1. Stirling Consulting Group
Procurement: how to work
with ‘em and win
David Wilson
dwilson@stirlingconsult.com
+1 602 952 8451
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Stirling Consulting Group

2. Hatfields and McCoys Redux?
“Procurement wants to pay less than enough” (Tara
Comonte, Mediabrands COO & CFO)
“Client procurement departments are challenging
every aspect of our industry’s economics” (John
Seifert, Head O&M North America)
“Advertising agencies have to grow up. And
quick.” (David Rae, Procurement Leaders)
“Simplistic cost cutters vs. fluffy money wasters”
(Unknown, Media Week)
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Stirling Consulting Group

3. Objectives
 Pull back the curtain on Procurement
 Identify what you might prepare to obtain a
better outcome with Procurement
 Show that not all the cards need be held by
Procurement
 Identify how you might leverage a relationship
with Procurement
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Stirling Consulting Group

4. Agenda
 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage the Relationship
 Q&A
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Stirling Consulting Group

5. Agenda
 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage the Relationship
 Q&A
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Stirling Consulting Group

6. What’s going on?
CFO Pressures
#1 Reduce operating expenses (74%)
#2 Optimize working capital (50%)
#3 Increase profit (39%)
CFOs with positive view of Procurement
2009 78% 2007 63%
Source: Aberdeen Group, 11/2009
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Stirling Consulting Group

7. Procurement business case
$1 80-95 cents
Source: Aberdeen Group, 11/2009
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Stirling Consulting Group

8. So what?
 Clients will continue to deploy Procurement
 In that context, position front-line teams to
 Leverage the relationship with Procurement
 Negotiate a beneficial contract that achieves your
goals and delivers against your standards
 On-going management of clients’ contracts
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9. Your challenge - Redefine the balance of
power
 Gain visibility into client’s decision-making
 Harness client self-interest
 Identify additional value
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Stirling Consulting Group

10. Agenda
 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage the Relationship
 Q&A
Confidential. All rights reserved 10
Stirling Consulting Group

11. What is (strategic) procurement?
An on-going process of reducing overall costs
and managing supply risk, while improving
internal and external processes
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Stirling Consulting Group

12. Procurement principles
 Rigorous
 Ethical
 Cross-functional
 Focuses on total cost (not just price), quality,
service, other criteria
 Clear objectives
 Objective decisions (to the extent possible)
 Grounded in strategy
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Stirling Consulting Group

13. Typical strategic procurement process
1.Analyze 2.Analyze 3.Develop 4. 5. 6. 7. Monitor &
Spend Market Approach Negotiate Award Implement Measure
First 3 Steps Next 3 Steps Last Step
• Baseline creation • Strategic and • Depends on
economic organization
• Not generally structure and
visible to agencies evaluation,
contracting maturity of
Procurement
• Generally visible &
familiar to agencies
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Stirling Consulting Group

14. Procurement maturity levels
•Fully aligned
•Scale leverage
•Engagement
•Aligned across value
strategies chain
•Cross- •Innovation
•Developing
functional •Change mgt
strategies
•Policies •Relationship mgt
•Projects
•Silo •Strong •Contract mgt
•Growing
•Transactional support
support
•Tactical
Confidential. All rights reserved Source: Corporate Executive Board research14
Stirling Consulting Group

15. Common procurement challenges
Internal Challenge External Challenge
Attracting supplier
Getting right
interest through
behaviors
compelling
adopted
proposition
Harnessing
Demonstrating Discovering true
Managing supplier’s self-
value of standing with
commitment interest for mutual
Procurement supplier
gain
Rectifying
unintended
consequences
Source: Procurement Strategy Council research
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Stirling Consulting Group

16. Decision criteria
Cost Quality Service Technology
Innovation Other
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Stirling Consulting Group

17. Selection might look like this
High
FINALISTS
Supplier E
Strategic& Other
Supplier F
Supplier A
Supplier C
Supplier B Supplier D
Low High
Cost
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Source: A.T.Kearney
Stirling Consulting Group

18. What else should you be looking for?
 Transition support
 Contract management
 Relationship management
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Stirling Consulting Group

19. Agenda
 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage the Relationship
 Q&A
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Stirling Consulting Group

20. Procurement tools emphasize analysis to
drive strategy & tactics
Spend
Category
Dynamics
TCO
Cost
Drivers &
Should cost
Relationship
Supplier
Positioning
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Stirling Consulting Group

21. Procurement also pushes on its internal
clients to prepare
Needs
Client
Objectives
Criteria
Decision
Weights
Needs
Contract
Walk-away
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Stirling Consulting Group

22. Agenda
 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage the Relationship
 Q&A
Confidential. All rights reserved 22
Stirling Consulting Group

23. Successful negotiations
Of the client Of yourself
 Understand needs,  Understand needs,
priorities priorities
 Assess positioning,  Assess positioning,
leverage points leverage points
 Assess client view of  Enlarge the pie
agency positioning,  Be objective
leverage  Determine strategy
 Assess Procurement
 Know walk-away
maturity positions
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Stirling Consulting Group

24. Successful negotiations
Prepare!
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Stirling Consulting Group

25. Agenda
 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage the Relationship
 Q&A
Confidential. All rights reserved 25
Stirling Consulting Group

26. You can have a beneficial relationship –
really!
Procurement does for you
Ethical process
You do for Procurement
Respect process
Relationship mgt
Prepare
YOU
Contract mgt
Be known
Advocacy
Introductions Improvements
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Stirling Consulting Group

27. Let’s summarize
 Procurement is here to stay!
 Procurement analyzes, prepares, herds internal
cats
 Savings for the client can come in many forms
 You hold some cards too
 Procurement can help you
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Stirling Consulting Group

28. Questions?
Contact David at
dwilson@stirlingconsult.com
or on
+1 602 952 8451
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Stirling Consulting Group