Eliminating Marketing Procurement: An Industry Trend?

November 18, 2015

By Bill Duggan

A recent advertising industry trade press article reported that a major corporation has eliminated its marketing procurement department, moving the function to brand teams to improve efficiency and effectiveness. ANA reached out to our procurement and financial management community to get perspective and asked:

PepsiCo has eliminated its marketing procurement department, saying moving the function to brand teams will allow it to be ‘more efficient and effective.’ Do you think PepsiCo’s move is indicative of a wider industry trend toward the elimination of marketing procurement departments?”

More than two-thirds of survey respondents (68 percent) say PepsiCo’s decision to eliminate its marketing procurement department will not become an industry trend. Meanwhile, 17 percent don’t know/aren’t sure and only 15 percent believe this will become a trend.

Among the majority who believe that this is not indicative of a wider industry trend, common responses were:

  • There’s value in procurement acting as a neutral third party.
  • Marketing/brand teams do not have the skill sets of marketing procurement. Procurement has expertise in areas including negotiation, contracting, supplier management, and risk management.
  • If marketing was required to do the work of procurement, it would be time-consuming and distracting. The role of marketing procurement is to bring value and efficiency to allow marketers to focus on marketing. If marketing teams are responsible for procurement, they risk becoming less effective.
  • Procurement provides a centralized function for coordination of supplier management and the resulting efficiencies.
  • Procurement can work with agencies and other key suppliers and play “tough,” if need be. Meanwhile, that’s harder for marketers to do given their ongoing day-to-day relationships, especially with agencies.

Procurement can still bring significant value to marketing. Procurement provides expertise in areas that are beyond the skill sets of most marketers. That allows marketers to do what they do best: marketing! At the vast majority of ANA member companies, marketing procurement is not going away!  

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