Campaign India Team
Feb 15, 2010

Procurement, the eleven-letter beast, is reality

A month or so ago, a New Delhi-based advertising agency resigned an account of a large auto brand (I know I’m sounding like one of the leading national dailies as I refuse to name the brands – and there I go again!), exasperated with their dealings with ‘procurement’.The long-drawn negotiations between Unilever and various suppliers is taking as long as it is thanks to ‘procurement’.

Procurement, the eleven-letter beast, is reality
A month or so ago, a New Delhi-based advertising agency resigned an account of a large auto brand (I know I’m sounding like one of the leading national dailies as I refuse to name the brands – and there I go again!), exasperated with their dealings with ‘procurement’.

The long-drawn negotiations between Unilever and various suppliers is taking as long as it is thanks to ‘procurement’.

It’s a department that none has read about in the reference material one receives at any B-School; it’s a word I certainly did not come across in the time I was in advertising.

It’s a word that many in advertising and media agencies, even today, have never used in the context that you see in this piece.

Yet it’s a word that is here to stay. Like it or not, one will have to understand the word and one will have to use it— often.

Let me first try and describe what ‘procurement’ does. While the users (whether in the case of a creative agency or a media agency) decide on who they want to work with, their procurement department decides what the service is worth.

As simple as that, you think.

No, it isn’t. The guys at procurement ask you a zillion questions on how much you are putting into the account—and their offer is based on the answers to the questions.

Most of which most agencies aren’t currently equipped to deal with. Tackling procurement requires agencies to have nearly precise answers to all costs, human and otherwise – which most agencies would not. The negotiations and the justifications, even if you have them, are tiring and time-consuming.

Most of those I have spoken to who have dealt with this new eleven-letter beast have come to terms with the fact that the beast is here for good.Where did it come from anyway?

It’s like my deciding on a restaurant to dine in, deciding what I will have in the restaurant and then, my accountant stepping in and deciding what I should pay.

And now imagine that my accountant is devoid of taste buds; he doesn’t even care for food; yet he, (almost) alone, decides on what the food is worth.

What does the restaurant do? Refuse my custom?

Sure, if I’m likely to come to the restaurant once in a blue moon.

Not sure, if I commit to visiting the restaurant each day for lunch and for dinner with scores of friends with me.

The restaurant, I guess, will learn to sit across the table from my accountant and arrive at a number that, finally, is acceptable.The restaurant will be shocked by the details that the accountant wants to know during the negotiation process. He’ll want the recipe with precise details of all that goes into the dish. He’ll want details on how many people (and who) will be involved in the making of the dish. He’ll ask what brand of crockery and cutlery you use and how much you pay for it. And so on.

That’s procurement.

There will be agencies who will refuse to go through the process with certain clients and agree with others. And because not too many clients have a procurement division now you still get business without the hassle.

But it will be a short while before all the big advertisers adopt this route and it will be the default.

There are a lot of questions I’ve been asking to understand the process better. On one, I haven’t even come close to getting an answer: How does the accountant, in the restaurant analogy, decide how much the sous chef, who only adds the salt, contribute to the magnificent dish before me?
 
How do you figure how much he is worth?

 

Source:
Campaign India