To Procurement Or Not To Procurement

I realize the headline for this article is not proper English. But I decided on it because Pepsi made headlines last week by announcing it was abolishing marketing procurement, and moved decision-making to a marketing Center of Excellence.

And Madison Avenue partied late into the night.

But it really does not matter.

I have had the good fortune to work with both the marketing as well as the procurement disciplines in various roles, and to have been involved in some of the shaping of the two disciplines as a whole through work I have done with the World Federation of Advertisers. What all this has told me, unsurprisingly, is that there are good and bad decision-makers — and you will find them in marketing procurement teams as well as marketing departments.

I have seen marketers who wanted to call a pitch simply because they did not like the latest proposals from the agency.



I have seen procurement advocating a media pitch “to test the market” — in other words, to see if there were cheaper rates to be had.

I have seen marketers blame agencies for poor work when their very own briefings were mediocre, incomplete and late. Or they had changed their minds so many times that the agency really did not know what to do anymore.

 And I have seen procurement teams negotiate agency deals with very rudimentary checks and balances and utterly simplistic pay-for-performance components that did nothing to stimulate the performance of agencies.

I have a much longer list of such occurrences, all of which  just goes to show that there really is no “good” or “bad” in having or not having a dedicated marketing procurement team. What I can tell you is that if you do have one, with clear roles and responsibilities differentiated between marketing and procurement, the end result can be very beneficial to the company as a whole — and to be honest, to the marketing partners as well.

This requires a few simple rules. Here you go:

-- Each party must share business delivery goals with the other to ensure that either party cannot be successful without the other being successful (mutual co-dependence for results).

-- Each party must adhere to a strict code of mutual respect and open-book sharing of business relevant information and data. Politicking will kill any positive outcome.

-- Marketing procurement teams must consist of people who understand the marketing and/or agency world. Kim, who until last week procured plastics, is not going to be a productive team member. She could be over time — but should not be put in charge until she has demonstrated she is now Kim from marketing procurement and no longer Kim from plastics procurement.

It goes without saying that Pepsi needs to ensure that its marketing folks are equally up to the task that was until last week performed by marketing procurement. That means empowering them with critical information, tools, benchmarks and skills so they can negotiate and close a deal that fits Pepsi’s overall business and marketing goals.

Most of all, the Pepsi marketing team members with negotiation and contracting responsibilities need to have enough time to deliver this part of their job. If Pepsi strategists thought that eliminating marketing procurement was an easy cost-saver, they urgently need to think again. That is the kind of thinking typically propagated by ill-informed marketing procurement team members like Kim — formerly from plastics.

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