corner-left

Lost sight of how your agency can and does add value?

corner-right
team member

Michael Toy

In terms of marketing, the biggest opportunity that most organisations of any size miss is the implementation of an effective supplier relationship management system. I know the “yawn” … But, people, stay with me — it’s important!

Supplier Relationship Management (or SRM for short) is NOT:

  • a collection of hand-holding meetings surrounding
    relationship guidance;
  • solely an Agency responsibility;
  • an ambiguous title for “a great opportunity to
    turn the financial screws on the agency.”

So what is it then and what will it give to me (aka “the business”)?

In brief. SRM is the deliberate pursuit and systematic management of post contract value from an organisation’s key supplier relationships.

So, “what drives success?” In our view, it’s made up of the following 5 key ingredients.

Targets
We note procurement teams narrowly focusing on cost reduction and hard savings. It’s a tough world: targets are often set and linked to hard bonus / malice KPIs which are drilled into contracts before the relationship is set, or indeed before any work actually commences. This narrows the vision towards ‘default traditional’ and ‘need to secure’ targets and misses the wider opportunity for ‘value growth’ identification. People focus on the elementary effects as opposed to the nurturing enablers that will, when given time and resources, blossom into a myriad of value streams.
Value can appear in many guises: from financial savings, increased or robust competitiveness, better creativity, agility, optimised processes, or access to new ideas and thinking. It’s important to recognize that target setting should not just be a pre-contractual battle for bonus / malice KPIs — it needs to be firmly linked to strategic thinking and future goals. In short, ‘Yes’ – agreed goals, ‘Yes’ – defined by methodologies, and ‘Yes’ – regular & timed.

Targets

We note procurement teams narrowly focusing on cost reduction and hard savings. It’s a tough world: targets are often set and linked to hard bonus / malice KPIs which are drilled into contracts before the relationship is set, or indeed before any work actually commences. This narrows the vision towards ‘default traditional’ and ‘need to secure’ targets and misses the wider opportunity for ‘value growth’ identification. People focus on the elementary effects as opposed to the nurturing enablers that will, when given time and resources, blossom into a myriad of value streams.

Value can appear in many guises: from financial savings, increased or robust competitiveness, better creativity, agility, optimised processes, or access to new ideas and thinking. It’s important to recognize that target setting should not just be a pre-contractual battle for bonus / malice KPIs — it needs to be firmly linked to strategic thinking and future goals. In short, ‘Yes’ – agreed goals, ‘Yes’ – defined by methodologies, and ‘Yes’ – regular & timed.

Stakeholder engagement and perspective
We regularly come across client departments that are clearly internally unaligned, yet alone aligned with their agency(s). Most know of situations where the agency takes the role of ‘lead coordinator’ in an attempt to command some sort of cohesiveness to drive their scope, agenda and mental health of their account teams. Degrees of cohesion in cases like this can be established, but engagement and agreement on SRM goals and priorities turn into mystical fantasies on a continuous carousel of the status-quo and, in many cases, spiral back towards the…. you’ve guessed it… cost.

Firstly, ensure internal alignment. Secondly, champion engagement. Engagement will deliver perspectives which, when connected with others, provides a view of a dynamic landscape. Take your time to understand the landscape, the mutual dependencies and the level of complexity. Visit, talk, appraise, interview, document, create, compare to others, but above all communicate. Having your and the agency’s senior management understand and champion the process is critical to its success.

Stakeholder engagement and perspective
We regularly come across client departments that are clearly internally unaligned, yet alone aligned with their agency(s). Most know of situations where the agency takes the role of ‘lead coordinator’ in an attempt to command some sort of cohesiveness to drive their scope, agenda and mental health of their account teams. Degrees of cohesion in cases like this can be established, but engagement and agreement on SRM goals and priorities turn into mystical fantasies on a continuous carousel of the status-quo and, in many cases, spiral back towards the…. you’ve guessed it… cost.

Firstly, ensure internal alignment. Secondly, champion engagement. Engagement will deliver perspectives which, when connected with others, provides a view of a dynamic landscape. Take your time to understand the landscape, the mutual dependencies and the level of complexity. Visit, talk, appraise, interview, document, create, compare to others, but above all communicate. Having your and the agency’s senior management understand and champion the process is critical to its success.

Capability
When was the last time you saw a marketing procurement, or indeed, a marketing strategy doc that sets out to achieve value creation through the supply chain? If it did, did you feel that you have the sufficient people and processes in terms of capability to pull it off? Right people, right skills, right processes, right attitude. Top tip — ensure ‘the challenger,’ ‘the curious’ and ‘the creative’ are represented. In short: make sure you’re capable as a team — you’re going on a value hunt.

Technology
Hands up, even though we’re surrounded by tech this and tech that, most businesses are still heavily reliant on Excel. It’s great, but so is a chopper bike. Yes, Dan Bricklin unknowingly changed the way companies can operate and scale with Excel, however, it’s not always the way forward. Tech is key, we all know that. So sort it.

Culture
We all live and work in a globalised society. Looking around us, we can all see real examples of company cultures being misaligned, untrusting ways being the norm, and transparency being lost. Watch out for agendas, establish trust and be clear on what a sharing of benefits could look like, particularly when related to co-design or co-innovation. Trust, is good control is better.

If you are new to the game, or are a seasoned pro and need a nudge back on course, get in touch with Julie.marshall@flock-associates.com and we’ll share with you our ideas of how marketing procurement should do SRM.

Leave a Comment