lack of supply chain expertise and their lack of access to internal or external expertise, she says. And some marketers tend to view areas such as warehousing, logistics, transportation, shipping and procurement of such materials as not being in their purview.

For instance, just 10% of respondents said they plan to actively reduce costs and inefficiency in their supply chain by limiting print runs, warehousing, storage and fulfillment costs, compared to 46% saying they will cut back on unnecessary areas of spend and resource utilization, and 38% citing negotiating tougher terms, better prices and added benefits.

"Marketers must turn their attention to optimizing and streamlining broad operational competencies to realize longer-term savings and cost efficiencies," concludes the report.

However, many marketers do recognize that consumables management functions do need more focus. While creative design and development was most cited (41%) as the area of greatest potential for process, productivity and performance improvements, 34% cited print production and copying, and 33% cited direct mail and fulfillment operations.

With regard to the numbers of platforms used to requisition marketing consumables, marketing services and event management services, 35% reported having a centralized purchasing and procurement group, but about the same number (34%) reported having multiple sourcing systems and processes used by different functions. Globally, 29% said that regions and/or countries source and manage their own vendors, 26% said that corporate marketing provides centralized services and regions localize their programs, and only 22% reported a disciplined, structured worldwide sourcing.

Nearly half said they rely "somewhat" on agencies to manage marketing services, 43% said they don't rely on agencies at all for this, and 7% acknowledged significant reliance on agencies.

About 30% acknowledged not fully exploiting the value of the Internet for supply chain management, but the same percentage said their use of the Net has generated big improvements in workflow, collaboration, content access and digital asset management.

The major obstacles to more effective supply chain management are functional silos and resistance to operational marketing integration (cited by 41% of marketers); established vendor and supplier relationships and loyalties (33%); and reporting structures and operational responsibilities (28%).

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