• by Richard Whitman , Columnist, November 18, 2015

Last week Pepsi made news announcing it would get rid of its procurement department and hand that role to the marketing departments of individual brands. While many noted the move was a positive one, most brands -- according to a recent Association of National Advertisers study -- will not be dropping their procurement departments. 

The study posed the following question to 148 of its members: “PepsiCo has eliminated its marketing procurement department, saying moving the function to brand teams will allow it to be ‘more efficient and effective.’ Do you think PepsiCo’s move is indicative of a wider industry trend toward the elimination of marketing procurement departments?” 

Of the 148 respondents, 68 percent said they do not believe this will become a trend, 15 percent said it would and 17 percent said they did not know. 

Several reasons were given by respondents explaining why they thought widespread dismantling of procurement departments will not occur:

• Marketing/brand teams do not have the skill sets of marketing procurement. Procurement has expertise in areas including negotiation, contracting, supplier management, and risk management.
• If marketing was required to do the work of procurement, it would be time-consuming and distracting. The role of marketing procurement is to bring value and efficiency to allow marketers to focus on marketing. If marketing teams are responsible for procurement, they risk becoming less effective.
• There’s value in procurement acting as a neutral third party.

While the findings do suggest there will not be widespread dismantling of procurement departments, another study, also from the ANA, found that just 47% of brands see value in procurement departments. In other words, no one likes procurement but everyone realizes they're stuck with it. 

And if there were any doubt as to where the ANA stands on this issue, ANA EVP Bill Duggan said: “Procurement can still bring significant value to marketing. Procurement provides expertise in areas that are beyond the skill sets of most marketers. That allows marketers to do what they do best: marketing! At the vast majority of ANA member companies, marketing procurement is not going away.” 

Long live red tape and bureaucracy!