“Did you know that only 40% of organisations believe their procurement resources are well balanced across the full range of categories?”
In the top 19 drivers of category management success, having the right balance of procurement resources across the categories is in 13 th place. Overall just 40% agreed they have this balance. In the Follower camp this reduced to 35%. Even with Leaders, nearly half (46%) didn’t believe they had the balance right which was leaving opportunity left ‘on the table’.
Only 2% of Leaders ‘strongly’ agreed that procurement resources were well balanced across the categories managed. Fascinatingly this compares with 4% in the Followers! Clearly there is a strong message here that organisation structures need some review,
In many organisations, annual Category Planning is not a formally structured and reviewed process. As a consequence, resource allocation across categories is infrequently scrutinised and no consistent methodology is deployed to drive a level of standardisation. This results in resource allocation being inconsistent and lacking balance – impacting the value that is ultimately delivered. Flexibility across the team needs to be factored into organisation design.
Also sometimes organisation designs are created under pressure of a deadline, rather than building up from base principles as part of a thorough operating model review. This means that the design can be built on limited facts and data, or thorough review of exactly who will be responsible or accountable for what in the many different parts of the process. These factors can lead to organisation designs that are OK, but don’t quite hit the mark.
New Year’s Resolution No. 16: If you haven’t reviewed your organisation structure in a while, undertake an operating model review. Operating model reviews are not to be confused with Organisation Design (which is the process of mapping boxes, and considering relevant spans and layers in the structure). An operating model review needs to map out key process steps and establish who in the business is accountable and responsible for different parts of the process. Usually this needs to be reconsidered for different category groups and all the enabling processes, people and systems. It’s a good idea to include other parts of the business in the review to avoid it being a ‘procurement only’ lens. Only when that is clear, should you go into Organisation Design activity. For Organisation Design you will need lots of spend data, cut into #suppliers, #sub-categories and sub-sub categories, #transactions, #invoices, % strategic work, % tactical, % transaction per category to name just a few. You may need to do some form of time study.
And remember good organisation design does not assume all staff are permanent – transactional and tactical workare ongoing needs and may be best resourced with permanent staff, but some strategic work may well be best manned by interims or consultants who bring their expertise in to challenge and bring new ideas, and lessen the time allocation over implementation to light project overview only. Additionally annual category group planning will determine priorities for the next year – sometimes you will get a priority project that just needs a specialist on the team, as a temporary measure. A core team plus associates is a tried and tested model that works for many sectors from Builders, various Trades and Professional Services firms. The Marketing function has been doing it for years – outsourcing brand strategy creation for example – and it’s high time procurement started to do the same. Being all things to all people, all of the time is hardly ever possible. Flexibility is the key.
You can click below to download our 2016-17 Global Category Management Leadership
Report Executive Summary.