“Smarter” Procurement?

By Principal Henry Hwong

McKinsey recently put out an article to urge more partnering between procurement and marketing when it comes to spend. Having spent many years in procurement technology with many battle scars trying to get into marketing, I have one thing to say:

Uh, what?

Putting aside the oil-and-water aspect of the procurement and marketing relationship, in general, procurement processes work well when things are very well defined. Sourcing, in essence, is about aggregating spend into categories of common items and services to have a better negotiation position with suppliers. That’s what’s being touted in this article.

However, we are still in the early days of digital transformation and marketing technology (martech) adoption. Even marketing automation, the grandaddy of martech, still has less than 50% adoption. The ground is still moving under marketing, from an agency, technology and process perspective. The last thing they need, in essence, is a slow moving, resource intensive process while everything is still evolving quickly.

Yet, the article touts that “continual transformation” is the reason why we need these deep, detailed processes. What? Something doesn’t compute.

It’s nice that they were able to get a 10% reduction in agency spend and 20% reduction in media, but what it doesn’t state the internal resource effort needed in both marketing and procurement to undergo a five month agency review. Think about that. Five months of people itemizing agency spend. Meanwhile, in this uncertain state, I wouldn’t be surprised if marketing campaigns were also impacted during this process.

If procurement wants to work with marketing, epic deep dive processes and only focusing on spend reduction as the result won’t cut it. This article tells me that thought leaders in procurement still don’t get it.

Sounds like procurement needs a dose of agility. Agile Procurement. Now that’s an interesting idea.

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