How 3 small changes can significantly increase value for procurement
Tag’s Senior Vice President, Americas, Patrick Fogarty, recently spoke at ProcureCon Indirect West 2019 on the evolving role of the RFP process as it relates to marketing procurement. He discussed the alternative methods procurement can embrace to deliver more value. With procurement industry feedback top-of-mind, Patrick Fogarty joins Tag’s marketing and procurement expert, Jon Bender, in an interview that addresses small changes procurement can make now to drive huge value in cost efficiencies, processes and innovation.
“In working with procurement, a key takeaway for me is the understanding that procurement is the voice of sourcing sanity within the organization,” explains Jon Bender. “Procurement must demonstrate to the rest of the company that the house is in order and there is control and process in place, to drive innovation and growth. In order to do this successfully, procurement must consistently improve processes and ask where else in the organization can this be done? The marketing supply chain can be a great starting point.”
Is procurement currently the example of best practices in control and process for their company?
“We often hear that procurement processes are dated, but because they are tried and tested the willingness to make a drastic shift comes across as both daunting and expensive,” continues Patrick Fogarty. “Procurement teams do not need to completely overhaul their internal process; a small change can have a very significant impact.”
1. The RFP is never going to R.I.P, but process must change – at least incrementally
In the August 2019 release of The CMO Survey, marketers admitted to spending more than 68% of their time on day-to-day tasks instead of thinking about the future of their company. What does this have to do with procurement?
Fogarty: We see this as a common theme in procurement departments as well. The RFP process has become so focused on completing a one-off request that it misses big picture goals.
We understand that there will always be a case for an RFP, like buying 100,000 coffee cups, but we also know that there are cases where the RFP process is more time intensive, than effective.
As a results-driven supplier, we ask procurement executives to consider shifting guidelines for what requires an RFP. Transactional items versus consultative conversations.
Bender: I agree. Revamping the guidelines as to what requires traditional process and what warrants a bigger picture conversation, can be procurement’s first step. We’ve found that consultative conversations uncover areas to improve efficiencies. In many cases, this replaces the traditional RFP process and allows for greater progress.
2. The lowest risk can also have the greatest reward
At ProcureCon Indirect West 2019, we met with a CPO who aligned enacting change in procurement to popping open the hood of a classic car. The idea of going all in can be daunting. You never want to endure the time or money to replace all the parts. Instead, choose the ones that are easiest to fix.
Fogarty: I hear this analogy and I immediately think of the relationship between marketing and procurement. We tell our procurement clients time and again, that they are never going to completely change marketing’s view of procurement, but what if they could fix one piece that allows marketing to do their job better, while documenting greater savings. Often the best places to start is marketing print management. Print production is often an afterthought of the overall marketing ecosystem, but by applying basic aggregation and leverage through an independent print management partner you can drive significant savings and visibility of spend.
Bender: We’ve heard from senior level marketers at large organizations that even in today’s digital age, big brands are spending up to 5% or more of their annual budget on printed material. We see that more than 74% of marketers are not optimizing their print spend. This opens up the opportunity for a “quick fix” with significant outcomes in terms of both process efficiency and dollars back towards your marketing budget.”
3. Pilot new processes before you expand
Whether it is due to limited resources or the fast-paced working environment of most organizations, companies often pick a process and press forward, without stopping to evaluate or look at the data. Does continual success require continual evaluation?
Bender: Yes. Without data it’s just guesswork. Pick one or two things you wish to change, and assess them. Look at the data, monitor the results, press forward or go back to the way things were before. Once you understand the small changes you can achieve, you can then expand to more areas and transform the process for the future of the organization. I see procurement as a company’s north star – challenging the status quo and continually improving to guide other departments to new levels of success.
Fogarty: It’s not unusual for us to identify one or two things within a client’s creative production or sourcing programs that present opportunities for driving greater value. Once we identify these opportunities, we pilot a new process. The biggest takeaway is procurement’s need for a supplier that can not only help to assess current practices and offer a solution to change, but also a partner to then execute new practices, pilot new opportunities, track data and show measurable results. This is how Tag works with brands and we do this really well.
For more information on how Tag works with brands and agencies to improve process for procurement, contact us.
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