Sales and marketing fails to see importance of negotiating deals with suppliers.
According to new research from eProcurement software company – Wax Digital, sales and marketing is the department least likely to get the best deal from its suppliers, with a massive 86 per cent saying procurement hinders their progress.
The CPO Viewpoint research, surveyed by Redshift, on behalf of Wax Digital, found that over one in three sales & marketing functions place orders and spend budgets with suppliers without any procurement involvement. And only 24 per cent in sales and marketing said that they use formal supplier tender processes managed by procurement, far fewer than other departments such as IT and finance.
The problem seems to be sales and marketing’s negative perception of procurement with only 12 per cent of sales and marketing respondents describing the relationship as ‘very close’ and only a quarter of procurement respondents saying the same.
Sales and marketing appears to view procurement the least favourably, with only 28 per cent regarding it as value adding or critical, compared to 44 per cent of finance having the same view. A significant 86 per cent of sales and marketing describe procurement as hindering progress, and 1 in 5 view it as a ‘necessary evil.’
Dissimilar procurement priorities suggest why the two departments fail to work collaboratively. Procurement sees ‘handling supplier negotiations’ as the top way it can help other departments, but this scored the lowest with sales and marketing – only 4 per cent of them prioritising it.
The two departments also disagree over sales and marketing’s spending priorities. While sales and marketing are focussing on creative communication activities such as advertising, website and branding, procurement prioritises marketing fundamentals such as analytics, data and CRM.
Daniel Ball, director at Wax Digital, said: “Businesses need to bridge this gap between procurement and sales and marketing but it’s often a difficult challenge as the two departments function uniquely. This often places an importance on different areas such as creativity and personal relationships versus best price and supplier risk and compliance, which clearly leads to them clashing and being poles apart.
“Through better communication, sales and marketing could perhaps learn from procurement the importance of negotiating worthwhile deals with suppliers, and how damaging maverick spend with suppliers who are not adequately vetted can be. This could also help procurement better understand what sales and marketing value, hopefully leading to a more balanced set of priorities between the two departments.”