purchasing optimization

To cut those 50% of marketing expenditures*

The challenge

Half the success of preparing a salad is to know where to buy from. Marketing is not much different. Almost every organization faces the need to optimize costs. Repeatedly. And most important – you must be sure this will not affect the quality of products and services.

The challenge I received from the management of Balkan Star group was to develop a cost optimization process and manage it for a year.

The solution

First, I monitored the marketing and communication costs allocation and analyzed the main focuses of the business strategy. I also evaluated the allocation of resources within the departments and the way every division organized its spending.

Since marketing and communication costs differ from the traditional expenditures of the companies, they were not included in the responsibility field of central purchasing department. This is why there was no comprehensive data generated about the service providers, terms of contracts or summary of the orders. Every division operated on its own. Therefor I needed to collected the data from the divisions and defined the cross-points of common interest.

For all these areas (for example print materials or design) I organized pitches. The final decision about the service provider is taken by a commission with members from marketing, PR, purchasing, controlling and legal departments. In this way the group of companies received subcontractors on a frame contracts basis with the best quality-price ratio.

I had to re-negotiate many of the terms of the existing contracts. This is especially helpful for pitches made over 4 years ago where certain refreshment of the market overview was needed.

The outcome

The implementation of frame contracts for the main services and for the biggest marketing projects such as fair participations increased the efficiency of resources allocation for Balkan Star. The direct cost optimization was 32% in one year. Indirect positive effect of the measures I introduced was the internal information and knowledge exchange between divisions.

This project I supported additionally with the implementation of cross-functional marketing for even better resources allocation within the group of companies.

__

* "Half my advertising is wasted, I just don't know which half" by John Wanamaker