The view from the other side: A procurement professional's insight into the challenges of working with agencies

But instead I plan to use this opportunity to speak about how procurement can and should work, at its best, with marketing. How we try to interact with agencies during the pitch process and what you can try and do to have a share in the control of the process.

My single objective is to work with my colleagues in marketing to ensure the right agency is appointed. So let me try and debunk a few myths about procurement and share a few thoughts on what controls an agency can bring to the party.

Procurement’s role, put simply, is to buy products and services in the most efficient and effective way for our organisation, to achieve the best ROI. It should also be about project management, challenging the status quo, bringing commercial insight and delivering the right agencies to the pitch. I’ve been doing this for 15 years and still don’t think it’s easy, or that I know it all yet.

But what I do know is there are many different personalities delivering this role for their brands, some of which may be familiar to you:

There’s the glory hunter – the procurement type who hears of a possible pitch and wants to run one. They love the words “briefing meeting”, “chemistry meeting”, “tissue meeting” and the special one, “pitch day”.

Then there’s the generalist – the procurement person that doesn’t only look after marketing. In their role they buy plant, travel, IT, telephony, legal services and anything that doesn’t go into or around the product.

Then there’s the enthusiast – who may often be inexperienced. They’re usually being told what to do from above and have limited scope for independent thought.

Of course, let’s not forget the ex-agency person (like me) who’s crossed to the other side. And you now also have the procurement consultancies who conduct an analysis of the A&P budget and come up with “you can save 10-15 per cent here, here and here”.

In my opinion it’s the lack of direct experience that poses the greatest challenge to these guys achieving their outcomes successfully. So if you are working out how to better engage with procurement you could start by truly understanding who you are dealing with and their level of experience. Speak to them, ask about their roles, tease out their experience and god forbid, possibly you might be able to help them.

Now for your side of the equation as agencies.

I read the same trade press as you and I feel equally despondent about some of the recent coverage of procurement. Credit terms of, or exceeding, 120 days, rebates, fees to remain a supplier, etc.

Whilst it doesn’t help you, I have a great deal of sympathy as I appreciate how hard it can be to run an agency. But I do think that in many cases as agencies you could do more to help yourselves, especially where it comes to commercials.

Let me share a relatively recent story. A pitch had taken place and the agency was appointed before the commercial terms were agreed against a scope of work. All that was submitted was a total price and a rate card.

The rate card looked fair enough so I never asked for a fee reduction, however I wanted to work with the agency to develop a structure that showed the talent employed, associated rates, where it was having an impact and define the deliverables for both the strategy and executional projects. After weeks of chasing the agency, who would probably be well-known to most of you, finally submitted a spreadsheet. The numbers presented literally didn’t add up. It then dawned on me there were hidden columns so I ‘unhid’ them. It showed the agency had tried to meet the request but couldn’t so just made up the numbers.

This is dumb on many levels. What value creativity? It’s a question thrown at procurement, but what value did this agency put on it? Dumb because it showed they had no commercial nous. Dumb because they delivered a document that didn’t address the request. All compounded when the next time, when I asked for an excel document, they submitted a revision they sent a PDF. This is one example but I could write a book on the subject. Agencies need to engage and treat procurement with a degree of respect.

I assume at some time or another you’ve bought a new car, a TV, a holiday, a mobile phone. At the base of your purchasing process, assurance of supply is pivotal. And whatever high value item you are buying, you are making a sometimes sub-conscious calculation of risk. And that’s what we do as procurement professionals, manage that risk for our organisations.

You wouldn’t buy a TV from a store you thought was going to go bust. And so too in procurement we have to know you are commercially sound, you are profitable, you can deliver the service you promise, you can deliver the quality our company needs, you have the right insurances and so on.

Business Requirements frame the entire procurement process and usually lead into an RFI. Though I know RFIs can be painful to complete, they can also help you decide if you want to participate and get you onto the shortlist.

I’ve read too many agency responses to RFIs saying: “We do not provide this information”. This leaves a question mark and can reduce your chances.

So how do we typically think about and map out our requirements? I’ve already mentioned assurance of supply, the foundation to our thinking. Next is quality. Quality is always key – If I said BMW then Citroen, you would see two different standards of quality. This quality can be defined in an agency. I accept not as directly, but the marketing client should know what quality they expect. Procurement should be able to translate and capture this.

Next: service. To stay with the car analogy, think about it this way. I need an exact day to bring my car in, I need a phone call if a problem is found, I need a cost for repairs and I need to know how long it will take. I want, and stress ‘want’, my car washed whilst the garage has it. There is a significant difference between needs and wants and you should be able to see this within your own clients requirements. If they are not marked out clearly for you, ask..

Next, your favourite part and mine: cost. There’s every likelihood there will be some commercial questions within an RFI. And I would encourage you to try and get basic commercial terms as early as you can in any process. What credit terms would you offer? Will you commit to not marking up third party?

If you read any clients requirements or RFI and dissect it you should be able to start to read between the lines of what that client is really looking for.

If it says to answer a question in 150 words then please do. I can’t begin to tell you what a turn-off it is to both marketing and procurement to have to read excessively long documents. You may turn off an ally when a competitor agency delivers a beautifully constructed RFI.

If you pass through the RFI stage and make the pitch list, please bear in mind that no agency joining you on the list should not be able to deliver the quality and service required. With financial risk mitigated, cost becomes a more significant part of the equation. You may hate filling in templates and other spreadsheets but we live in a commercial world. Your clients are somebody else’s supplier. Your client is under pressure to cut costs and margins. Your client is facing online auctions and procurement people too. It’s tough but it’s not only agencies that have to face it.

My advice with you is to work with procurement, work with RAR, work to deliver the best submissions you can. Work openly with procurement to give them what they need in the bounds of reason. Not every pitch asks for 120 days, nor a review of your overheads on a line by line basis. For me good commercial submission is made on excel without hidden columns. It shows the breakdown I require, a breakdown my colleague in marketing actually requires to deliver to maximise their budget. I genuinely see my role as an investment manager. My stakeholder in marketing has a budget that they need to invest. I help them invest it wisely.

Procurement isn’t all bad and they often will listen and enter into sensible dialogue with an agency, assuming the agency wishes to enter into a sensible conversation with them. Strange what happens when two parties treat each other with mutual respect and trust. Listen carefully to what procurement request. Don’t give your value away, and value what you do.

Andrew Lowdon is the global category leader - marketing procurement, for Associated British Foods. He manages the marketing spend for Twinings, Ovaltine, Pataks, Kingsmill and more