Good procurement means good business

Recently I attended a brilliant BIMA panel discussion, delivered by the industry’s finest procurement talent, exploring the ever-evolving role and relationship between Client Services and Procurement. Despite the discussion being extremely open, respectful and constructive in the room, the title slide of the presentation was somewhat contradictory. Client Services vs. Procurement.

I jest but there is a level of truth that lies behind this title as the role of procurement, certainly within agencies, is still routinely perceived as something negative or to be feared. The idea that conversations with procurement are often confrontational or solely driven by cost. Of course, this couldn’t be further from the truth of what ‘good procurement’ looks like in practice and so I want to share 4 sure ways to spot the signs of trustworthy procurement.

Sign 1: Procurement respect the role of Client Services.

In procurement's eyes Client Services are the cartilage of an agency.

They are the people who bring together and lead different disciplines as well as corral internal client stakeholders under a shared vision, towards success. They balance what the agency needs with what the business wants, taking the time to listen and understand the organisations objectives and challenges. They are honest and proactive in their approach, whether that involves acting on opportunities to improve existing processes, seeking out ways to deliver greater value or challenging their clients to take more risks for the good of the business.

Procurement professionals who truly respect and value the role of Client Services want to actively engage with them, seeing them as a trusted adviser. Essentially someone who is strategically focused and driven opposed to an overhead who is focused on small chat and client entertainment. They recognise that unlike the finance or new business team, Client Services are uniquely positioned to understand both the business and commercial context in which clients operate and so make procurement's life easier. Procurement also appreciate being spoken to by Client Services like a day-to-day client contact rather than an evil villain but if you suspect the latter is true of your procurement contacts, then it may be time to politely divorce.  

Sign 2: Procurement involve the business in negotiations.

Whilst procurement professionals are increasingly becoming more specialised, particularly in marketing and IT, they will never have the same depth of knowledge about the products and services they are procuring than the people on the ground in the business. Procurement are highly trained in negotiation – it is their craft and it should remain that way. It is why elite procurement professionals endeavour to bring subject matter experts from the business into negotiations with agencies. This not only helps augment their own skill set and knowledge but also acts in the favour of agencies by fostering a shared understanding and ultimately, a fairer value exchange for everyone. 

If procurement for any reason block involvement from the business as part of a negotiation, this should be treated as a red flag because procurement's role is to negotiate the best value for money rather than decide how money should be spent. The final budget decision should ultimately reside with the business so if you don’t have people from the business in the room with procurement, then chances are the negotiation will be convoluted and prolonged as procurement won’t be empowered to make budget-based decisions.

Sign 3: Procurement are willing to negotiate beyond the rate card.

The nature of the projects agencies now deliver are increasingly more transformational and the impact of the work is much easier to measure and quantify. Long gone are the salami slicing days of procurement liaising with the Finance Director to get a blanket rate card discount. For any commercially savvy agency today, this approach to negotiation is sacrilege given the ever-increasing cost of talent attraction and retention in such a competitive market.

Successful procurement professionals understand that there needs to be a two-way gain in agency negotiation. It is as much about the agency being bought into the client as it is the other way around, especially as agencies continue to see their margins squeezed by demanding clients. It is for this reason seasoned procurement professionals are increasingly open to discussing more value-based pricing models of remuneration such as profit share or performance-based bonus schemes over more traditional models that are less tailored, and impact driven. Not only that but good procurement experts acknowledge the business benefit of blended approaches to pricing dependent on the nature of the work from retained teams to pay as you go or fixed scope models.

Sign 4: Procurement welcome an ongoing dialogue with the agency.

If procurement's objectives are truly aligned with that of the business and are not solely cost driven, then it should be visible from the outset of the relationship that procurement want to engage in a two-way dialogue with the agency. They should be involved in early chemistry meetings or long-term business planning, taking an arms around rather than arms length approach to the agency-client relationship.

This dialogue shouldn’t stop after the initial negotiation is complete but rather, be sustained in the longer term through scheduled business reviews and assessments. It is easy for agencies to forget that procurement, especially when externally recruited, are impartial decision makers and so their involvement in agency reviews can be invaluable being one step removed from the day-to-day.

It is commonplace for agencies to complain about the state of their relationship with procurement but equally, it is our choice to continue to play the game or not. Dodging the cost driven procurement hooligans and instead investing in good procurement relationships requires us to be more observant of procurement's behaviours and to be honest with each other, as with any successful relationship. We must simply open our eyes to the signs of good and bad procurement playing out right in front of us.