Category Archives: Marketing

Half of Procurement Leaders Expect Their Budgets to Increase. Are They the Kings of Wishful Thinking?

A recent article over on the Supply Chain Quarterly (which launched about the same time as an article on the Supply Chain Management Review) quoted the newly released 2024 State of Procurement Data Report from Amazon Business (whose PR team was working overtime) that was revealed at Amazon Business Reshape. The report, which surveyed 3,000 buyers, procurement decision makers, and organizational leaders, had a number of interesting statistics.

The ones quoted by Amazon Business on their site included:

  • 95% of decision-makers acknowledge that there’s room for procurement optimization
    (which says to the doctor that 5% of decision makers are clueless and need to be replaced)
  • 85% of respondents say the difficulty of sourcing suppliers that follow sustainable practices prevents their company from setting or achieving strategic sustainability goals for procurement
    (which is totally logical because when there is a national demand for something that is in extremely limited supply, most companies will fail; it’s like demanding gender equality in STEM organizations in North America; on average, women are 25% of STEM workers; this means that for every STEM organization where they manage to fill more than 25% of their positions with women, there is an organization of equal size that won’t)
  • 81% of respondents had mandates to buy from certified sellers, which might include sustainable, local, or disadvantaged group-owned businesses
    (and it would be nice to know what percentage achieved those mandates; the doctor would be surprised if more than 25%, at most, succeeded)

The SCQ and SCMR picked up on different statistics, and you can read the articles to find out, but the most interesting to the doctor is:

  • 53% of business respondents in the survey expect their budgets to increase in 2024.

Go West, Young Man, Go West and pan for the gold! As far as the doctor is concerned, you’re the King(s) of Wishful Thinking. And, if you really want to, you can call me a bitch like it’s a bad thing for suggesting you’re so far out of this world that you’re a space oddity, but it doesn’t change the fact that you need to sit back, have a deep think, and accept the reality that it’s not going to.

Before you find new offensive adjectives to describe the doctor, ask yourself: When was the last time you received a significant budget increase that was above inflation? And when did it include even a dollar more than what was needed for the new hire(s) you fought nine months for or the system that your CFO decided he or she liked best? And if so, was it enough to actually acquire a new system or an extra hire you didn’t have to fight nine months for? In other words, when was the last time an increase you received was truly significant?

Procurement needs to remember that, in most organizations, it is still looked at as a cost center even though it may be the only profit center a company has left in an inflationary economy with declining consumer demand. As a result, with budget scraps are few and far between, those budget scraps are going to continue to go to sales and marketing hoping that the closers and the mad men will save them, and we all know that’s not going to change anytime soon in most companies.

Expectation is not always reality. And wishful thinking is just that. To succeed, don’t plan for any increases beyond specific increases for specific headcount or CFO friendly systems you have already hard fought and negotiated. This way, you won’t feel let down and you’ll be setup for success.

And while my gloomy glass more-than-half-empty outlook on the situation may not be very gladdening, remember that you are Procurement Pros, you always have sour lemons (and nothing else), and when challenged, you still find ways to make the best lemonade. Prepare for tough times and, on the off chance they are a little less tough, you are guaranteed to succeed.

Consumer Dynamics are shifting like never before. But how does that affect Procurement?

Beyond the obvious, of course. But let’s backtrack.

A recent article over on Fortune noted that consumer dynamics are shifting like never before while purporting to give us some insights from Executives from Instacart, Atlassian, Nordstrom, and Black & Decker [who] share their strategies. However, the insights it shared related to the challenging technology environment the companies, and teams, face daily and not the consumer market in general, which is a very important topic not covered much by most of the publications and analysts that focus on how great the technology (especially AI-backed technology that may or may not work at all) is, but not how it helps you address the consumers that your organization is in business to serve.

Now, it’s easy to track change in demand if you have a good POS system, a good inventory system, at least weekly (if not daily) synchs, and a good DiY (Do-it-Yourself) Analytics system with baseline trend analysis capabilities that can signal changes in demand, the need for rapid reorders to prevent stock-outs, and increasing changes in demand as a result.

It’s not always as easy to track why. Sometimes there’s a strong correlation between the sales and a particular campaign, between the sales and a sustainability initiative, between the sales and recent price decreases in the product line or price increases in a competitor’s product line, or between the uptick in sales and competitor stock-outs, and in this case it can seem obvious, even if it’s not. For example, the campaign may have had nothing to do with it, it could have been the result of a single influencer promoting the product. The sustainability initiative may have had nothing to do with it, as customers may have known it would only impact the next generation of the product. The price decreases may have had little to do with it because it may have already been one of the lowest priced products available at the time as well as the one with the best brand reputation. The competitor stock outs may not have had anything to do with it because those might have been the higher priced products that were only stocked in low quantities anyway.

Moreover, even if you can determine the why with some statistical confidence, that still does not identify the underlying root cause as to why customers reacted to the campaign, the sustainability initiative, the price decreases, or the stock-outs. Are customers shifting towards your brand, adopting a preference for certain products, responding to certain messaging, or just veering away from certain competitors (or at least certain competitor products).

More importantly, how can you predict these trends early, when they are just starting, so that you can make the appropriate Procurement decisions in time to meet the shift in demand better than your competition. Certainly predictive trend analysis (using traditional machine learning fine-tuned to your problem domain) will help, but only if you can identify the right data sets and indicators, which will also mean being able to detect shifts in early sentiment early. So sentiment analysis (not overblown generalized error-prone Gen-AI) will also help.

But that’s just the beginning. Technology indicates possibilities, maybe even probabilities, but not guarantees. For that, you will need a human based assessment of the situation. And possibly an anthropological one. If you want to get ahead, you will need to think ahead of the crowd.

Marketing Don’t Get No Results …

Everyday the doctor sees yet another post in his feed on LinkedIn about how Marketing is not getting results in the current climate because of reason X, where reason X may or may not be relevant, and how marketing has to do something different to get a sale. And every week there’s yet another article like this one on Forbes that provides Nine Marketing Tips to Improve Business Sales that is supposed to solve all your Marketing problems, but actually doesn’t. Why is that?

Well, let’s start by examining the tips:

Foster Collaboration between Sales and Marketing … well, duh! If you’re not doing that, you’re so clueless that you shouldn’t even be trying to market.

Design Your Goals with a Customer Focus … well, duh! If you’re not marketing to your customers, then you’re not going to get any business from them.

Regularly Review and Adjust to Ensure Alignment and Growth … well, talk about generic. This goes true for all departments in all businesses because the market is always changing. There are annual, and in some fast moving industries, quarterly reviews for a reason … it’s not just for determining how well you did, but how well what you are doing is suited to the market.

Begin with a Competitive Analysis … finally something not completely obvious! You’re going to have competition (because if you don’t, you don’t have a business), so if you want to outsell your competitors, you need to offer something better for a segment of the market, and that means understanding what you do different, better, or more cost effective.

Develop a Content Strategy on Digital Channels … back to the duh! Most buyers are online and don’t look at flyers, watch TV, or even listen to traditional radio … if you’re not digital, then unless you’re selling only to the soon-to-be-extinct old-retirees who don’t use tech, you’re not selling at all.

Gather Customer Feedback … more duh! You should do your best to get insight from them as to what they like, don’t like, and want.

Understand your Team Members’ Capabilities … finally something else not completely obvious or generic. Not just that they did X, but precisely what X was; how they did it; what industries and markets they did it in; what channels they did it on; what results they got; and where their expertise truly lies. That goes beyond a simple resume and a few questions.

Be Consistent and Persistent with Outreach … again, not completely obvious, but mostly since every market says persistence, but not all focus on the consistency. Brands aren’t built overnight.

Target High-Value Accounts with Personalized Campaigns … and a third thing not completely obvious or generic. You will be selling to multiple demographics and buyers, though not necessarily penetrating each demographic to the same degree, whether you realize it or not. And some of those buyers will be high-value (regular customers and/or regular purchasers of your most profitable products). Those are the ones you really want to return to you.

In other words, the tips are usually not that great. (And while batting .333 in baseball is great, batting .333 as a leading authoritative business source that is supposed to provide leading advice is not very good. Not very good at all!) And while we picked on Forbes (because it’s a super big publication that can take it), the Forbes article was actually one of the better ones … most of the articles are recycled obvious generic advice (likely regurgitated by ChatGPT cheaters) that are so bad the doctor could not write about them without interjecting so many profanities that he’s sure your spam blocker would ban it!

And, even worse, the good tips are usually focussed on engagement or sales. And while you might think those are the metrics that count, engagement doesn’t necessarily mean sales and sales doesn’t necessarily mean profit or results.

Revenue on its own is not results. Results are profit, and, more specifically, increases in profit over time (and if you think the shareholders give a damn about anything else, you’re dreaming). Profit requires selling the products and/or services that are profitable for the organization over time — those with a good margin now, a low return rate, and a low repair/support cost. And profit increase means selling more products that are highly profitable, which may mean shifting demand from one product to another or even altering the primary product/service offerings over time.

And how does Marketing figure this out and get results? The answer should be clear by now, but if it’s not, the answer is work with Procurement as well as Sales. Make sure that it understands the profit of each product over time, the ability of the organization to maintain supply and scale up, and alternatives that may be more profitable, sustainable, or stable that it should shift customer demand to over time.

But have you ever seen a major publication say this? Probably not. But Marketing (and Sales) will never peak without Procurement support.

Dear Vendor Rep, when you hear “We have trouble … ” You SHOULD NOT assume the individual wants you to sell them whatever your closest solution is. NEVER!

Another Friday. Another dozen topics to rant about. But one has to surface to the top, and this week, it’s the circulating documents and advice on LinkedIn on what a vendor sales rep should say when a potential customer says “X”. I don’t want to get to specific, and inadvertently call people out (although I may if I see a continued push for this nonsense), but needless to say, as this is a Friday, and another rant, the “advice” being given is entirely wrong and total BullSh!t! And I’m sick of it, and as a potential customer, you should be too.

As an example, and this is not necessarily a specific example, I’ve been seeing advice along the lines of:

If a potential customer says “we have trouble managing our inventory and/or raw materials

Then a vendor rep should hear “our business could be stalled or halted if we don’t have what we need to satisfy our customer demand, produce our products, or run our production lines” and “therefore, I want inventory management, product tracking, and or storeroom/warehouse management software and I want it now“.

And then that vendor rep should identify their most appropriate software solution or platform and say “our Gruntmaster 6000 module is exactly what you are looking for as it tracks your inventory on-hand by quantity and location, as well as in process by lane and supplier, lets you assign it to builds and customers, and gives you an accurate picture of what you have on hand and when you will need to restock and even prompts to re-order” …

H3CK NO! ( Get lost, Phil. )

As another example, if a potential customer says “we are in immediate need of Procurement cost savings

Then a vendor rep should hear “if we don’t get a cutting edge e-Sourcing or e-Procurement solution ASAP we are going to get fired so, please, find us one, no matter what it costs

And then that vendor rep should identify their most appropriate software platform and say “our new Ovation Sourcing Suite, running on the new-and-improved Phantom operating system, is exactly what you need as it will save your organization at least 10% annually on your addressable spend, which we estimate to be 400M based on your current spend profile, so you can easily afford the low, low, annual license cost of 4M

AGAIN, H3CK NO! (Phil, we’re warning you!)

In neither situation does the individual want a sale. They want a solution, but that’s not a sale, and not necessarily even a piece of software.

Specifically, they want to understand what their problem is, why they are having the problem, what processes could be changed to prevent the problem, and only then what a solution needs to be in order to help them (and they want to understand what they need before they are asked to judge a solution, and how valuable that solution really is). At least if they are an individual with independent thought who wants to remain that way. (the doctor does realize that there are apparently quite a few individuals [numbering in the thousands] who would rather just belong to a cult of savings and/or a cult of technology and that there is at least one predatory vendor out there that seeks these customers out and actively convinces them to repeat the “savings” mantra until they buy in and join the cult. But there are still quite a few individuals who may eventually want your technology who abhor cults and want to retain their individuality.)

Thus, when a customer says “we are in immediate need of Procurement cost savings

What you should say is “we need to do something or our jobs are on the line, but we don’t know what and we need some guidance

And before you give them a single word of guidance, you should ask, not say, ask “why, what’s your reasoning, and where do you think that savings could come from“.

If the reason is “the boss said if we don’t cut the costs he’ll cut our jobs“,

then you should say “okay, so your boss thinks you are overspending — that may or may not be the case in the current economic and supply chain environment; the first thing you should do is a category-based spend analysis against market benchmarks to identify where your spending is, and whether any savings is likely in each category with significant spend; then, based upon any identified opportunities, you need to determine the best way to capture those savings which could be renegotiating with contracted suppliers (in exchange for a longer term), putting spot-buy suppliers under contracts, or going to market with a (multi-round) RFP

and only then should you say, “now, if you would like us to help, we offer a spend analysis tool if you can do the analysis yourself and/or [guided] spend analysis services and/or we partner with consultancy CCA who can help you with the analysis; then, if you determine that you need RFP technology, we have an advanced sourcing product that could be a perfect fit, and if you determine (re-)negotations are the big problem, we also have a contract management solution/integration with negotiation support that many of your peers have said works great in those situations; we’ll reach back out in x weeks, which is about how long the initial analysis should take, but if you get answers sooner we’re here to help

Not only will the potential customer respect you, but you will be their first callback as soon as they know what they need, and if they can skip an open RFP process in their technology selection, it’s likely you will be their first choice because they want a vendor who will listen to them, understand their problems, help them identify the root cause and the necessary processes changes and improvement, and ensure that any solution they buy is one that’s actually appropriate to their situation and one they can use. And this will be true even if your solution costs more because they are looking first and foremost for a vendor that will help them achieve the promised ROI, not just promise them one (or insist they drink the kool-aid). (Please don’t sip the Kool Aid.)

The situation for the inventory example is similar. Almost every manufacturer has an MRP, and knows what they are buying/using, so it’s likely their inventory issue is a process issue, possibly exacerbated by a lack of integration between systems, or a lack of visibility into forthcoming production plans. Similarly, every organization knows what they buy, it’s on the PO, and they know what is shipped, it’s on the ASN, and if they have a no-receipt, no-pay policy, they know they should have received what was in the ASN. But chances are there is no counting, or ASN override, when receipt is verbally acknowledged (and a buyer keys in a single “Y” when the warehouse clerk says “yeah, we got it“), no connection between the procurement system and the inventory system, no identification of where the product is stored, and no indication of whom the product was intended for.

In other-words, they probably don’t need an inventory system, they probably need an integration solution/module that connects the systems, consulting on best practices to help them get the processes right, and auxiliary modules for sales tracking or integration into sales so the inventory is properly allocated.

They may still need your solutions, but they need your knowledge first, and if you offer the right services, possibly need your consulting, more.

Remember this before you take that bad advice to lay right into an inappropriate sales pitch. At least if you want them to want you. (They don’t want a Cheap Trick anymore.)

Still Using Product Photography to Drive Sales? Part II

Today’s guest post is from Brian Seipel, a marking project expert at Source One Management Services focused on helping corporations achieve both Marketing and Procurement objectives in their strategic sourcing projects.

While this guest post is a bit off of the beaten path for SI, it’s a very interesting one and relevant for those Procurement professionals that want to run with the marketing bulls.

Five Ways Rendering will Beat Out Photography

In Part I, we noted that rendering needed to be “as good” as a photograph for organizations to ditch photography, and for this to happen, rendering needs to offer more. What is the “more” that is needed?

Here are several examples of what “more” means in this sense:

  • Perfect conditions – every time. Let’s face it: there are plenty of elements of a photo shoot that can (and will) go wrong. This is especially true of outdoor shoots or tricky products. Think of Breyer’s next “ice-cream-cone-on-a-hot-summer beach” ad. With rendering, you control all aspects of the environment, leaving nothing to chance – bad weather can’t shut down your rendering, and there’s no hot sun to melt your product.
  • Don’t like it? Change it. Another reality of product photography is its element of permanence. Once a shoot wraps, it is over. Small-scale changes may be possible in post-production, but also may incur additional charges. Larger changes will require a costly reshoot. Rendering provides the flexibility to make changes right up until the point you have your perfect image.
  • Rendering goes where photography can’t. Imagine filming a fly-through of the many intricate elements of a watch, with the viewer flying over the watch face and delving deep into the watch’s moving inner gears. Imagine this watch transitioning from a solid object to an exploded view, showing how a thousand individual components come together to form the whole – all while still ticking away and moving in time. These are powerful ways to showcase a product, but creating them with traditional photography or videography would be a struggle at best. With digital rendering, achieving these views is no more difficult than capturing a standard image.
  • Entrée into augmented reality. Just how far augmented reality will go in helping an organization reach customers is still an unknown. However, definite marketing plan synergies exist by developing a rendering that could not only replace a photograph but also feature in an augmented reality app.
  • Rendering keeps getting more cost-effective. To be clear, rendering may still be expensive depending on what work you need done. However, the fast pace of advances in this area have dramatically cut costs to the point where many organizations see a direct financial benefit to making the move. Photography costs are much less flexible – the costs related to studio space, product and equipment storage, and prop warehousing will always be present. Even though photography equipment keeps getting better, staying on the cutting edge of hardware still requires a large outlay of cash for studios, which is passed onto customers in every shoot.

Is Rendering Viable Now?

Given the speed at which technology is moving and just how lifelike the results are becoming, a transition to rendering from photography will, for many organizations, be a matter of “when” and not “if.”

So, at what point is this switch viable? For many organizations, this is a judgment call. For many, rendering can achieve results faster than photography and at a better price point. For others, rendering supplements photography to achieve results that traditional production can’t.

Thanks, Brian.