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OPINION21 August 2014

Procurement: friend or foe?

Opinion

Procurement departments are having more and more of a role in research buying. Craig Scott looks at the consequences of this for everyone involved.

The sorts of frustrations include simply not understanding market research and reducing everything to comparable widgets (a word often used about procurement). One agency owner told me that a client procurement team presented her with proof as a fait accompli that her depth interviews were more expensive than a competitor. Turns out the sample was completely different.

Another had to complete a monumental spreadsheet with a dizzying number of metrics. But not a single question about quality. Is the end result of this enabling companies to buy rubbish cheaply? A commitment to dumbing down?  Others have had to submit blind bids with no accompanying explanation or relationship building opportunity (like eBay) – great if you’re buying bolts but what about knowledge?  Another agency negotiated a 20% discount of its services for a commitment of work which meant it could recruit and have a stable team of staff knowledgeable of the client’s business. A win-win situation. No. The procurement contact left the company and his replacement, eager to prove himself, requested a 20% discount – on top of the 20% discount.

Agencies want talented individuals and want to reward them fairly and well. They have commitments to people who have commitments. Some agencies are simply not bothering to engage with procurement teams as it’s too much effort, with the danger of being pushed into agreeing uneconomical day rates for experienced staff.

Even client teams have vented their frustration, being tied to a preferred supplier list when they know of an agency who would do a brilliant job solving their business challenges. What professional satisfaction is there in that?  As we see more and more agencies specialising they are in danger of falling off the preferred supplier roster. Clients are professional and smart – they know the value of a project and they know when it’s worth paying a premium. The problem is that value is intangible. Even bigger than that, we don’t even have a definition of what value is in our industry. It’s difficult to prove the knowledge from one source is better than another. It’s much easier to buy bolts.

So, is procurement all bad? You may not know where your pension, ISA or other equity-based investment is placed but wouldn’t you want it placed in a company that actively seeks to reduce its costs? Isn’t that prudent duty that you benefit from? One agency couldn’t praise procurement enough as it intervened to point out to the client that the scope of the project had crept way beyond what was initially agreed. An amicable agreement was reached; everyone was happy. I personally worked with a procurement team who became so knowledgeable about research that I considered them as recruitment candidates for my team. And what’s wrong with being challenged? What’s wrong with someone snooping around asking about the costs of this and that? Surely we can answer those questions and articulate the value we add and the premium we charge for it – isn’t knowledge about a client’s customer worth its weight in gold?

In a world where procurement is on the rise, here are some tips on how to work with them:

  • Accept that they are here. Not necessarily here to stay but here, in our time, in this professional era to be partnered with.
  • Engage with them. They have a job to do and being obstructive or combative isn’t going to help – they are on the rise and their organisational influence will rise accordingly, so influence them.
  • Embrace them, let them see what you do and how you make your decisions, include them in team meetings and debriefs, build their research capabilities and demonstrate your value.
  • Get them involved earlier and get them using your language knowledgeably.
  • Build relationships. Acknowledge and support their need to reduce costs but emphasise along the way your desire to maintain and increase quality – then journey together.
  • Be relentless in your discussions about quality. Use the word so much that they start using it and anticipate your desire for it – eventually they will talk about quality and cost rather than cost alone.

Craig Scott is a market research enthusiast, speaker and writer.

1 Comment

5 years ago

I suspect most suppliers have had experience of bad procurement and though less emotive, we have probably also seen examples of good procurement. And don't forget, client side buyers / procurement will have had good and bad experiences of working with suppliers too. The key question is why are some research purchases a constructive "win win" experience and others a lamentable destruction of client organisiation value and agency relationships and opportunity. MRS now has an active best practice buying initiative to understand what good looks like for each of the 3 parties involved in a "best practice" purchase of research. We are actively seeking examples and feedback or engagement for the goal of promoting best practice for client buyers, procurement and agencies alike. A framework for the initiative can be found here https://www.mrs.org.uk/careers/buying_guide and comments by email to bit@mrs.org.uk are welcomed. We aim to share what works soon. Martin Cary Buying Initiative Team, MRS

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