Optimizing Your Marketing Supply Chain in a Recession
The R Word
A natural reaction in a recession is to retreat, cancel all new programs or projects, essentially tightening the budget. However, smart companies are much more planned and targeting areas that will not only help them through a downturned economy, but to also help them prosper during and after.
These smart companies take a bird’s eye approach and look at the big picture. They look to what can they control: customer retention.They can’t control acquiring new customers, however, they can foster and build stronger relationships with customers theydo have. There is nothing more detrimental than a lost account because they are often unplanned and their revenue is baked into the budget.
Customer retention is often seen differently across departments as each has their own business goals and objectives. For example; a shoe manufacturer’s shipping department might have a goal to decrease their delivery cycle, however, the customer is prepared for a standard shipping cycle. Reducing the cycle does not offer value. If the shoe manufacturer focused on the process, for example, to take an extra measure to ensure accuracy of the order, as well as the accuracy of the invoice, this would be a far greater value to the customer. It’s the process that gets overlooked and it’s the process that is the biggest opportunity for a company to focus on.
The Process
The first step to recovery is to admit there is a problem. All organizations have a supply chain that produces materials (print, promotional products and point of sale) to market their products and services. The Marketing Supply Chain is often comprised of numerous partners inside and outside of the organization – such as brand managers, marketing services, agencies, direct sales teams, buyers, printers, fulfillment houses and many others – all interconnected through often very complex relationships with little to no measurement in efficiency. Because of the siloed process, there are many undiscovered opportunities for market effectiveness, operational efficiency and cost savings.
Some of the world’s largest consulting firms and NVISION™ estimate that up to 60% of marketing costs are related to non-product ancillary areas (fulfillment, people, freight, storage, obsolescence, technology, inventory management, etc.) within the supply chain process. How does a company uncover these costs without spending additional time or money? The answer is simple – outsourced marketing.
Outsourced Marketing
Companies have traditionally tackled cost reduction from a “largest spend first” philosophy. As a result, some very substantial cost savings opportunities are overlooked, such as indirect materials and supplies – products and services that are not a core or direct part of the company’s finished product. Many companies outsource everything from human resources to engineering; however, the Marketing Supply Chain continues to be handled internally, thus adding costs and overhead.
All companies can benefit from outsourcing the Marketing Supply Chain. Most operate with many people within the organization that buy print; usually segmented into a catalog buyer, labels and forms buyer and possibly a creative agency or two that purchase collateral such as display signage and brochures.
This structure lessens the buying leverage of a company because the purchasing is fragmented within departments and the company, allowing more cost per unit verses having dollars spent with one vendor at a lower per unit cost. It is difficult to measure spend and marketing effectiveness with having multiple vendors, multiple departments and outside agencies all coordinating the same projects.
Other significant factors to consider are warehousing and fulfillment. Most companies prioritize internal warehousing and fulfillment to core products and goods. Often times marketing materials are managed through third party warehouse and fulfillment facilities, adding costs that are often captured in the procurement or operations department budget.
Passing the Baton
Taking control of your Marketing Supply Chain involves outsourcing to experts; a company with a comprehensive solution with measurable results. There are many factors to consider in choosing the right partner for your company:
Analysis – in order for an outsider to know the right approach to streamlining your Marketing Supply Chain, they must uncover opportunities such as hidden fees, cost analysis, inventory analysis, operational inefficiencies and measure relative to leading practices. From the analysis, a comprehensive plan can be developed.
Services – what type of services does the company provide? Are all of their services an internal offering, meaning, do they themselves outsource fulfillment or kitting? Do they offer on-site support? Do they offer technology such as on-line ordering tools, on-demand reporting and user friendly customer ordering? How much of the process will be automated? What type of reporting/measuring is offered?
Results – does the provider have a proven track record in results? Why types of customers do they service? What do their current customers say about them and would they recommend them? Do they guarantee the results?
By taking a complete Marketing Supply Chain approach, with identifying inefficiencies and developing best business practices, companies can improve their marketing supply chain process. Outsourcing the process manages total marketing supply chain spend, as well as an opportunity for measurement in marketing; one of the major challenges in the profession.