In our previous blogs in this series we explored why Procurement Matters in business , and subsequently what THE key process is to build in the Procurement capability of the organisation. We concluded this was the ability to implement Category Management . True category management, not some former shadow of itself, that many procurement departments deploy because the other bits are too hard.
If your organisation pulls together a bunch of ‘catman’ templates in some sort of vacuum, if there is no formal governance consisting of a sponsor, steering group, core and extended team members, if the category managers largely work on their own, arranging occasional meetings with key stakeholders then these are characteristics of an organisation that’s simply ‘playing’ with the concept of category management.
Category Management is a truly cross functional activity where all members of the team are equally focussed and invested in the outcome you’ve agreed to strive for. The Category Manager, in this context, is significantly more skilled than the Category Manager that ‘plays’ at it. This Category Manager is a strategic business leader and influencer, is a change manager, and relationship manager. Those things are far more important to deliver a successful category management programme than negotiating and running a standard sourcing process. Technically, they will have a clear category and supplier management methodology to follow, but the best Category Managers are experienced in ‘what works’ and can advise the core team of the relevant tool to the task, yet maintain an open mind to create unusual and inspiring strategies together with the core team.
In the latest global survey on Category Management Leadership from Future Purchasing 2016-17, the top 19 best practices have been highlighted, that if focussed on and embedded will have the most impact and create a sustainable category management organisation. No. 1 in this list is embedding the category management process with other related business processes. And within the top 5 best practices, the criticality of stakeholder roles in the process and their active engagement is highlighted. We know that procurement cannot be a discipline only conducted by procurement professionals – and this is borne out very clearly in the survey and through my own experiences.
Procurement is a capability that all senior business people need to be have an awareness of, and their role. Best in class Category Management is so strongly codified and explained, these days, that these different roles and importance is clear (see figure 1 below). Experts who use the product or service every day, shape the demand with challenge from others in the team, Procurement Professionals can look for shapes and dynamics in the market via surveys, analytics, and networking. Finance and procurement colleagues can take insight from predictive analytics and previous data to find patterns and challenge suppliers and colleagues powerfully with logical reasoning and together the team can solutionise, and create and test new models and theories to create something together that’s really special.
Figure 1: Future Purchasing Track8 Category Management Model
In Figure 1 above the Category Management process is set as the ‘engine room’ of Procurement, and all the critical enabling disciples e.g. vision & strategy, operating model, change management, communications, technology, policies and processes and people surround it, to enable it. Category Management is the key enabler of value in procurement, but it cannot do it without the enablers. And this is why Category Management and Procurement are 2 names that are irrevocably entwined.
If you would like to hear more about the practical steps to implement a procurement transformation and set category management up for success, whether you’ve tried before and failed or trying for the first time, please do get in touch with Allison Ford-Langstaff , Transformation Director to hear about our self-assessment or consultant run diagnostic and opportunity assessment tools. Driving procurement performance improvement using Category Management as a key lever is what Future Purchasing do: identifying savings and benefits e.g. cost reduction, value creation, risk mitigation and stating a clear ROI to create the business case for change. Make a difference, call us today.
Look out for our next blog in the series where we shall start to look out how we shall achieve our Procurement Transformation.