I am always struck by how easy it is for procurement professionals to mislead and misunderstand each other, when ultimately we are usually striving for the same thing! I had a call earlier this week from an organisation looking for support to transform their procurement function and I spent, as I usually do, a few minutes just gently exploring what ‘procurement’ meant to them as opposed to ‘purchasing’ or ‘sourcing’. Just to make sure I didn’t mislead them in advertently. But perhaps more on those terms another time!
The area we can have the most fun with however is Category Management. This term of course is widely used in Retail but since the procurement profession adopted the term, it’s become widely used – and I think abused. Why? Well in my view I think everyone knows it’s a best practice thing to do, so to admit you don’t actually do it is not great self-marketing. But more worryingly I think many people don’t realise they’re not actually doing it – and that for our profession poses a real opportunity for upskilling. So here goes – my top 10 fails when asked the question “Do your team do Category Management?”
1. Oh yes, the team is organised by key categories.
2. Oh yes, we have a clear tender policy for all spends over $250k.
3. Yes, we all do Category Management, and have been for years. Now we’re thinking of doing SRM.
4. Yes, but we struggle to implement our suggestions because stakeholders are still doing their own thing and don’t listen to us.
5. Yes, but we do struggle with time to do the strategies properly because the CFO just wants us to bring in the cash now.
6. No we don’t do all that template filling – we need to make bottom line impact.
7. No, not got enough time for that, we do real work – that’s something for Head office isn’t it?
8. Oh yes, we do that each year in October - pull together a source plan for next year.
9. Yes, and we’ve made it really work for us, my team can do a sourcing strategy within the week now, we’ve really reduced the templates.
10. Yes we do it via Ariba, it’s great.
If you ever have answered that question with one of the responses above, I implore you to have another naval gaze and a think. Category Management is a business process involving cross functional teams to review a distinct area of purchase to generate value and mitigate risk and there are many ways to achieve it. The RFx process is just one mere way - SPM, SRM and a myriad other techniques equally abound.
Oh and by the way, if you think I made up those answers above. I really didn’t. I hear them all the time. It’s not that I don’t recognise the answers – I do – and I think there is validity in the responses and sensible points. The challenge for me is when I hear people say “Yes, they do Category Management” when in fact, I can tell by their answer they simply don’t. They may be striving to do an element of it, they may even be following some good principles of it – but the moment I hear anything like one of those answers above, I know there is still an opportunity for them. And since Category Management Leaders are able to achieve up to 111% more savings than Followers, that’s got to be a good thing to go after, right?!
True category management is hard work – it’s hard to achieve and bring hearts and minds with you, and you need time to do it justice. And, ultimately, whilst Procurement are rightly the guardians of this process and provide the expertise, it has to be a way of working by the whole business. So to all of you out there who are doing “category management”, I leave you with this thought: if your Board Members don’t know about the term and recognise what you’re doing, you probably aren’t doing Category Management….
….But that’s just my view – what do you think?