A few days ago David Rae of Procurement Leaders highlighted a viewpoint given by Tim Williams in Advertising Age regarding how marketing agencies should align their compensation in such a way that it actually supports instead of opposes the procurement process. Tim Williams proposes that in order to do this, advertising agencies must “make the mental leap from cost to value”.
What struck me with Tim’s reasoning was how strongly it resonates in almost all service categories. In many purchasing departments strive to lower hourly costs – since this is the one variable that is on the table – real value is lost in the fog.
As I outlined here, some old dogs go as far as to oppose the entire idea of large consulting firms (and outsourcing houses) since their experience is that it in the long run costs more than what it initially said on the price tag. By focusing on delivered value instead of purely cost and working tightly with stakeholders I truly believe that purchasing can evolve service procurement to a higher level.
And this type of paradigm shif is especially interesting in times like ours as we are approaching the tipping point leaving the fierce badlands of right side of the A.T. Kearney diamond for the more co-op pastures on the left.
