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The role of Procurement in buying print
Prima 2015
Google search
Print companies “About 635,000,000 results (0.33 seconds)”
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"As I hurtled through space there was only one thought in my mind - that every part of the capsule was supplied by the lowest bidder" John Glenn
The 10 Most Important Marketing Trends According To Sir Martin Sorrell – May 2014
Number 7 The Rise of Finance: The collapse of Lehman Bros. in 2008 impacted corporate behaviour more than it affected consumer behaviour. Sorrell predicts that companies are likely to maintain a cautious financial stance for the foreseeable future, and sees finance and procurement as playing a more active role than marketing
Old Procurement style
Agency operations a dark art Buy Products not services Marketing client in control ‘Low Price’ mission Cherry-pick comparatives Transaction style
The environment Tighter client budgets Marketing have to prove the ROI Increase in spend on digital (P&G announced 2 weeks ago a target saving of €500m)
Tough negotiations around prices, payment terms, contract durations & decoupling This is continuation of a long trend that in recent years has embraced opening up prices for more transparency, tighter credit terms, and eliminating margins on third-party value-added services
Impact of the environment changes
Economic climate has forced pressure on marketing budgets And increased the role and power of procurement Greater call for measuring the return on marketing spend The Marketing budget needs to show payback over time Decoupling areas such as print and production are now seen as the norm Print Management companies have got smarter & targeted Procurement as clients, and have employed ex procurement as Account Managers
New Procurement style
Understand Marketing Trained negotiators Bigger role in supplier selection Client and Value focused Some are Poacher turned gamekeeper Relationship style of management
Contribute to the overall profitability of the organisation Management of the organisations external resources (suppliers) Minimisation of Risk and Maximisation of Value
Role of Procurement
Risk Impact – what is the impact of failure on the company’s operation? Supply – what sort of market is it? – how many suppliers are there and what is the cost of switching?
Value
Size – how much do we spend? Impact – what is the impact on our cost base?
Role of Procurement
Role of Procurement
“Buying is as important as Selling” – a £1 saving will benefit the bottom line immediately, a £1 sale will after reduction of cost of sales potentially benefit the bottom line by £0.35 Responsible for managing costs acceptable to the business and represent good value Ensuring quality and delivery is not compromised (Total cost of ownership) Responsible for developing and implementing sourcing strategies for all external spend Ensuring Corporate and departmental governance principles are adhered Project management skills – working collaboratively with internal and external departments. Ensuring appropriate levels of contractual coverage are implemented and managed.
Print Management & Procurement
They are ‘winning’ as they can talk the Procurement language (see the next slide) In reducing risk for Procurement, they offer an one stop shop for print buying, often now with a basic studio service often on site In maximising value, they provide Management Information, showing spend and savings made, which Procurement can report They can offer a global scale if needed They are aligned with the creative agency process They can build DAM’s for clients
What do Procurement want from Print suppliers?
Actively maintaining a competitive supplier roster through constant review. This allows flexibility and business continuity through depth and breadth in the supply chain Aggregating spend with preferred suppliers, thereby giving us as customers access to best-in-class services and innovation Working on innovative new services and solutions with the suppliers, thereby helping us drive [sales] growth through exciting new product development
What do Procurement want from Print suppliers?
Automating and streamlining of the job or project pricing process to ideally get instant, sustainable and low prices Benchmarking industry pricing to track the lowest sustainable price, so we know that we are paying less than if we had bought the service ourselves Provide print suppliers with real-time intelligence on their price and service performance, so they can improve based upon real insight Leveraging of purchasing economies of scale
Benefits of a Print Management company
One supplier for all print requirements Can consolidate small client spend to get better deals Provide advice on print buying Offer an European or Global presence if required Have staff that understand Procurement Understand what Procurement want e.g. savings, management information reports Can provide resource on site e.g. print buyer Offer design services & are expanding their services to digital and often a low cost option vs an agency Talk Procurement’s language
Benefits of a Print Services company
Specialists in their area of print The best option for single high volume print e.g. catalogues, brochures Can talk directly to the people that know print and challenge specifications etc One profit margin Provide innovative ideas
Question
What should the paper industry, as suppliers of the printers or as direct suppliers of advertisers/publishers, do to strengthen their position? How can they cope with the role of Procurement? How can they support printers or print management companies?
Direct dialogue Proactive engagement Innovative and new ideas Working in partnership with both Procurement & others Support Procurement objectives – risk and value
Question
How can printers cope with the continuous pressure on cost of the print management companies? As the print management companies seem to buy on cost only
Educate on the cost of materials Encouraging discussion on value add that they print Seek to drive better value for all Have regularly reviews with the print management companies Ask for meetings that involve them and the clients
The Year Ahead
No change in the role of procurement The financial prudence that was put in place in 2009 will continue More pressure to deliver targeted savings Though procurement will drive tenders, there is likely to be improved dialogue between procurers and agency execs, due in part to an eagerness on behalf of the procurement community to bone up on the business of creativity Continued use of eSourcing but less eAuctions
Support them in achieving their targets Demonstrate bottom-line savings Show transparency and accountability Offer savings through improvements in working practice Manage your 3rd party suppliers competitively
What do Procurement want you to do?
Talk to them in their language Provide accurate numbers and detail Provide information in the format requested Provide backup information for pricing Develop improved processes for working Demonstrate ROI
What do Procurement want you to do?
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