March 2014 |


Over the past few weeks we have written about the journey towards corporate virtualization that many media & entertainment businesses have been on over the past 10 years.

Today, media & entertainment businesses now spend 55% of revenues (on average, based on our latest study) with third party suppliers, and only 23% on their own people. Not only does this stark disparity between internal and external costs say something about the very fabric of today’s media & entertainment businesses; but it should raise questions around their level of investment into supplier management.

The simple truth of the matter is this: how well your suppliers perform on your behalf, has a significant impact on your overall business performance both now, and in the future.

For example, this short animation explores how we helped our multi-billion dollar client improve the impact their marketing suppliers had on what mattered most to their business – the level of engagement they were achieving with their consumers.

Through our experience, we have found that senior executives need to be asking themselves 10 fundamental questions in order to better understand their supplier spend:

  1. How well aligned is your spend to corporate aims and objectives?
  2. How many of your suppliers feel like trusted partners? How many are motivated to be contributors to your success?
  3. What is the experience of your staff who interact with the current supply management team? Are they getting a truly value-additive service?
  4. What role or function is accountable for managing your total supplier costs and relationships? Can you go to a single source to get all the correct and up-to-date information about your cost base?
  5. What board representation does this person have?
  6. What metrics do you have around the effectiveness of your revenues? How confident are you that they are encouraging the right behaviors?
  7. How do you extract and capture new insights, innovation, IP and expertise from your suppliers?
  8. What is your three year strategy around how you plan to improve the performance of these costs that take up an increasing proportion of your revenues?
  9. How do you keep up-to-date with the latest trends and insights across hundreds of areas of spend, to ensure that you achieve value for money?
  10. How is your company fairing in this area compared to your competitors?

As global economies begin to rebound, optimism for financial growth is also increasing. Improving how well aligned your suppliers’ performance is with your corporate objectives will ensure your revenues are spent smarter; your people are more productive; and any capital-related growth initiatives are accelerated and deployed faster than your competitors.

Are you ready to ask / answer these 10 questions?