Pepsi Sees The Light, Trashes Procurement Department, Agencies Rejoice!

The idea of a procurement department, much like the notion of agency search firms, really accomplishes nothing except to add yet another layer of bureaucracy to an already delicate process. Oh, sure -- the goal with the former is to save money. I'm not really quite sure what the value of an agency search firm ever was, but apparently there are some in the business who feel that function serves a purpose. I don't know any of those people.

In any event, PepsiCo just announced they are getting rid of their global marketing procurement department and shifting that responsibility back to where it belongs -- with the marketing departments of the individual brands charged with creating advertising programs for those brands. 

Of the change, a PepsiCo spokesperson said in a statement: "We continue to evolve our operating model to be more efficient and effective. These changes are made with careful consideration and are necessary for us to stay competitive while meeting the future needs of our business. Unfortunately, as a result of these changes, some positions have been impacted. These are never easy decisions but we are committed to supporting affected employees by offering severance packages and comprehensive career transition support."



Yeah -- well, like I said, extra layers, extra bureaucracy, extra baggage, pointless waste. Nothing against the fine human beings who held those positions, but whatever happened to the notion that budget responsibility could rest with the people who actually manage the budget--the marketing departments of individual brands? 

Where in the world did we think a disconnected department of number crunchers could ever hope to ascertain the intricacies of the value that's tied to a client agency relationship? It's not a math problem and it never was. Anytime even the tiniest bit of design comes into play, so does subjectivity. And subjectivity is not the strong suit of a procurement department. And as we all know, the cheapest solution is rarely the best solution. 

It's baffling that procurement departments ever took root. In fact a recent ANA survey found that just 47% of brands saw value in a procurement department and, no surprise, just 10% of agencies found benefit. 

And so today is a day to celebrate. Perhaps more brands will follow suit and we can get back to the business of advertising and leave behind the silliness of pretending the selection of an ad agency is as simple as second-grade math.

1 comment about "Pepsi Sees The Light, Trashes Procurement Department, Agencies Rejoice!".
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  1. Jack Skeels from AgencyAgile, Inc., November 16, 2015 at 2:23 p.m.

    Ah, welcome news.  As I pointed out in my July article on this topic, the use of procurement services for purchasing what are essentially strategic partnerships is completely mis-guided.  Link here: 

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