A time for change in Marketing Materials Sourcing?

Prior to establishing Axiom, our Co-Founders spent over two decades in the Marketing Materials Outsourcing sector - shaping, leading and managing not only some first, but also the largest regional & global deals.

Two years ago, Axiom was founded - primarily to address some key challenge that the industry was struggling to get to grips with. Particularly around the wider use of data to drive procurement decisions and the measurement of ESG - two areas in particular where it could be argued that the industry has been ‘asleep at the wheel’ for too long.

In this series of articles, we’ll examine this outsourced marketing materials procurement model more broadly and ask, “is it still fit for purpose today, or it is time for a new approach?”

For a sector that controls over $1Tr of client spend, we’ll argue that the model, that was established in the 90’s, has changed very little in the last three decades and is increasingly becoming “off the pace” as we enter the 4th Industrial revolution (4IR).

But is the model completely broken?

It’s easy to suggest not, particularly when you consider that it’s an industry that’s created some very successful $bn service providers, and also when there seems to be no end in sight to the number of client organisations turning to this outsourcing approach, as they try to drive change in their own procurement organisations.

But do these clients deserve better than what’s currently on offer?

We believe very firmly “Yes”! And throughout this series we’ll explain Why and How these world-leading global organisations should be, and could be, better served.

Challenges

Our perspectives are borne out of deep sector experience, augmented by the startlingly clear insights derived from Axiom’s research, data modelling and analysis since 2020.

This work is highlighting what many people in the industry suspected - the model is outdated and is no longer fit-for-purpose, particularly given the ever-increasing commercial and ESG transparency demands being placed on buying organisations.

Our work has shown that the standard industry contractual, commercial and operating models are one-dimensional, in most instances ‘broken’ and often misaligned with the current and future needs of large buying organisations. The technology deployed by the primary service providers is too simplistic and simply reinforces a traditionally flawed approach to buying.

Over the course of the next few instalments, we’ll add some colour and substance to each of the following areas, as well as some key challenges the sector faces:

  • High levels of budget waste, resulting from the dominant blind ‘spot-buy’ and ‘three-bid’ buying methodologies which are fundamentally flawed
  • Industry standard commercial terms that are designed to drive the wrong behaviours both in the client and service provider organisations
  • Poor quality and/or incomplete data capture that means transparency and objective decision-making and contract management is impossible
  • Data poverty that naturally leads to low levels of automation and high levels of human intervention in repetitive activities, resulting in a high ‘cost to serve’, compromised ‘speed to market’ and increased supply chain risks
  • Heavy reliance on simplistic savings methodologies that do not deliver P&L savings
  • No ability to deliver instant predictive pricing or automated procurement scenarios
  • No ability to accurately measure and manage ESG factors pre-emptively
  • No ability to manage demand pre-emptively, resulting in unnecessary cost and environmental impact
  • No means of objectively measuring the ROI and the effectiveness of the investment in marketing materials

Don’t get us wrong, there are some very good global and regional services providers, but procurement’s historical primary focus on cost reduction and the industry’s infatuation with driving scale and geographic coverage has almost certainly been an inhibitor to real progress and investment in marketing materials procurement innovation. Faced with the need for volume to sustain business models, commodity level service pricing expectations from large buying organisations and competitive tensions that have reduced contracted margins to single digits, most of these service providers have looked up- and down-stream to drive improved margins.

The future

The wider world of Procurement is changing at a faster pace than ever before. A wave of Digital Procurement is washing across the industry, driving a new era of Transformational Sourcing. Recent advancements in Automated Insights and Spend Analytics is now yesterday’s news, being rapidly overtaken by 4IR technologies using the power of Big Data, Blockchain and AI to drive Predictive Procurement.

In the often one-dimensional Marketing Materials world, this talk probably seems like a foreign language, as the industry continues to plow on in the same old furrow.

But this is not some distant future, Industry 4.0 is already here and driving change across numerous sectors and disciplines, where the use of data and AI is delivering significant advances in efficiency, effectiveness and delivering ESG commitments.

The marketing materials sector is unfortunately lagging far behind and needs a wake-up call. It needs to change…..and quickly. BUT is it up for the challenge? Can it lead or will it wait to be forced into a new way of working by its increasingly digitally-savvy clients?

As Albert Einstein famously said, “Insanity is doing the same thing over and over and expecting different results.”

Coming next……

In the next instalment, we’ll look at the current state of the industry in more detail and consider what the outsourcing proposition promises to deliver. In part 3, we’ll get under the skin of the issues that face the industry, from outdated commercial and savings models, to the inadequate technology offerings that are being deployed across global organisations and the enormous gap in accurate ESG measurement and management.

In the final part, we’ll describe what Marketing Materials Procurement 2.0 should look like in today’s data-empowered world, and how it can start to add some real, measurable value both to Procurement and Marketing.

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AXIOM

Axiom is a next-generation Procurement-Intelligence© platform, using AI to enable Procurement to make more effective, more sustainable, more efficient and more inclusive decisions, every time, in real time.

Axiom launched in 2020 in the world of marketing materials. We’ve come a long way since then!! Today, we’re a dynamic ProcureTech start-up, working with clients across a variety of procurement categories, assisting them to drive Transformational Sourcing strategies, as part of their wider digital ecosystem.

Completely independent, we work with clients directly, with management consultants, technology providers and with intermediaries to drive meaningful, AI-powered change.

Why not drop us a line at info@axiomdata.io to see how Procurement-Intelligence© could help to deliver your digital procurement journey in 2022 and beyond.


Everybody loves a '2022 Procurement Trends' List!

As usual, throughout December and into January, the Procurement industry peers into its proverbial Crystal Ball, to proclaim the top Trends and Predictions for the year ahead.

We’ve summarised our humble thoughts on the topic at the end of this piece, but first of all let’s look at what the industry is suggesting that we should be focussing on in the next 12 months:

SUPPLY MANAGEMENT – rounds up its key procurement and supply chain predictions for 2022:

    1. Prioritising risk management
    2. Investing in IT solutions
    3. Maximising talent
    4. Visibility in supply chains
    5. Procurement taking centre stage

Have a look at: What are the key procurement trends for 2022? - Supply Management (cips.org)

 

SOURCE TODAY – 5 procurement predictions for 2022:

    1. Companies Want Less Paper and More Automation
    2. Procurement’s Role in ESG grows
    3. The Spotlight is on Supplier Diversity
    4. Forward-Looking Data Analytics Come Into View
    5. Artificial Intelligence and Machine Learning Come of Age

Have a look at: 5 Procurement Predictions for 2022 | Source Today (from a Basware article)

 

PROCUREMENT MAGAZINE – summarises the thoughts of 10 Procurement industry leaders’ insights and predictions for 2022:

    1. Are businesses ready for Circular Sourcing
    2. Risk Management should be a first priority for organisations
    3. It’s time to think big
    4. Accelerating digital transformation in Procurement
    5. Social procurement
    6. Customer data will focus much more on quality over quantity
    7. Source to Pay
    8. Contract lifecycle management
    9. AI-powered contract review
    10. Don’t doubt the Metaverse

Top 10 procurement predictions and trends in 2022 (procurementmag.com)

 

PROCURETECH – predictions for 2022:

    1. Digitalisation
    2. Intelligence
    3. People, Planet and Prosperity
    4. Organisation

Have a look at: ProcureTech100 Predictions for 2022: Digitalisation Part 1 – Procuretech

 

As always, there’s much to admire in these lists, and the articles wrapped around them. From our tiny corner of the ProcureTech start-up world, we humbly put forward 6 key areas that the conversations we’re having with our clients are suggesting are going to be critical to them in 2022:

 

  1. Acceleration of Digital Procurement Transformation
    If you follow the theory of the Diffusion of Innovation, it could be said that we’re at the start of the “Early Majority” segment when it comes to the Digital Procurement Transformation that forms part of the Fourth Industrial Revolution (4IR). The 2.5% of “Innovators” are way out in front. The 13.5% of organisations that constitute the “Early Adopters” made great strides throughout 2021. Now the next 34% of organisations have got Digital Procurement in their sights – the question remains “how long will it be before the ‘Late Majority’ (34%) and then finally the ‘Laggards’ (16%) wake up and join the party?”
  2. Data, Data, Data
    Much has been written about data and its importance to successful digital procurement (including our piece here: Why we hate data - Axiom Data). We think 2022 is the year when Procurement finally starts getting to grips with data and stops hiding behind the fact that their historical data is poor. Now is the moment for Procurement to make a stand, draw a line in the sand and ensure that suppliers understand their responsibility in presenting you with complete and accurate data for every single transaction moving forwards (if necessary, as part of supplier contracts). Leave us to worry about your dirty and unstructured historical data as we build a powerful data foundation for you.
  3. Beyond Spend Analytics and the Rise of Procurement-Intelligence©
    There was a time when data driven Spend Analytics was all the rage, the new kid on the block, the answer to Procurement’s woes. The reality is of course that this is only one piece (albeit an important piece) of the jigsaw or step on journey to the more efficient, automated procurement world that is coming down the track. Understanding what you’ve bought previously still means you’re looking in the rear-view mirror. Procurement needs to be focussed on the road ahead and needs to ensure every single future procurement decision is predicted, with this prediction Powered by Data, Informed by Insight, Driven by Intelligence and Guided by Science. Welcome to the world of Procurement-Intelligence©.
  4. Creating a Digital Backbone and best-in-class ecosystem
    One of the biggest changes this last year has been the wholesale realisation that one system doesn’t fit all. As Dr Elouise Epstein, Thought Leader and Partner at Kearney states: “the technology landscape of the future will be an ecosystem of flexible tools. Companies need to take a future-proof approach, which means sourcing intelligent individual technologies that can be updated as they evolve.” And Dan Bartel, CPO of Schneider Electric reinforces this view when he says “75% of the innovations that we embed are coming from start-ups and 25% are coming from our strategic suppliers – 5 years ago that ration was reversed.” The start-up landscape is ever changing and there are two good places to start – Lance Younger’s ProcureTech (Procuretech – The definitive 100 pioneering digital procurement …) and Matthias Gutzmann’s DPW (DPW | The global ecosystem for technology and innovation in procurement.)
  5. Digital Procurement as a Competitive Differentiator
    We’ve been reading about the Great Resignation, and as things stand a quick search on LinkedIn reveals that there are 362,895 current procurement jobs listed on the platform. The War for Talent is enormous at the moment, but the great news is that there’s a wave of new talent, with new ideas and a new energy entering the sector. Once seen as a bit of a corporate backwater, Procurement is now at the centre of every progressive organisation with a seat (and a loud voice) at the top table. As Dr Elouise Epstein says “the greatest time to be in Procurement is NOW!”. It’s easy to see how this talent is going to levitate to companies seen as “Innovators” and “Early Adopters” in our digital world. This is without considering the commercial advantages that such organisations can achieve through streamlined and intelligent procurement that focuses as much on managing global risk as it does on maximising value. If you’re working for a “Laggard” boss or company, and your mindset is towards innovation then if you haven’t dusted off your digital CV yet then we suspect it’s pretty high up your list of New Year’s Resolutions!
  6. ESG comes of age
    And Procurement can make all the difference. The world is not interested in green washing any longer, consumers are not interested in bland corporate PR statements about carbon off-setting. They want action and they want it now! Or they’ll be off to one of your competitors who’s got it right in this area. It’s easy for organisations to get to grip with their Scope 1 and 2 emissions but it’s the Scope 3 emissions that exist in the supply chain that are the hardest to quantify and control. But all your Scope 3 emissions are a Scope 1 or 2 for someone – your supplier!! If we’re honest, Suppliers have had a pretty easy one-dimensional ride for the last 20 years – compete on quality, price and service levels and you’re going to be okay. Not anymore, Buyers need to work with their Supply chain to get them to step up to the ESG table, big time. They need to know that moving forwards your decisions are going to be based on data relating to Sustainable objectives and Diversity metrics and if they want to remain a ‘strategic’ supplier then they need to provide you with accurate data to guide your decision making.

What do you think? If you want to continue the discussion then please feel free to get in touch, we’d be delighted to expand on how Procurement-Intelligence© is helping global organisations on their Digital Transformation journeys…….

 

In the meantime, we’re very much looking forward to tuning into PROCURETECH’s virtual event on Thursday 13th January to listen to: “2022 Predictions & Purpose” where Patrick Foelck (Roche), Jason Kurtz (Accel-KKR), Adam Brown (BT Sourced), Dr Elouise Epstein (Kearney) & Lance Younger (ProcureTech) will be sharing their thoughts and revealing the way ahead for digital procurement.


Why we hate data

As we push on in the information age you have probably grown sick of the word data or big data or data lake, data cleaning, data pipeline, the list goes on… Everyone is talking about data but very few people are using it because there are a million and one things that data does to try and stop you. If you can jump through the hoops and over the puddles that data puts in your way then it’s green pastures and blue skies.

“Without big data, you are blind and deaf and in the middle of a freeway.” — Geoffrey Moore

So, how do I get to the promised land?

Clean Data

What is clean data? The easiest way to describe clean data is as the antithesis of bad data. Bad data is an inaccurate set of information, including missing data, wrong information, inappropriate data, non-conforming data, duplicate data and poor entries (misspells, typos, variations in spellings, format etc).

As more and more information enters your organisation from different points of origin, the likelihood that mistakes will be made automatically increases. The first mistake that many organisations make is disregarding the potentially damaging impact of bad data that’s already flowing around between their enterprise applications and playing down the problem by assuming that their data is clean and accurate.

“Torture the data, and it will confess to anything.” — Ronald Coase

The solution?

It’s simple really, just remove duplicates, verify new data, update existing data and the most important one IMPLEMENT CONSISTENT DATA ENTRY. By the way, consistent data entry is not Tom and Steve being the only ones to enter a product specification in a text box because “they know how to do it”. Data should be entered into a standardised format with validation rules implemented for every data feature.

Disconnected Data

The second mistake that organisations make is to allow different parts of the business to become completely isolated from one another, as this creates departmental silos. Once these silos have been created and taken root, not only are they hard to break down, but they also encourage the use of data definitions that are different to those used by other parts of the organisation. This makes it difficult to manage and reconcile important data between teams and applications.

“If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” — Jim Barksdale

The solution?
There is no one size fits all solution to this problem and unfortunately, the solution is usually a long one. It involves integrating all of your data, gaining agreement between teams on data definitions and a historical review of all your data to sort the wheat from the chaff.

No Data or Not Enough Data

Although some organisations have been collecting data for a very long time and that data may even be clean and connected. Once an organisation tries to use this data for something other than simple reporting they usually run into problems. They realise the data they have contains no information and they don't know where to find the information they want.

The solution?
It all starts with a plan. Gather some big brains who have domain expertise and think about what questions you want to answer with your data yesterday, today and five years from now. Then for each question hypothesise five different ways you could answer these questions and the data you would need to get to these answers. For each data feature write accurate and specific definitions of what it means and for the love of all that is good in this world, try to make the data feature categorical or quantitative!

Now, there is a fourth, fifth, sixth … and two hundred and fifty-eighth reason but we will stop at three.

This all seems like a lot of effort…

It is. And it is not a one-time effort, large organisations will continually have to fight to keep their data clean, their information accessible and their insights true. However, when it comes to marketing procurement information, Axiom is here to help. With domain expertise and advanced data collection, cleaning, modelling and analytics capabilities we can optimise your procurement process, reduce your environmental impact, ensure you’re buying responsibly and save you money.