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Procurement function will stay

News, 19 November 2015

NEW YORK: PepsiCo's decision to scrap its marketing procurement department is unlikely to herald a widespread shift in this direction, according to a survey by the Association of National Advertisers (ANA).

The ANA sent a survey to its procurement and financial management community asking if they thought PepsiCo's recent move to hand procurement responsibilities back to brand executives was indicative of an industry trend.

Of the 148 member responses, a 68% majority said "no", versus 15% saying "yes" and 17% that didn't know or weren't sure.

And the ANA's survey highlighted several reasons why procurement professionals feel – or hope – few companies are likely to follow this route, including know-how and time.

Marketing/brand teams, they suggested, generally don't have the same skills as marketing procurement specialists, who have expertise in areas including negotiation, contracting, supplier management and risk management.

And if marketing has to take on procurement work, it could be time-consuming and distracting, making these departments less effective.

"Procurement provides expertise in areas that are beyond the skill sets of most marketers," said Bill Duggan, group EVP at the ANA. "That allows marketers to do what they do best: marketing!

"At the vast majority of ANA member companies, marketing procurement is not going away."

Survey respondents also observed that there was value in procurement acting as a neutral third party.

At the same time, within their own community, procurement professionals, perhaps conscious of a possible wind of change, admitted a need for continuous learning to foster stronger relationships with their marketing colleagues.

Some examples included the alignment of goals between marketing and procurement, as well as the need for procurement to better understand marketing in order to be effective.

Data sourced from ANA; additional content by Warc staff