That floor of the company headquarters that no one from procurement has been to..that’s the marketing department. It shares the floor with the legal department and they do not want you talking about their spend, let alone sourcing it! This month there was a very good (and direct) editorial in ELP, written by Kevin Freedman of Freedman International, which tackles this subject with a take no prisoners attitude about marketing spend. The article is not available online with out a subscription but if you receive the magazine, I recommend taking a look and developing your own ideas about this category. I ran a mutli-day series on a similar topic in legal spend, e-Discovery services. There are millions of dollars in every big company in this category and it is usually sourced by a lawyer or a paralegal, which is scary.
Freedman gives excellent advice about strategies to address this area, and of course, he recommends targeting tangible items first, such as printed material. He also has good experience in discussing how to improve the marketing process and efficiency through sourcing since marketing spend typically ranges from 3-10% of company turnover.
This is a really good overview of the topic and one that does not lolly gag around the issue, which is a many times a problem since most people do not like to take risks of rocking the boat. I would not be surprised if Kevin received a few phone calls from companies that wanted to learn more.
Marketing spend can indeed be a juicy target, but let’s not forget the intense pressure on Marketing from the highest levels of the corporation to produce pretty Annual Reports and good-looking collateral. Just try to source Annual Report production to the lowest cost printer. I triple-dog dare you.
I tried to source the annual report and only got to bid out the paper stock.
Well, it’s a start. Our trusted consultant had a trusted relationship with the printer. Imagine that.
The lowest-cost printer is likely not a good choice for the annual report. However, a person in Purchasing or Supply Chain with appropriate print knowledge and experience (not someone who was buying pipe and flooring last week — no slight intended) can build a working relationship with Marketing and can influence both supplier selection and pricing. If Marketing permits Purchasing to take the lead on pricing discussions, Marketing may still have the final word on printer selection, with a cost savings.
Eric is right with the triple-dog dare. I once was asked to get quotes on paper at the very last minute with mininal specs. When I started to ask questions the time clock was advanced so fast my efforts were a waste of time. Annual reports are the ad agency’s cash cow.
As someone with a procurement background who now manages the print spend for a number of large enterprise customers globally, I find the comments on this subject to be quite amusing. I work with a number of entertainment companies whose printed materials are obviously quite important to them, but senior marketing executives embraced a cost savings approach to help them save money so that they would have more money left over for more interesting marketing pursuits. When procurement leadership does not collaborate with marketing leadership on this spend category right from the start, you’re basically wasting your time. If you are not able to get ample buy in, then you may as well stick to sourcing business cards, forms and other commodity print items.
It may not be as easy as more commoditized categories, but if you do it right, the savings can be dramatic.