PepsiCo axe its Procurement Marketing team
Is PepsiCo's decision to scrap its marketing procurement department a sign of things to come? The pepsico move would seem to go against the grain. PepsiCo says it will shift the responsibility for overseeing agency remuneration back to individual brand teams and that this decision is a result of evolving their operating model to be "more efficient and effective". In this article in Campaign Magazine some interesting thoughts from marketing professionals on the PepsiCo strategy and what it means for the role of Marketing and Procurement functions.
At The Drum’s Brief Encounters event in London the PepsiCo's decision to axe its procurement marketing team earlier this month breathed new life into the debate on whether the two discplines can work in harmony. Procurement managers from Royal Bank of Scotland (RBS) and GlaxoSmithKline sought to debunk some of the untruths around the dynamic and explain why it shouldn’t be seen as the thorn in an agency’s side.... see their thoughts...
And from Campaign Magazine:-
Agency head: Neil Christie, managing director, Wieden & Kennedy London
"Marketing and procurement often operate separately. Setting fees is in the hands of procurement and workload is in the hands of marketing. Procurement wants lower costs and marketing wants more work. Agencies are squeezed between the two. This squeeze is transferred to agency staff and resources – agencies have to do more with less. The result is weaker work that delivers worse results. Everyone loses.
"Pepsi’s move will apparently place both fees and workload under the control of one team. If that leads to shared accountability for the value of work delivered, rather than focusing on cost-cutting, Pepsi and its agencies will all win."
Client: Jonathan Mildenhall, chief marketing officer, Airbnb
"Procurement specialists don’t necessarily have to be bad for a client/agency relationship. In fact, if managed correctly, they can ensure absolute fairness.
"I want world-class procurement capabilities within my organisation. But that’s just it – embedded ‘within’ the marketing organisation, not positioned outside. This ensures that the team is aligned to the same goals.
"For all markets, I find our primary goals are incredibly similar: world-class creative thinking that drives efficient performance; world-class partnerships, which enjoy fair compensation that reflects the value created; and simplicity – this ought not be that complicated."
Agency head: Melissa Robertson, managing partner, Now
"‘Procurement’ is the noun form of the verb ‘procure’, meaning ‘to obtain, especially with care or effort’. If that effort is a race to the bottom (don’t even start me on e-auctions), then it erodes the value of great work. If it’s about mutual benefit and longer-term relationships, it can be a positive conversation.
"Brand teams are crucial to making procurement discussions meaningful as they get the most from the partnership. If they disengage and palm off the ‘grubby’ stuff, they’re not the best clients. They should want you to feel that it’s fair.
"The best procurement people should know that, or should get out of the way."
Industry body: Tom Lewis, finance director, IPA
"This is a significant development from PepsiCo. It is another example of a leading brand owner thinking innovatively about how to balance short-term cost management with longer-term value creation. "The move by PepsiCo places budgetary responsibility firmly back within brand teams by integrating cost management with marketing activities and will allow agencies and clients to have more balanced, holistic conversations.
"It also places greater focus on maximising the return on marketing investment in both the short and the longer term – an area that the IPA has championed with its Effectiveness Awards and Commercial Certificate training."