- remains a top 3 priority for more than 70% of procurement teams
However, only 5% of respondents report that they are doing it well. So there is
considerable opportunity to deliver additional value from category management – for
both leaders and followers.
2. Procurement Maturity - only 28% of Procurement teams are mature in category management
For many organisations the focus is still on RFPs and negotiation - engaging stakeholders
and working collaboratively with them to unlock the value available from each category
is a running theme in our report. Creating compelling category management strategies
is a key factor.
3. Top 19 Category Management Best Practices – accounts for 68% of CM value
From our category management survey results, the top 19 best practices accounted
for 68% of category management value which in turn equated to 15% of company financial
performance. So the direct impact of category management on company performance should
encourage a serious focus on improving category management performance.
The opportunity for improvement in category management is confirmed by the fact
that, on average, these top practices are implemented by only 58% of leaders and
36% of followers.
4. Stakeholder Collaboration – Procurement need to increase collaboration with stakeholders
Leaders have made good progress in connecting category management to their organisation’s
broader strategic objectives.
In contrast, both leaders and followers fail to secure sufficient time from stakeholders
for category management. This restricts the ability of procurement to work with technical
stakeholders to identify and validate all available value improvement opportunities
for a category – resulting in missed opportunities.
In the few organisations where category management is optimised, it is often considered
a business, rather than functional, process and this reinforces the need for stakeholder
5. Savings Potential for Leaders and Followers:
The survey shows that leaders achieve higher savings rates than followers from their
category management projects - 11.1% compared to 7.7%. Yet, even leaders recognise
they are missing opportunities and leaving value on the table – a further potential
5.2% by their own estimates.
Leaders also have a higher proportion of their spend covered by category strategies
- 64%, compared with 34% for followers. The survey results demonstrate that a third
of leaders are achieving greater than 75% category strategy spend coverage and a
potential target of 80% is reasonable.
Figure 1 shows the combined impact of savings rates and strategy spend coverage
for followers, leaders and the full potential. It also includes the total savings
achieved at each of the three levels per €1 million spend. Followers achieving the
potential will boost their current savings performance by 400%, compared with an
83% performance boost for leaders achieving the full potential.