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You hear all the time about marketers wanting to rationalise their roster of agencies. And this is because, like coat hangers, they seem to keep multiplying. You turn around and there is a few more agencies on the roster, plus another print company, a couple of PR agencies and lets throw in a handful of sales promotion agencies.
This is usually because agency rosters are not developed strategically, but evolve organically. Which means that they inevitably grow over time.
Every agency on the roster adds additional time simply managing the relationship and administering the agency. It also has the ability to decrease your buying power, consolidating suppliers can increase your negotiating power and deliver economies of scale.
So what is the right number and mix of agencies on the roster?
Simple - as many as you need to deliver the range of services you require in the lowest possible number.
The problem is that simply taking the knife to the problem can create more problems than it solves. You could cut suppliers that have huge amounts of residual knowledge that does not exist anywhere else in the organisation.
Or you could cut the outliers that provide the diversity in the roster and end up with a very 2 dimensional roster profile.
But there is a better way of answering the question: How many and what mix of agencies is the ideal roster?
At TrinityP3 we call this Strategic Supplier Alignment.
And all it takes is three little steps:
First, you need to determine what are your requirements by brand across the organisation. Not just today, but in the next 3 to 5 years. This is the strategic part. And you need to work out who is providing those requirements.
Second, from this you can create the ‘As Is’ state. This is a map that shows you where there are gaps, duplication, underperformance and opportunity.
And third, you create a number of ‘To Be’ state models based on the various roster models available.
Collectively the marketing team can review these models and on agreement select the model that delivers all of the required services with the minimum number of suppliers. This is the alignment step. The difference between the ‘As Is’ state and the ‘To Be’ is the procurement plan.
It means that instead of just wielding the knife hoping for the best, you have a roster plan aligned to your strategic requirements. But more importantly it aligns the marketing team to the roster structure, which minimises the leakage and reduces the coat-hanger effect.
And that is why we call it Strategic Supplier Alignment.
TrinityP3 – Strategic Marketing Management Consultants