'Closing the Gap' breakfast focuses on the pros and cons of procurement

NEW YORK: Companies' increasing use of procurement is a mixed bag for PR firms that has created an environment that facilitates more cost-efficient operations but also opens the door for corporate cost-cutters who don't understand the industry.

NEW YORK: Companies' increasing use of procurement is a mixed bag for PR firms that has created an environment that facilitates more cost-efficient operations but also opens the door for corporate cost-cutters who don't understand the industry.

That was the conclusion of Thursday's panel discussion sponsored by PRWeek and Peppercom. It was the second of four roundtables in the "Closing the Gap" breakfast series.

The issues covered in the discussion included measurement, creativity, and PR's status as a business function that's taken seriously by corporate purse-holders.

"This is a wave that's crashing over organizations everywhere," said panelist Charlie Young, SVP of marketing and communications at Tyco International. "If we can't all find opportunity in this, it shows that we aren't real businesspeople and that the organization is steering us rather than us steering the organization."

What hasn't been clear to many in the PR industry is just what kind of opportunity procurement presents outside of the gloomy one for firms to have their profit margins slashed. The involvement of purchasing experts focused solely on cost has left a bad taste in the mouths of many in the industry, especially those who see the profession as creative one.

Eastman Kodak's Loren Martin's advice was to get over that. "It's about value and deliverables," said Martin, global purchasing manager, advertising and marketing services

Added panelist Ed Moed, Peppercom managing partner, "We don't look at this as all bad. Where we've seen problems is where procurement doesn't work with communications and they just take over."

Some of the 50 or so PR professionals in attendance came with horror stories about purchasing departments demanding very detailed financial information, including salary information for executives and other staff.

"Firms should not have to bear their financial souls to win a piece of business," said panelist Kathy Cripps, president of the Council of Public Relations Firms.

Martin outlined what he asks for from PR firms: "We like transparency. We like to know what the profit is up front. Then we can work together on costs."

Some had more positive stories about procurement. Euro RSCG Magnet CEO David Kratz, a panelist, used his experience with IBM, a client, as an example of how procurement can benefit both agencies and clients. "With a positive performance review, the procurement people will market the review internally and they actually become allies in reaffirming the relationship," he said.

There was an apparent consensus that PR pros have to do a better job of showing that communications is a vital and necessary business function that has real benefit.

"It's expertise, judgment, and strategy," said panelist Michael Lasky, a partner at the law firm Davis & Gilbert. "It's a different kind of deliverable than something than can be delivered against a chart."

Another consensus was that procurement is not a passing fad and that it will reach into smaller and smaller companies.

Martin said that communications pros can play a role in educating the purchasing departments they deal with, most of whom don't specialize in communications. "It may not be part of your function, but it is part of your best interest," he said.

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