As PepsiCo announces the dissolution of its global marketing procurement department, 4C Associates’ Milan Panchmatia & Emanuel Modrovic examine the rise of the specialist
In many sectors, a traditional career path will see someone work their way up through the ranks, over a period of time. As they continue this upwards trajectory, the expectation on them will be to take on a leadership role across an increasingly large part of the organisation.
For example, a marketing director might be expected to set the general strategy, define the criteria of success and sell this vision to the board. The director might also be expected to have a certain amount of knowledge across each marketing channel, as well as what constitutes best practice.
However, as technology continues to progress and open up more and more channels to reach customers through, the vision of an all-knowing generalist begins to fade. Marketing is a good example as it’s a category made up of so many distinct branches. Traditional TV and print advertising, for example, are worlds apart from the data-focussed world of digital marketing.
In this context, a procurement team focussed on cost reductions and traditional, lengthy sourcing processes is unlikely to guarantee the speed and flexibility required. A deep understanding of the category and its intricacies is necessary to deliver real value. In short, this is not an area where a generalist can expect to thrive.
PepsiCo’s global marketing procurement department disappears
The debate is particularly topical given PepsiCo’s recent announcement to dismantle its global marketing procurement department. Responsibility for agency spend and other activities will reside within the organisation’s individual brands.
The change was brought about in an attempt to improve the organisation’s efficiency and to ensure the speed and flexibility necessary to succeed in a modern marketing environment. A requisite which may not be aligned with a centralised procurement department.
The move is expected to radically change the way in which PepsiCo deals with agencies as well as ignite a discussion around the value of corporate procurement departments. Brands such as Doritos, Pepsi and Gatorade will not appoint their own procurement teams, but responsibility will instead fall to each brands’ executives. That means procurement won’t necessarily be handled by a ‘procurement person’.
The rise of the specialist
Marketing is a distinct category. It is an area where value delivered cannot always be measured in pounds and pennies and therein lies one of the principal bones of contention between traditional procurement and marketing functions.
The truth is that a specialist function requires a specialist. Someone with industry knowledge, able to recognise the value that a boutique agency can bring to the table, despite costing a bit more than a by-the-numbers giant.
This means that the need for more specialised procurement professionals is likely to grow as they will be the ones with the knowledge and expertise to add real value.
On the flipside, broad generalists are going to find it harder and harder to justify their existence. In the end we will most likely have to say, (generalist) procurement is dead, long live (specialist) procurement.