How Do You Support Marketing? Get a Grip on Agency Lifecycle Management, Part II

In our last post we explained that even though Marketing thinks its spend is sacred cow spend, it’s really not and that proper Agency Lifecycle Management techniques can be used to get a grip on marketing agency spend and manage it through the services lifecycle. We also explained that basic Agency Lifecycle Management consisted of four necessary steps: selection, scoping, briefing, and evaluation. In this post we’re going to dive a little bit deeper into the requirements of each step as Supply Management will not be able to support Marketing in Agency Lifecycle Management, and get its hands on that sacred cow spend, unless it has the appropriate processes and technologies.

Selection

In order to support the selection process, Supply Management will need to use a full featured RFI solution that can capture, at a minimum, the following agency information for each agency under consideration:

  • firmographic data, including location, size, financial health, ownership, and affiliations
  • (core) capabilities and resource availability
  • (primary) and secondary specialties, and the relative percentage of business
  • experience in the vertical(s) of interest
  • (major) clients and (potential) conflicts

In other words, before a selection can be made, a rather complete profile is needed to narrow in on the agencies that are not only capable of doing the work, but appropriate with respect to the target mediums, populations, and desired branding. For complex requirements, you almost need a SIM application to capture, store, and analyze all of the data.

Scoping

Where Agency selection is concerned, it’s not as simple as just identifying the agencies that could do the work, it’s finding an agency that can do the work, do the work the way the Marketing department wants it done, commit the resources the Marketing department is acceptable with, and do so in the requisite timeframes. Where as any Tom, Dana, or Harry, at least in the eyes of a Marketing Department, can sweep a floor or use a copier, not just any Tom, Dana, or Harry is going to come up with that killer campaign. For that, you need a Sven, Celine, or Giorgio.

This requires, once potential candidate agencies are selected, the provision of a detailed scope of work and the collection of detailed responses to the scope of work that outline who the Agency has that can do the work, what the resources can do, when the resources can be devoted to the project, where the work will be performed, how the Agency intends to reach your target audience, and why the Agency is the best for the job at hand. This will require some back and forth negotiation until the response is acceptable to Marketing and the scope is acceptable to the Agency. Then an agreement can be cut. Then it’s on to the

Briefing

In the briefing phase, the scope of work is further refined to provide the Agency with details on demographics, target audience, budget, and desired creative elements for the current phase of the marketing campaign. Typically, the scope of work will be for the entire campaign and then a detailed briefing will be provided at the start of each phase. The Agency will then respond with any additional requests for clarification or refinement, some back and forth may occur, and then they will produce and, after the requisite review(s), deliver the work for the phase.

Evaluation

Marketing should be reviewing the results after each phase, particularly where the budget is concerned. If the scope of work was for a one year campaign, with a new set of tv, radio, and online advertisements each quarter, and halfway though the year the Agency has blown three quarters of the budget, something is very wrong. Marketing has to keep a continuous eye on budget, timelines, and (any measurable) results on a regular basis, and make sure everything goes to plan. This is where Supply Management, and it’s best practice Supplier Relationship Management and data analysis skills, can really help Marketing.

If Supply Management can effectively support each of these phases, then chances are it can effectively support Marketing and get some control over that sacred cow spend.

And if it doesn’t have the processes and tools it needs, there are Agency Lifecycle Management solutions on the market.

How Do You Support Marketing? Get a Grip on Agency Lifecycle Management, Part I

For many Supply Management organizations, Marketing is one of the sacred cow spends that they don’t get to touch. This is because Marketing insists that creative talent can’t be traditionally sourced due to the inability to quantify creativity systematically, and can’t be managed using traditional processes because creative talent is not like easily sourced janitorial services.

But this isn’t true. Creative talent can be sourced systematically, but not using a hands-off auction, outsourced GPO, or other inappropriate methodology. It can be effectively sourced using a proper RFX, Supplier Management, and negotiation process. And creative talent can be effectively managed using an Agency Lifecycle Management process that manages the services cradle-to-grave.

So what is Agency Lifecycle Management? It’s Services Lifecycle Management customized for Agency Management. In traditional services lifecycle management, you have the following basic steps:

  • supplier identification and selection
  • contract and scope of work
  • delivery
  • review and evaluation

In Agency Lifecycle Management, you have approximately the same steps, except the scope of work can take various forms and be much more involved, and the delivery step requires a lot more interaction than a traditional (services) delivery and usually takes the form of regular interactive briefings. In other words, in Agency Lifecycle Management, you have the steps of:

  • selection
    where agencies are identified, their core skills are captured, and the best match(es) are identified;
  • scoping
    where the scope of work is collaboratively defined between Procurement, Marketing, and the Agency to meet the needs of the initiatives Marketing has planned;
  • briefing
    where the specific requirements of each initiative are captured in a clean and complete manner for the agency to deliver against; and
  • evaluation
    where the work effort, cost, and other relative metrics are captured for verification and comparative purposes.

And, most importantly, each step is tailored to the specific needs of the Marketing department where Agency Management is concerned. So what are the specific needs? We’ll address those in Part II.

Sourcing Innovation Welcomes Back Next Level Purchasing!

Sourcing Innovation is thrilled to welcome back Next Level Purchasing (NLP) as a lead sponsor. Next Level Purchasing, which has been offering on-line purchasing training since 2001, and purchasing / supply management certifications since 2004, is one of the few companies that shares SI’s passion for the continued education of Supply Management Professionals everywhere and that’s why it’s great to see NLP back on SI.

Plus, it’s SPSM (Senior Professional in Supply Management) certification is a groundbreaking offering in the Supply Management space. While the original SPSM certification, launched nine years ago, is fairly basic by today’s standards, it still defines the baseline skill set required by every Supply Management professional, a skill set that is not taught in most business programs and a skill set that didn’t even exist in the curriculums of the big Purchasing Associations, including the ISM, until five years ago (as the ISM did not launch it’s CPSM certification until 2008, four years after NLP introduced the SPSM)! Furthermore, since then, Next Level Purchasing, which recognizes that the Supply Management function has been in continuous change over the last two decades, has launched the SPSM2 and SPSM3 certifications (which are still unmatched in the big associations) which are designed to help a Supply Management Professional advance in her knowledge, skill sets, and career once she has mastered the basics. (And even though the SPSM3 was just launched, they are already in the early planning phases for the SPSM4 and when the need is there, they will be ready.)

Today is a great day to be welcoming back Next Level Purchasing as a lead sponsor. Today, Next Level Purchasing launches its 3rd annual salary survey. The survey, which is sponsored by Sourcing Innovation and which can be downloaded for free on Next Level Purchasing’s website, contains a lot of useful data on salaries by continent, education, years of experience, and certification for everyone in the purchasing profession. Some key findings include:

  • Managers in North America make almost 30% more than Buyers,
  • Purchasing Professionals with Bachelor’s or Master’s Degrees make, on average, 45% more than those with an Associate’s Degree or less, and
  • Purchasing Professionals WITH a certification make $12,250 more than those without a certification, and Purchasing Professionals with a SPSM certification make $15,549 than those without a certification!

In other words, when SI told you to train thyself because it would be worth it, if you train thyself (and get certified), you’re adding, on average, another $1,000 a month to your salary! (Considering that the basic SPSM Certification is only $1,149, this is definitely worth your time!)

To download the Free Salary Survey, log into the Next Level Purchasing Association (NLPA) member’s area and download the report from the What’s New tab. (Membership is free for all Supply Management professionals, so sign up if you are not a member!)

Plus, this year Next Level Purchasing, always looking to add to their educational offerings, launches the first Next Level Purchasing Association Conference. Being held this September, this conference, which will feature keynotes by leading analysts (including Andrew Bartolini of Ardent Partners and CPO Rising and Chris Provines of Value Vantage Partners and ChrisProvines.com), will be centered around a number of workshops designed to increase your Supply Management skills. Instead of the same-old same-old conference where you sit around all day listening to the same people speak over and over, this conference will focus on teaching you, which should put it on your short list as not many conferences these days seem to have that objective.*

Welcome back Next Level Purchasing!

That’s why you don’t find the doctor at many conferences these days!

Talented Professional, Train Thyself!

Earlier this month, in our Procurement Key Issue 2013 post, we noted that CXO’s still don’t get the disconnect and that the average CFO, COO, and CEO still does not understand the value of the Procurement Organization. Furthermore, despite the ever increasing need for Procurement Training, from what we’re seeing, for the fifth year in a row, as part of the continued drop in operating budgets for the Procurement function, Procurement training budgets are (again) being slashed, if they exist at all!

In order to achieve the objectives being put before you, which include:

  • the acquisition of game-changing innovation and technology,
  • the increase in purchasing’s scope and influence,
  • the increase in value of the organization’s product and service offerings

and, SI’s favourite,

  • a further decrease in organizational spending

(even though inflationary times are back with a vengeance and the pursuit of cost reductions is a lost cause in this market where food reserves are at an all time low, China has a monopoly on rare earths, oil (and energy) demands are skyrocketing around the world, and metal prices are shooting off of the charts), you need training. The skill sets and knowledge you need to keep up with today’s supply markets is almost overwhelming!

Right now, you’re probably asking why you should front the time and money to train yourself. Especially when it looks like the organization will get all of the benefit. Well, the organization will get a lot of benefit, but so will you. At the end of the day, the fact of the matter is that you will be more skilled and you will be worth more. If you are unable to negotiate a pay raise with your current employer that at least reimburses you for the effort and money that you spent getting yourself trained within three months, then another Procurement organization will be happy to give you a significant raise. The reality is that many companies would rather pay more for already trained talent than pay to train the talent themselves. While the exact amount that training will boost your salary is hard to quantify, some institutes claim that the acquisition of a purchasing management certification can boost your salary by 30% to 40% and Next Level Purchasing knows of at least one case where an individual obtained a 67% salary increase! While increases of this magnitude are atypical, salary increases in the 10% to 20% range are not!

So train thyself. It will be worth it!

The Strategic Category Management Lifecycle: Getting it Right; Part III

In our first post, we noted that 30% to 40% of negotiated savings never materialize during strategic category sourcing and this is because the “strategic” element is usually forgotten once the sourcing exercise is over. Strategic category sourcing is not enough to realize results, an end-to-end strategic category management lifecycle, which consists of at least nine phases, needs to be followed. In our second post, we defined each of the phases and the key activities in each phase.

In this post, we’re going to present some tips to getting the most out of each phase.

Phase 1: Rationalization

When analyzing a category, be sure to analyze it from multiple perspectives. Look at the products, the (potential) suppliers, the (potential) customers, and the level of spend. As per our last post, when looked at from a product perspective, you might put printers in with computers, but when looked at from a supplier perspective, pairing it with toner in an office suppliers (sub) category can sometimes get you a better deal.

Phase 2: Supplier Identification

Don’t just look at the major competitors to your current suppliers, or at (potential) suppliers who have called you, but open up an RFP to see who might be able to service your needs.

Phase 3: Sourcing

If you’re not sure of the best approach, call in a category expert. As per our last post, the best approach will depend on the category, market conditions, and specific organizational needs and might change from one sourcing event to the next for the category.

Phase 4: Contract Award

Once the negotiations are complete, the next step is to make sure that all of the terms and conditions are defined, not just price and delivery. It’s important to also define return and recovery, (satisfactory) performance metrics, and other factors critical to success.

Phase 5: Supplier Management

Supplier Management is not just an up-front meeting and an annual site-visit, it’s regular communication and joint problem solving. It’s working together to find ways to improve product quality and service delivery. It’s building a strong relationship that will insure quick recovery in the face of a significant supply disruption.

Phase 6: Procurement

Make sure to send a purchase order, issue a goods receipt, and demand an invoice for every shipment and do an-way match. In order to make sure savings are captured, it’s critical to make sure you are not overcharged. Also, track every return and require a credit memo from the supplier on a monthly or quarterly basis.

Phase 7: Inventory and Distribution

Optimize the warehouse layout for inventory management. It should be easy to locate, count, pick, package, and re-ship available inventory as required. Use the services of a 3PL to optimize distribution if that is not your specialty.

Phase 8: Returns Management

Implement a returns management solution to insure returns are appropriately managed.

Phase 9: Recovery Management

Implement a Supply Chain Finance solution that can accurately track returns, refurbished goods, and credit recovery.