Partnering with Finance
A great relationship with finance is key to building marketing procurement’s profile across an organisation. WFA Global Marketer Week in Lisbon heard some top tips for making it happen.
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All businesses want growth and smart procurement is an important ingredient, but it’ll be most effective if its work is widely recognised.
At this year’s WFA Global Marketer Week, Magid Souhami and Emily Olson, Global Sourcing Director and Global Sourcing Finance at General Mills,respectively, talked about how their teams have evolved the understanding of the value and performance of procurement and increased the level of recognition across the organisation.
As part of this effort and to encourage better collaboration with Finance, they even created a “Finance Sourcing” role reporting into procurement. The aim was to allow the two disciplines to deliver against the business growth targets; from buying better towards spending and planning better together, but also evolving the perception of the different types of value Indirect Sourcing creates, which are sometimes intangible or hard to measure, towards credible holistic margin management.
Building on this case study, other WFA Sourcing Forum members talked about their relationship with finance teams and what had improved their collaboration.
Four key areas highlighted for a better relationship included:
- Recognition from Finance that there is value and recognition of the existence of “broader benefits”;
- Aligned processes to evaluate what to do with the savings achieved (do they go towards profits or do they get reinvested in marketing);
- Ensuring greater understanding of Sourcing within Finance – including education on different marketing categories – but also education within Sourcing about the needs of Finance; and
- Securing a Finance sponsor or business partner.
Everyone agreed there were still areas that needed to be improved in most companies.
Central and first was the need to work on the relationship between the teams. Practical steps included having Finance as a member of the project team, organising finance/agency meetings as well as ensuring that finance meets the marketing team regularly to ensure that the relationship goes beyond procurement.
The second area involves ensuring everyone understands how both parties’ goals and ambitions can be tied together. That means having full alignment on language and marketing taxonomy, agreement on which areas would benefit from value measurement as well as agreement on what happens to the additional value achieved in terms of overall company profits. It’s also about ensuring that Finance understands that “it’s not just A + B in marketing procurement and a considerable portion of the spend is ad-hoc, not recurring year-on-year or like-for-like”, as one member put it.
The third area is the need to ensure common targets based around clear definitions of robust shared metrics with clear, accurate and timely data collection and regular communication with stakeholders. This might include using a shared tool such as Moat to improve viewability and tracking real-time progress. It was important to link outputs to business performance.
More broadly, the discussion should involve issues such as short- vs long-term business goals, as well as clear definitions of the wider concept of budget holder responsibility and a cultural recognition that, in the words of one member, “the agency bonus payout is a good thing, not a source of year-end funds”.
The conversations around delivering value will continue at the next WFA Sourcing Forum on May 15th in Nyon, Switzerland, which will be hosted by General Mills. To register, click here.
Watch WFA members’ views on evolving the practice and perception of marketing procurement. Hear from Diageo, General Mills, Heineken, L'Oréal, Mondelēz International, Nestlé, Pernod Ricard and The Observatory International below:
Global brands on how marketing procurement can add real value to the business
Global brands on how marketing procurement has evolved to deliver value beyond savings