Indirect procurement
By Heiko Steinmetz, Manager Kloepfel Consulting
Contents:
- Print requirements: The paper market is gradually stabilizing again: prices and availability are leveling off, declining slightly, tendering is worthwhile (in some cases 5-15% savings)
- Agencies: Due to inflation, many agencies are currently raising prices/hourly rates: Time to think about a pitch or take a closer look at processes and needs to identify potentials
- Media (print): Publishers are increasing advertising prices due to rising (production) costs. Media agencies also receive higher commissions as a result of higher ad prices. Potential through negotiation or pitch
- Maverick buying (power of departments, lack of expertise in purchasing)
- Advantages through involvement of purchasing: professional and compliance-compliant procurement of marketing requirements, higher savings through structured approach, transparency in costs and scope of services, supplier management
Marketing procurement
Even now, the current crises continue to greatly influence costs and availability in marketing procurement. High energy and raw material prices have recently led to massive price increases for paper, and thus also for printed materials. As a result, advertising rates, and therefore media costs, are also rising. Record inflation is adding to the problem, which is why many agencies and service providers are currently raising their hourly rates. There are few needs that are not affected by price increases. Whether it’s promotional items, trade fair construction, store construction, or postage for direct marketing: the effects of increased transportation, personnel, and material costs are being felt everywhere.
In the meantime, prices for raw materials and energy have fallen somewhat compared to the beginning of 2022, and the paper market, which was very tight especially during the Corona pandemic, is also stabilizing again. For print buyers, this means that after a phase of constant price increases, better conditions and therefore savings are once again possible on the market. Print shops are once again able to prepare reliable quotations, plan for the long term and make binding commitments on delivery dates. Tenders are therefore particularly promising at the moment, which is why we have already been able to realize potential savings of between 10% and 15% for our customers in current projects.
In the case of agency services, it can also be worthwhile to scrutinize the costs after the general price increases and to conduct a pitch. Depending on the remuneration model, budget and scope of services, potentials of 10% and more are certainly possible in the media area through a tender, since, for example, AE commissions can automatically develop in favor of the agency with the price increases of gross ad prices.
Regardless of the external factors already mentioned, savings potentials are often present in marketing needs or needs with marketing-related aspects, which often go unnoticed due to the maverick buying of the mostly autonomously operating departments and the lack of capacity in procurement. Processing these needs through tenders, direct negotiations, or bundling them usually generates savings between 5 and 15%, in addition to the valuable gain in transparency.
In summary, it can be said for marketing requirements that, as with most product groups, the price level of before 2020 can certainly no longer be achieved. However, potential savings are still available and can be successfully implemented by involving purchasing with the necessary expertise.
Contact:
Kloepfel Group
Christopher Willson
Pempelforter Str. 50 | 40211 Duesseldorf
Tel.: 0211 941 984 33 | Mail: rendite@kloepfel-consulting.com