MarPro - The Marketing Procurement Podcast

Office Hours - Breaking Down the 2021 Deloitte CPO Survey & Weighing Hard vs. Soft Dollar Savings

July 14, 2021 Rusty Pepper & Dana Small Episode 4
Office Hours - Breaking Down the 2021 Deloitte CPO Survey & Weighing Hard vs. Soft Dollar Savings
MarPro - The Marketing Procurement Podcast
More Info
MarPro - The Marketing Procurement Podcast
Office Hours - Breaking Down the 2021 Deloitte CPO Survey & Weighing Hard vs. Soft Dollar Savings
Jul 14, 2021 Episode 4
Rusty Pepper & Dana Small

Once a month our hosts will be doing a segment called 'Office Hours' to share their perspectives on various topics and/or questions. So this week the topics are...

- The 2021 Deloitte CPO Survey
- Hard vs. Soft Dollar Savings


Show Notes Transcript

Once a month our hosts will be doing a segment called 'Office Hours' to share their perspectives on various topics and/or questions. So this week the topics are...

- The 2021 Deloitte CPO Survey
- Hard vs. Soft Dollar Savings


Music:

so

Rusty:

let's talk about the CPO survey that Deloitte just issued for 2021 big surprise. A lot of people have been talking about over the last few weeks, which was reducing costs. Got pushed down from number one for the last 10 years. It's now. Number two. So let's go through, let's talk about the first six, but what really, the ones I'm, I'm curious about talking about and kind of getting your insights and thoughts on, on this kind of shake out and where things kind of sifted into it. So step number one was driving operational efficiency, which is also new to the list for 2021. Uh, number two was reducing costs. Three was digital transformation for another newcomer is innovation all by five, introducing new products and services. And six enhancing risk management. So that's your top six, a CPL list of priorities. So, yeah, let's talk about number one, obviously a newcomer driving, operational efficiency. What is your thought on that? On kind of on that being number one and it also being a newcomer to the list.

Dana:

You know, I think first, my first thought or gut reaction to it is that it speaks to the disconnects between marketing and procurement. A lot of times, you know, I think you have this viewpoint of procurement just coming in and hammering at cost and suppliers. And so to me, it really speaks volumes to that's the way Birch or mine has operated in the past. And that's part of the problem that we have with marketing procurement. The other thing that really comes to mind is that. Once you're done beating up suppliers, you can only do it for so long. Right. And then you've got to find other ways to be able to find savings. And how can you do that process efficiencies that turn into savings and cost efficiencies. Right. So I think it's. Maturity of a procurement organization moving to more strategic site, more strategic sourcing or category management. It's that still hold churn. And I think we've talked about before, where we've had buyers in the past and it's cost focus. And now we're trying to bring in more strategic MBAs and people who can help us manage those categories. And so it turns out. Once you bring those people in their priorities and the shift. Right. And I think it's for good. Right? It's a positive, what's your kind of

Rusty:

thoughts on it? I mean, I, what I liked about it was the, for the, from a marketing and sales perspective, I see it as we're going in the right direction because it's not about cost and it looked costs are important because the more we can save. The more, we could do more with the same budget, right? We can repurpose that. We can extend, it can go create new campaigns, have more outreach, hire new people. So savings is important, but at the same time, being able to create better processes and enhancements. Without even really having to change always your vendor base too. You could just bring new tools in to help into the relationship, to help further it extract more value out of that. And that's really huge because a lot of times it's a reactionary, right? Where we're reacting to what the needs are and what's happening in the business cycle. 2021 or 2020 was a great event. Nobody expected that. And then you turn the whole, the whole world upside down and business in particular really suffered. And the companies that did not have really good processes and great tools and had been investing in and were ahead of the curve. Got crushed.

Dana:

Yeah. And it's interesting too, right? When we talk about, uh, what, how 20, 20 and 2021 has definitely changed priorities. You know, I took a look. You know the list and to me, I'm going, why isn't risk management higher? Why is it still flat? Um, to the previous year, because what I think about how has it impacted to me? Um, on the indirect side, we had to help out our direct site and find like PPE, like masks and things like that, so that our business could keep going. So we could have our employees in the facilities to keep producing drugs. It's interesting that operational efficiencies, all of a sudden was a new entrant and came in. And then also that risk to me was just kind of

Rusty:

flat. Okay. It stayed number six and literally was unchanged percentage wise based on private. Yeah, to me,

Dana:

I would, I would assume that's one of the things that we care about in procurement, right? We have this whole pyramid and it's at the bottom is like a Sheriff's supply. So, which is risk, right? You've got a risk management. That's part of what we do with contracting. So the fact that it wasn't escalated, maybe people have better risk management policies and procedures in place, but.

Rusty:

Yeah, I thought it was interesting during that whole 12 by 20 cycle was at the vulnerability of our domestic supply chain and not having and being so relying on certain regions around the world where, when that shuts down, we were scared. We were scrambling and it's still, and we're still paying for it right now. When you look at freight and try and just get containers over, it's.

Dana:

Yeah, everything's delayed. Everything's delayed, right? Everything's more expensive. So many issues that I think have just, you know, kind of cascaded down that I don't think we were all prepared for. And that's why I think in my mind, risk should be a little bit higher because all of those things downstream have a huge impact. And we need to think about those things and have a plan for if, again, if another COVID happens.

Rusty:

And so when you look at those, the top six, you got driving operational efficiency, reducing costs, digital transformation, innovation, introducing new products to risk and enhancing risk enhancing risk management. Where would you have ranked risk management in that list?

Dana:

That's an interesting question. I definitely think I would choose. Costs down to out of the top five and put it in the top five where I would put it in

Rusty:

the top five. Now a lot of sales and marketing people. Yeah,

Dana:

no I wouldn't, because I think if you do your job, right, if you do the digital transformation, if you look at process efficiencies, if you look at risk management, if you look at all of those things, In the list, they will produce the savings. So to go directly after just savings, to me is kind of secondary. Yes, we care about it. But if we do all these other things, well, we don't have to focus just on cost. And I think that's the strategy that people need to take more, no matter the size of their business. Right. I know a lot of big businesses love to just crush on suppliers, which I'm just not a fan

Music:

of.

Rusty:

I have a really good point because when you do look at the profile that top six, there is a lot of ways to drive costs quietly, right? Where it's not, you're not going around just being people that have had with about price. It's about process improvements, lessons learned, creating best practices, transforming your business and entire industries. Yes. That's huge and it delivers those savings without a being front and center. That's what you're trying to do because you're not only making your partnership stronger by bringing in best practices or tools, but you're also creating better buying pattern habits. You've got longer forecast. It's so much better where, like you said, you're not only reduce the risk, but you're also driving better enhanced. Uh, that will ultimately result in savings. Now, when I look at reducing costs, I, with you, I would like to see that being pushed out, uh, even farther out of that top five, for sure, because I think there's others, things that are more important now, digital transformation and innovation. I have a hard time distinguishing really between the two, because I li I think digital transformation is bringing innovation and to organizations for innovation to be completely new. I don't know if that's just maybe was a really import or our buzzword from 2020, everybody's trying to innovate to take the focus of what they were, what was happening in 2020 to make their business better. But clearly it was an important topic or. Priority because it's listed as number four. Yeah. So

Dana:

I have the same sentiment. I do see when I was starting to think through all the different ones on the list of what they are. What's going on, that there is a lot in there overlap between digital transformation and innovation, digital transformation though. I tend to think of it as bringing in new products and services, but that's innovation too. Right? So that's, to me where the overlap is, the other portion of digital transformation really is all the systems. So procurement is starting to look like marketing are starting to gain a ton of differences. There's no consistency. Sometimes you have a sourcing module that's built in with your procure to pay system, right? With POS. And sometimes you don't and then sometimes you have these specialized suppliers that can be separate modules or an entirely separate system. Really all over the place. But to me, digital transformation is really being able to bring in best of breed for those types of sourcing activities, whether it's spend management, P2P, um, any of those things. And then two is to be able to have them integrated and working quickly so that the business is more efficient so that we aren't, uh, the. We're not the stopping point for anybody in that process that we have everything we can get you an RFI quickly. We can do it electronically. Everything's stored one place, but back to the overlap, it is hard because when you think about innovation, there is such an overlap, right? If you're bringing in something new, that's innovative, but if it's a digital system and you're transforming, it's almost both, right. There's, there's clear, overlap that I see with.

Rusty:

Well, I think there's a there's there's overlap. Cause you w well, you mentioned was digital transformation and innovation very much the same, but it also is in, it also includes introducing new products and service, which is actually number five on the list. So between three, four, and five, you can almost put those together as a bundle. Of the same because you have introducing new products. I look at introducing new products as an innovation, and I also look at that as that's what digital transformation is doing is it's actually introducing processes, tools, and activities, uh, into the, into the organization. So, um, it, to me there, wasn't a real clear cut and dry. Yeah. Yeah. That whole grouping. Yeah.

Dana:

I think the other part of innovation is the innovation with your suppliers and your supply chain. Right? So whether it's the level one suppliers or level two, you working with them to make them more efficient to make them innovator to me. You know, your processes more efficient. If you work with your suppliers and work with them downstream, then you in turn are going to see those benefits. And I think if people don't think ahead, like a couple of steps ahead in that, then they're missing out on that huge innovation that you could do down the pipeline. Right? To me, I see innovation also as help innovating with your suppliers so that, you know, if you only have a single source. Then maybe you can find somebody else in build them out so that you do have a risk management plan, right. That you aren't dependent, maybe on a single source out in China, wherever it is.

Rusty:

So overall. Put your CPL hat on, sir. Did they do a good job with this?

Dana:

Yeah, I mean, I, I agree with most of it, like I said, I will go back to, I still think cost should be out of the top five, just because if you can do all those things, then you're going to eventually drive cost savings and you're bettering your business. And I think that's what a lot of the times people miss, but I think at least it's moving in the right direction.

Rusty:

But I think too, you know, this list we're we're we talked primarily about marketing procurement, right? Our sales backer, your, your procurement, you know, marketing procurement focused. Whereas for CPOs, they they've got direct. They've got a lot of different areas of spend in there. So trying to understand the waiting, I think is really key as well. And, and how these, uh, priorities get weighted is probably relevant or related to. How much the focus with an organization is in direct versus indirect and how their. They're structured within your own work. Yeah.

Dana:

You know, initially when I thought about that too, I was like, well, they have the direct side, which is going to be more focused on cost and cost per unit and production. But then as I kept thinking about it, it was more like, well, yes, they do have the direct side. At the same time, they need to find process efficiencies that you need to make their manufacturing lean. Right. They need to do all these different things too. Not just cost. Yes. Cost is one component of it. But I think it's just one of those things. Where, what does the organization value? It comes down to, I think, as we talked before organizational culture, right? W what is high priority for the organization at that time? It's going to filter down through the CPS.

Rusty:

Yeah, and I think you nailed it right there as the pressure of the organization, the culture, and what the priorities of the entire organization are, are going to be directly related to where that CPO is putting, uh, his focus and or her, his, or hers attention on, uh, how they're going to this, these priorities. We've danced around a little bit, the savings element. And so there's two different ways that you can look at savings. You have hard dollar savings, which is what you're going to hammer down on price, where you can measure it. And then there's this. Soft dollar savings, which everybody is always talking about, but it's also very hard to quantify and measure.

Dana:

Yeah. That's to say least that I'm actually very curious, um, because this is a very heated conversation, I think in savings with the discussion of multitude of partners, whether we're talking to finance, whether we're talking to, uh, internally as her own sourcing teams and. With business partners too, right? Like finance is easy. They want to know, can I take it out of the budget? Does this affect the P and L business partners or like, does this affect my budget and please don't take it away. The harder part, I think from my perspective is our internal sourcing team from what I've seen in the past, if you don't have people who have a finance background, because we really do have tons of different backgrounds who just kind of end up in procurement, then there's this huge disconnect. Internally with the team prior to reporting out to finance or the business partner. I know I had this one. Great big fight with somebody internally on a team, not so long ago where he saved$50 million over 10 years. Okay. So I'm like, that's great. He goes, but I say$50 million this year. No, you did. And we would cut. I mean, for years we would go back and forth and fight and I'm like, listen, it's 50 million over 10 years. It's you save 5 million for this year. Maybe you save right. Maybe 5 million for next, but he would, we never could agree. And I always took the heart stands. Cause I'm like, this is my finance background. And that's what it tells me. Let's look at the annual budget. Not, yes, this is a ten-year project. I say $50 million to me. It just speaks to how even sourcing internally can look at things differently and we have to come up with the rules. And a lot of times we can't even agree internally and they're hard to come up.

Rusty:

It's interesting to talk about that because trying to understand, and again, I go back to waiting how, when you're delivering a contract and you're working on a contract and you're putting one in place, there's different ways to weight the savings or the contract can bring, is that on an annualized basis or is it a lifetime value and different organizations look at it differently, right? I mean, we've had, we've seen organizations say we want to have over the life of the contract.$10 million. What are our percentage of whatever that might be? And that could be a three or five-year contract, but that has to deliver, it might be a small amount the first year, and then may roll up and get more advanced or maybe heavy savings on the front end. And then tail is down longer or it's going to be split up equally. And sometimes we've seen where the particular category manager who's administering the contract has the ability to. Create their own scenario of what's best for them. I've always been kind of scratching my head going what's normal.

Dana:

So there's this other concept out there when you think hard versus soft savings in annual annualized savings, right? Is there incremental savings? And so when you look at organizations, very mature organizations, like I say, at antigen, we had the rules and it was. If that 50 million then reset the baseline for the next year. And there was nothing incremental on top of it. You didn't save anything else. The baseline has now reset down 5 million and now guess what? You're not saving anything. I think organizations that aren't as mature are able to get away with saying, I say 50 million without any incremental year over year costs. Right. Even if the baseline is reset. Just because they don't have that maturity, the strength, that relationship with finance, where they've really nailed down, like here are the rules here, how are we going to play hard versus soft and incremental, right? And then that gets into the whole spate of hard versus soft savings and cost avoidance in my mind. You can't, you can't say you saved money if you didn't spend it to begin

Rusty:

with. Well, yeah, because you just held up food. When you look at the soft dollar savings, that is that's the mystery answer. I've seen different models out there in which people could sit there and say, well, from an overhead cog standpoint, time-savings versus total costs, et cetera, how do you typically view soft dollar savings?

Dana:

So for me, soft dollar savings is anything you can't either take out of the budget or. Affect the P and L different types of hard dollar savings that can affect the PNL, even things like, um, we are so efficient in our processes. We're able to get rid of a building that depreciation is no longer on the PNL. And so that, that is a savings to us. We don't have to record that portion. So to me, it's anything that really can impact the budget or bottom line when it comes to business soft savings or cost avoidance is really just us mitigating, say a supplier says, I want to raise. 10% we say, no, they say flat well, that's avoidance. You know, a percentage of FTE saved because we implemented a new process that soft. Now, if you completely remove that headcount and take that cost out of that person, that FTE, then 100%, it's hard. But if not, if there's a percentage and people are just getting more time because we're more efficient because we implemented a new system, then to me, that's 100% soft savings. It's easy to calculate. But it's not something that you can claim as heart dollars, right? It's truly is soft.

Rusty:

How do you weight the two differently when you're administering a contract, how much of a blend are you looking at versus, or do you put a priority over hard versus the soft, so

Dana:

savings or savings? From our perspective, obviously we always are working towards getting the hard dollar savings. So when you think about negotiations, what we. As we take a negotiation template and list out all of the things that we want and we prioritize them savings. It's a rate, maybe it's contractually. We want, you know, different liability terms or different business terms, like being able to get out of the contract, you know, as needed without a 30 day. So we take all of those things and try to wait them out. So it's one component of it. It may be the highest priority of that negotiation list, but it depends on the business partner depends on what they say their priorities are for us to then go back and wait. We have a list of things we need to negotiate. Cost is very high. They don't care about costs. It's low. We care about quality. We care about the creative ideas. We care about these things like you'll see in marketing one of many, it's just, how do you weight that in overall negotiation?

Rusty:

And do you ever go in, uh, with your partners and pull them in and say, here's our initiatives for this year? Here's what our goals are. The store trying to get to, how can we get there? What could you contribute here

Dana:

now? I don't, because I feel like if I approach somebody with that conversation, they're just going to be scared off. They're not going to want to talk to me right. To me. My approach is an I've got a goal to hit and you need to help me. It's you've got goals to hit. Let me help you. And because I'm helping you, I will hit my own.

Rusty:

But it's not necessarily helping them save money, right? You're not, they're not, you're not coming to them with had a hand saying, oh, I need you to fill this up out of your coffers. Most suppliers understand that there is behind the scenes. There are goals and initiatives that are happening every single year. If marketing cureman, you need to contribute X percentage to this savings line or these efficiencies. Sharing that and having transparency, I think from a vendor standpoint, we would sit there as a partner go, okay. We know that there's going to be an ask of some sort every year, and that helps us also stay in good standings with our partners as well because we're helping them. And we know one day the more that we are helping our partners, the more they're going to advocate on our behalf and keeping us around. Transparency and open conversation I think is really important because like you said, I want to go there and help them hit their goals while at the same time, I know if I do that, that's all it's going to come back around and they will help me hit my, because we're, we're creating all those great value, but I think that could also be collaboration as well. I think most people would be surprised that there are ways that you may not, or the procurement standpoint understand. The operations of what's happening on, on their side, that they might be able to do something even more than what you're asking for, because they've been holding off introducing something that they were afraid might be, seem as, you know, not accepted, but it could be yet risky. But at the same time, when you see the value of it, you're like, shit, why did we get. Why don't you tell me about this before?

Dana:

So I think, you know, when I was talking previously, it was more of like an internal business partner conversation that conversation with a supplier 100%. And I think if you can be transparent, you do trust them and you have that partnership. Say, Hey, we have these goals of X, Y, Z. How do you think best to get there? I think that's probably the easiest way to figure things out. It's a lot harder to say. Yeah, we need to cut costs. Well, how much that doesn't help you kind of steer the ship. Do I need to a big chunk, a little chunk someplace in between, and to me. Transparency really leads to a better outcome so that we can try to hit that internal goal. And those are more of the conversations I'll have with the supplier than I would an internal business partner.

Rusty:

Yeah. And I think that go pull them back to the internal business partner standpoint that goes back to the alignment, right? Their goals are going to align with how your, what your goals are, because then it makes it a lot more easier to work together to be able to achieve each other's. Yeah,

Dana:

100%. It does. Um, and it also motivates people to do the right thing. Right. And that's part of when you think of hard versus soft and then you get into, does that actually get taken out of their budget or does it get re spent to me most of the time it gets responsive to argue or to try to take it out of the budget. It's just not worth the fight. I'm better off approaching anything. My business partners and having a conversation of, Hey, whether your budgets cut or. Do you want to do more with the same amount of budget? Typically business owners will come to us when their budgets are cut, because now they have to do the same amount with less. So of course that's when they need us, which makes sense if they would come to us earlier. Okay, great. You have a brand plan. You have your budget. I'm fine. I don't need you because I have the budget for it. Well, wouldn't you, aren't there some other things that were lower on the priority list that you would like to do that you can't because your budget is. Yes, you can do all the things that you have to that are high priority. But what about the medium and medium low wouldn't you like to get to those or

Rusty:

get a new platform or have a new tool? Have something I can actually do more automation. There's a lot of different things, especially at MarTech right now. It's the wild west with all these different products and services coming out. It's like, holy shit. Every day. There's it's over with. I that's interesting. I think a great, a great perspective on not only the CPO list, but also how companies are measuring and maximizing their hard dollars versus soft dollar savings.

Dana:

But how about you? How do you view the hard versus soft? How

Rusty:

we're losing contact here? We've got,

Dana:

come on. Go.

Rusty:

Hard dollar savings from a marketer's perspective is more scary because that means we're going our testing, our existing suppliers are our partners who we might be really happy with and that are they vulnerable. Plus you also think about Jesus could be time-consuming it's going to be lengthy and disrupt a $12 savings realized because that means that there's operational efficiencies, things that we can do to create more. That is key. And if we get partners that can allow us to extend budgets, do more with less, that's even better,

Dana:

more than just like, Hey, I lowered my rate. Right. I think we talk about this for we at the discussion of there are, there are different, hard dollar savings, right? You can have tiered rebates, you can have give back.

Rusty:

Yeah. But you're paying for rebates. Whenever I hear rebates, basically, all I hear is, okay, so I'm paying more front because those dollars have to come out of summer. Right. And I know that from being on that side before. W that's exactly what happened is, oh, you want to, you want a rebate to your rebate. Great. That just means we're not going to lower our initial price as much because you've got to pay for them somehow. It doesn't just magically appear it incentivizes to consolidate and drive more, spread more revenue through that. That's that supplier and it justifies. The reason for putting them in there, but you're still paying for it. Just

Dana:

kind of defining what is hard versus soft. Sometimes just doing that and agreeing, like I said, like me with you, you're the marketing perspective, I'm the procurement. And then there's the finance perspective agreeing on what those definitions are and what you view as hard and soft is really one of those things that I think a lot of people end up debating.

Rusty:

And let me give you a different perspective of why it can be a value is if you have a program in place where you're being sold in. From a vendor and it's hitting the sales organization, operations, HR, and they're all utilizing those products and services, but marketing is getting a rebate on it. That's huge because those are free dollars that flow in right in place.

Dana:

But typically when we do agreements of that sort or. With a supplier and say, okay, we spent this much, and these are the different cost centers. So each sort of have credits that said, we should all go back to marketing, marketing and spends, you know, this it's, it should lie with my business partner who spent it's

Rusty:

a marketing program and a marketing initiative, but should go into marketing a

Dana:

lot of times what happens is we have see, there are two departments that did. But it's negligible. So we just roll it into a different brand or the marketing department, but that does add up somebody realizes, Hey, if I spend with them, I'm going to get more money back and they do it knowingly. We try to reward them for that good behavior. But I think that's what procurement's all about is being able to understand how we can have the whole organization consolidate. And that's why I think. It drives good behavior from a sourcing perspective.

Rusty:

Well, and also too, we do want a reward and we'd like to see our vendors do well. Right? You want to see your partners succeed and grow the ones that are putting a lot of work and energy. You want to see them get the value from that. But what do you

Dana:

think when thinking about hard versus soft savings, like a pay for performance. I mean, depending on the way it's structured, it could go either way, right? I've seen them structured where we started at a certain rate, and then you could get a bonus or you could potentially lose. So you have to budget for that full amount. But if you budget for the full amount, it's hard, it's

Rusty:

getting the measurements, right. And understanding and agreeing on how it's going to be measured and score because your, your version versus my, uh, how, what we consider success. It's different. Right? And then also you have market conditions out there as well. To me, it's,

Dana:

it needs to be mainly turned up by concrete things. Like whether it's P2P, like, did you guys get the financing? Right? Did you contact the right person? You know, a lot of times with services, it's a little bit harder than widgets. And so you have to be a little bit more creative, but they still should be counted. Right. Check the box.

Rusty:

But if you're looking at it from a marketing perspective and driving a campaign and engage or attendance, right. What would happen 20, 20 period. If your performance is based on event attendance, there was no events. You did a bunch of creative, you load it on the front of that year and then Q2 hits March. Right. And then everything ended. It was tough. And again, that that's an outlier because I think 2020 was an anomaly, but. There was a lot of people that were in situations like that in 2020 or whose businesses are gone

Dana:

fully have somebody on the other side, who's at least a little bit understanding. And isn't in this huge company where they're like, I just don't care what your problem is. Right. You want somebody to at least add some emphasis?

Rusty:

It sounds like you're putting a lot of your performance into SLS and the waiting there. sees as well. So, but I mean, that's, I look at that as that's just what a good partner should be doing anyways. Right. It, and you would be

Dana:

amazed. You would be amazed what, um, some people will get away with until procurement comes in, especially when I've come into green organizations. You're like a lot of the contracts don't have any KPIs, any SLS, there's nothing to hold. There's no. What we call teeth to the contract without procurement in those. Do you typically don't get those types of business terms because legal's not legal, doesn't care about those things, right? That's not a legal term

Rusty:

liability

Dana:

insurance. Yeah. All of those things, they don't care about SLS and KPIs. They just want to make sure we're covered from their perspective, not from, you know, am I getting something in time perspective for the most part, I'll say for the most part, but it. Say this is where again, sourcing can provide that value to the business to make sure if things are going kind of sideways, we can come in with business terms and reset the baseline.

Rusty:

Yeah. I think a lot of times where you see those types of agreements and always been when somebody comes in and it's a OSHA, we need to get this done. Let's go find somebody to come in. They do a great job and all of a sudden now, oh, by the way, we can do this, this, this. So they just start to kind of encroach into these other areas. And there is basically a simple agreement in place, or if anything, maybe even nothing, not even a contract, a place that you're just a vendor. Yeah. It just stays that way because nobody's really audited or checked it because they may view something that most companies don't and they kind of have that market and they're quietly, or they're quietly under the radar screen. And that's a good position for them until it gets exposed. And then it's like, ah, shit, we got.

Dana:

Uh, sourcing showed up. I've had people would have come into a new position, say, oh, I've been waiting for this call for about five years now. I've been I've been waiting for your call and it's, it's funny to see the difference of somebody waiting for your call. For at a smaller organizations, which, you know, medium to small organizations, or just large organizations where you have suppliers knocking down your door, they're not waiting for anything. They want that contract. They want the ability to go and network within your company and to have the possibility for revenue, whereas smaller companies are they're like, if we can fly under the radar, let's do it. We can make some money that way.

Rusty:

Yeah, absolutely because there's no checks and balances. Yep.

Dana:

A hundred percent. They just don't, they're small. They're just growing and there's not a lot with the older, more mature and larger organizations, they've gotten their own.

Rusty:

And typically marketing is if it's working for them and it's driving results, that's all I care about. They're not sitting there going, oh shit, we got to get this contract in place. We gotta make sure they're compliant. No, you're delivering results. You're reactionary. You're, you're proactive. You're, you're doing everything that we need you to do. And more, why would we waste our energy and time? Because we know we can move, pick up the phone, you're responsive and you're doing everything we needed to. And so it just kind of stays that course until somebody discovers it. Anyways. I think it was a interesting conversation. Yeah,

Dana:

definitely. I think it's, um, we didn't fight, so that was good. No fisticuffs.

Rusty:

I just think that, you know what? I look at the hard dollar hard, soft dollar savings. It's just, does

Dana:

it make you cringe when you hear that from somebody on the sourcing side, are you like, oh God.

Rusty:

Nobody likes to be decoded die, sir. And, and that's just the key part of it. I think if we want partners, we want to deliver value. And I think most suppliers are, they want to be, they, they really want to be viewed as a partner and they want to drive value for it because. That's what they're in business. Do they believe in the proxy service that they prefer visitors? There's the value they're bringing theirs. Their products are better than everybody. Else's, that's how everybody views it. And they should. But when you hear savings, it's like, okay, you're not you're you dilute the, what? The value that I'm bringing in. All you're trying to do is get straight to out of my pocket. And even though it's probably not always reality, it's how it feels certain hand. You don't want that. And so there's. There's a soft way of approaching that, where it's they were treated as partners and brought in for the strategic conversations and the understanding, and then moves into. Okay, great. Well, these are the goals that we've got to achieve. So how do we do that together? That's a lot different than, oh, by the way, we're going to go on a bid and a, or we're going to go to RFP and yeah. And now it's like, I feel vulnerable. It's not cool. And. It's all of a sudden, I've got to go lower costs, find ways people to cut, put less seasoned people in place that aren't going to cost me as much. There's a lot of layers that go into that day. That is hurtful. Not only to. Yeah, the vendor's business, but also the partnership and ultimately clients.

Dana:

Well, and I think the partnership, right, it speaks to the maturity of the sourcing organization. So people who are more mature, larger companies typically do view it as a partnership and that we can learn and grow together. And they know the suppliers invested in them. They believe in them. They want the product to work, but old procurement. Really it's just cost focused. And so you're not going to have that same conversation, right? They are just going to say, I need 10% off and I need you to do X, Y, and Z. When a smarter person will come in and say, let's be partners. We want a long-term partner. We don't want to be turning you over. We want to be consolidating. It makes most business sense. It's the smartest thing to do. Let's figure out how to do it together.

Rusty:

Okay. Yeah, because after, after so many years of giving 10%, 5%, 2%, whatever the savings, maybe. So, where do you think this is coming from? Cause it's so they're having to find that savings or deliver that savings somewhere and either they're, they're getting it. They're, they're finding ways to give clot back on the backend or they're diluting the value or the. The quality slips, right? Quality at the quality or the staff or the product itself,

Dana:

you pay for what you get, which goes back to the whole Deloitte survey cost. Isn't number one anymore is efficiencies. Things are moving in that direction. Very

Rusty:

close to it. It's still pretty close up there. I mean, it was it wasn't far behind. At least it wasn't there for the first time in 10 years. And I wouldn't be surprised if it, if I don't think it's going to fall follow the top five anytime soon, but I could see it slipping, continue to sleep. Cause again, in the top four, you've got two newcomers innovation and driving operational efficiencies, and I think that's only going to continue to be.

Dana:

Yeah. And to me, if they can get the CPO role to have different goals than costs, always being number one, that two can have a great influence, right? So it's that company culture and having costs be the number one metric on our list of things to do. If we can get them to focus on quality and other things that maybe are a little bit harder to measure, but still can be measured. Then we can remove costs to that top five and say, we're actually working with our second level suppliers. We're assuring supply. We're making sure we had that service level that we needed or making sure they're innovating and being a true partner in strategic costs will come along with it.

Rusty:

And I think at the end of the day, What would be really neat for this? Like the CPO survey is if fair actually did one that was focused. What are the priorities for marketing procurement? What is the, how does marketing procurement align with these or separately? What are the priorities? What are the top five priorities for marketing? Well, not

Dana:

even marketing procurement, all the different functions. Right. So when you think about sourcing

Music:

matters, okay.

Dana:

Okay. No, but I, to me, like in thinking about it in general, it would be great to see because different departments value different things. Right. And marketing, I think is the, one-off where it is specific because quality and innovation are so highly ranked where in other areas, maybe they're just not as important to somebody when they go to buy them.

Rusty:

Well, I think that's where it'd be interesting to see is if you have that for director, director, then chairman, or

Dana:

I think there'd be a big separation

Rusty:

there too. I think you would, because you know, if you're talking marketing procurement, I bet what you said. As far as where reducing costs would fall would not be an anomaly, whereas on the direct side, It would be up there one or two, if not one, the entire across the board. And that I think is what's. What was interesting. What we're talking about, the weighting of this from a CPS perspective is how does I get diluted based off of how much within the organization, what their cultural or focus is, right. These types of products and services. And where does marketing, are they a CPG company where marketing is a huge driver of, of expense and revenue and also costs versus one where it's all about direct

Dana:

for the most part in general, it's a clear divide, right? There's just different focuses for different reasons. And not that it's right or wrong, it's just.

Rusty:

So do you, when you see somebody from like the direct procurement side killer, it's the direct

Music:

side?

Dana:

Well, so we call them at waste in pharma supply chain and. Typically a separate function. And I, not that I say, oh, those people, but I've actually done some projects on that side. I'm like, oh God, I would not want to do that. No, thank you. I'll pass things. I guess I have more of a marketing mindset, right? To me, it's like, you got to get all these details nailed down and this and that. And it's just so much more work.

Rusty:

There's a lot of, so. Which is why I

Dana:

like it, but just quiet, like marketing. It is subjective. Whereas on the indirect side, there's no subjectivity. It's either it works or it doesn't, it's either quality or it's not right. It's very black and white. And I think, you know, for people who enjoy that black and white type of view, Go ahead, hang out supply chain people. But if you can see shades of gray come over to the dark side.

Rusty:

Yeah. And also color too. Right? It's not just shades of gray, but there's also a lot of color to a pig because you got the cultural elements, partner's culture with the, the business ways that businesses can fit together. And they may be the most creative, awesome company. But if it is a misalignment of cultures, it is brutal and that happens. It can just all of us. The people that on the front end, they get along really well. And then all of a sudden it gets into the business side, uh, after onboarding and everything else. And it's just. It goes to hell water, like what happened here? And it's hard, but it's so important. And I don't think not everybody could read that. It's hard enough to read it when you're, when you're in it. Well, this is fun. Thanks for the good conversation.