Too often Procurement works in isolation when deciding what category projects to work on. We all know that without the right level of stakeholder support and input many of these projects simply will not be implemented. There is then a danger that it becomes a self-perpetuating cycle of unfulfilled expectation from a procurement perspective. Procurement need to promote the value and benefits of planning and agreeing which projects are going to be worked on in the next 12 month period with their respective business stakeholders.
In our recently published FP Category Management Leadership Report 2016-17, 67% of Category Management Leaders confirmed they had agreed a plan of projects to work on collaboratively with business stakeholders for the year. Only 33% of Followers who are in the majority (72%) confirmed they did this.
Identifying the projects to run through a strategic sourcing process is often either a ‘black box’ activity with little input from stakeholders or an unplanned process where the procurement team responds to last minute stakeholder requests. This misalignment between the procurement team and its internal customers results in:
By formalising the Category group planning approach and aligning it with the corporate business planning cycle, an agreed pipeline of projects can be built that maps out sourcing/supplier activities for the next 12 months and beyond. There are a few critical factors to consider.
1. Understand the current corporate context of the business
2. Understand the Business Planning Cycle
3. Confirm Category Group Segmentation
4. Conduct Research & Strategy
5. Engage Business Stakeholders
6. Prioritise Opportunities & Create a Category Group Plan
The category group plan should provide project & savings visibility, ensure the workload is distributed evenly and projects are scheduled appropriately. Moving from the ‘black box’ or unplanned engagement and prioritisation process is a fundamental change for many procurement teams. It encourages more collaborative working with business stakeholders rather than Procurement continuing to “sell” their pre-selected projects to the business.
Agreeing with stakeholders an annual plan of category projects to be worked on together in a cross functional manner is number 4 in our Top 19 practices that drive category management and business performance. So, spending time on this much neglected area will deliver significant benefits. Unless, of course you just want to give up on category management?
by Simon Brown