Do Procurement and Finance People Know Anything about the Marketing Ecosystem?

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The honest answer is ”probably not”.

Marketing and Procurement

Most people are critical and sceptical about things they do not understand and people in business are no different; Production think that Sales ought to make better forecasts, Sales think that Logistics ought to be able to supply forecasts more accurately, marketing thinks no-one understands the consumer, and everybody thinks that Procurement should be able to get better deals – as long as quality and service are not affected!

Generally marketers perceive people from back-end functions such as Supply chain, Procurement and Finance as “a bit dry”. Marketers think these folk are all about numbers and they are not tuned into the intricate ballet that takes place within the marketing ecosystem.

Not surprisingly, the feeling from the back-end functions is that Marketing spend too much money and live in a world as close to “show business” as you can get in corporate life. This is very classic and slightly amusing, but this prejudice also has a significant impact on business.

The “sweet spot” where synergies are generated and quality improved, comes when functions break down the scepticism, engage with each other, and make an effort to understand and embrace the different disciplines. The best marketers do this, the best procurement professionals do this. The worst of each don’t!

An example of where really close cooperation is required is when a company misses its corporate targets. Marketing budgets are “easy prey” when things get tough in a business during the year. If sales start dropping, there is no money for campaigns, and product launches might get axed as well. It may be very tempting for finance and procurement to “sharpen the axe”, but the Marketing leader might have booked slots, paid fees up front etc. and the cuts end up being in the wrong places to the detriment of the company to an even greater extent than just missing sales.

So, how do we let other functions into our functional world and how do we accept and embrace other functions coming into ours?

Particularly, Procurement is getting more and more integrated with all business functions, and Marketing is no exception. Usually procurement people are used to buying machinery, materials and services of a different character than marketing and it makes marketers nervous that they will be steam-rolled by spreadsheets and KPIs.

And they are right…Procurement and Supply chain will always try to find a way to measure things to determine whether or not the stuff works and if it is getting cheaper and better. Marketing effectiveness is notoriously hard to measure and procurement needs to adjust to this fact. Also, relations between people are – and will continue to be – impossible to measure.

Still the relationship between an agency and a marketing leader is a buyer/seller relationship (no matter what anyone says) and a performance management system should be put in place. If a contract is too loose, whether it is the purchase of a machine or an advertising campaign, the deliverables need to be clear and measurable. If they are not in place, the relationship will suffer anyway.

Performance management can come in many forms. If it is not possible to put measurable KPIs in place between the two parties, there are a couple of routes to take. A third party might be able to measure and follow up through systems of its own. If that is not possible either, it is still possible to have close follow up on actions and progress.

Performance is not black and white and even in a production environment where a machine is installed and its performance is not optimal, there can be numerous discussions with the supplier about culpability; flexibility is required.

Even if the message is that there are many synergies and similarities between back-end and front-end functions, the procurement leader who wants to engage with the marketing department must show empathy, and understanding of marketing, as well as apply the same skill sets as used for buying plant machinery. It’s a rare skill! And, that is why a “translator” who can speak “marketing” and “procurement” maybe useful.

So, if a translator is you what you need, find a company that speaks “marketing”, “procurement”, and “agency” as the same language – we look forward to hearing from you…

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Henriette Kistrup – Senior Director Operational Excellence Arla Foods and Flock Associates Non-Executive Director

Contact Flock here.

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