The changing role of procurement

In today’s highly competitive business arena, organisations are constantly trying to identify ways to boost their profitability and gain competitive advantage whilst also cutting costs. The notion that companies need to become leaner and more agile through focusing on their core competencies and sourcing all other goods and services externally has really gathered pace.

As this theory has become reality, organisations have developed increasingly complex, and increasingly global, supply and value chains.

This phenomenon has fundamentally transformed procurement’s role and remit. Today it goes well beyond simply getting the lowest price; it’s about developing relationships with suppliers and internal stakeholders, whilst also supporting strategic objectives.

Undoubtedly, this has led to some overlap at a strategic level between the roles of marketing and procurement. For instance, where does managing the transition to an outsourcer from a procurement perspective end and the process of internal / external communications begin? Alternatively, where suppliers are chosen on the back of their ability to innovate, new ways need to be found to preserve marketing’s involvement in new product development.

Interestingly, this has not automatically led to a situation where procurement’s involvement is sought in Marketing’s purchasing activities.

Marketing and procurement – a changing relationship

The new stakeholder networks arising from the move towards ‘lean’ organisations have undoubtedly had a major impact on marketing’s strategies. Despite this closer collaboration at a strategic level however, marketing remains the one area that from which procurement is routinely excluded.

The arguments that marketers use to ring-fence their budgets and supplier relationships generally revolve around the notion that “…You can not put a price tag on creativity…” and cultural differences i.e. “Procurement is from Mars, Marketing is from Venus”. These arguments once did tend to ring true and today, both parties are living in the shadow of this legacy.

In recent years, much has changed both in the worlds of marketing and procurement. Procurement professionals used to be generalists that did not fully understand the delicate balances and sensitivities of the marketing world. Trying to apply the same commercial disciplines to purchasing advertising as are used for the purchase of goods such as stationery, raw materials or IT hardware was a recipe for disaster and only helped to widen the perceived gulf between the two functions.

Marketing and procurement – conquering the divide

Since the first stand-offs between the two functions, procurement has evolved at a considerable pace. Today’s procurement professionals bring both commercial rigour and category expertise. Additionally, there is increasing pressure on marketing to demonstrate a return on marketing investment and to get more out of smaller budgets.

From procurement’s perspective marketing is the final frontier, and whilst it is still the exception rather than the norm for marketing directors to seek procurement’s involvement, we believe a fundamental shift in perception is underway.

Procurement has moved with the times, and the task of working with marketing in order to deliver savings and added value from their budget has led to the emergence of a new breed of procurement professionals. Often from a marketing background, these individuals combine an understanding of marketing’s softer, more creative objectives with sound commercial rigour enabling, them to align procurement and marketing goals.

Beyond the divide

Marketers want to identify, anticipate and satisfy their customers’ needs in the most efficient possible way, and ultimately, this has to be procurement’s goal also. In the past marketing and procurement have come at these goals from very different angles, with procurement seen merely as a cost-cutter, and marketing aligned with sales and top line revenue generation. Marketing and procurement are now working together at a strategic level; the next step is for marketers to work more closely with procurement in terms of their own supplier relationships. We believe this is a positive step, and continuing to develop this internal partnership is crucial to building successful relationship with external partners.

By George Giassopoulos, Senior Category Expert – Marketing,
and Tabatha Hawkins, Marketing Manager,
buyingTeam.

Email: George.giassopoulos@buyingteam.com
Tel: 020 7611 4999
Email: Tabatha.hawkins@buyingTeam.com
Tel: 020 7611 4999

About buyingTeam

buyingTeam provides expert resource to deliver better value from purchasing for clients. Using a “hands-on” approach buyingTeam focuses on the delivery of tangible, measurable benefits through procurement consulting and outsourcing. Clients choose buyingTeam because of its track record of achievement in complex environments. buyingTeam has a dedicated marketing procurement practice which specialises in helping organisations achieve best value from the marketing budget.