Posted 4th May
If I had a pound for every unwittingly self-deprecating procurement professional who has told me that Category Management is just common sense, I would be a rich lady indeed.
As it’s a phrase I hear so often, much to my continued surprise, I thought I’d look up the definition of ‘common sense’ to see if I was missing something. The Oxford English Dictionary advises me that common sense is “good sense and sound judgment in practical matters” so presumably when people make the statement that Category Management is ‘just’ common sense it would seem that they are in effect saying that Category Management is simply about applying good sense and sound judgment in the practical application of the process to yield the result. I couldn’t disagree more.
It all probably centres around the definition of what category management actually is. It is an overused and often misunderstood term. Some procurement teams believe that if they have organised themselves structurally in categories then they are by default deploying category management i.e. they are managing spend by categories. Other procurement teams may own a particular approach which they mandate or strongly advise buyers to follow - this may include recognised category management tools such as Portfolio Analysis (Kraljic) and Supplier Perception Analysis or Supplier Preferencing as it is sometimes known. But simply following a set of tools is not category management, it is at best following some category management principles but of itself is not true category management.
This definition of what category management is is at the root of why I think category management is not just ‘common sense’. Category Management* is the strategic end to end process for buying goods and services that aligns business goals and requirements with supply market capability. It has the ability to transform the long-term value achieved from an organisation’s supplier spend and drives reduced cost, reduced risk, improved revenue, improved service and ultimately better business performance. But where Category Management truly differs is that followed correctly it enables the effective internal (across the business functions) and external collaboration (across suppliers and supply markets) – it is this collaboration that separates those who truly operate a category management organisation and approach and those that simply follow category management principles (some key tools with ad hoc and limited engagement internally). Put another way, any strategy created by a procurement professional alone, with occasional input and testing with a stakeholder is not a category management strategy. Category Management necessarily involves core cross functional teams working as equals towards a common objective, often working in all day workshops challenging each other creatively, where all core team members are equally incentivised and targeted to achieve the outcome (not just Procurement).*Figure 1: Future Purchasing’s Definition of Category Management
But back to the concept that somehow category management is mere common sense – the ability to simply apply good sense and sound judgment in the practical application of managing categories. Let me paint a picture of the CV of a true Category Manager to illustrate (in no particular order and by no means exhaustive):
I could go on. These are just a few of the attributes of a true Category Manager who can lead a cross-functional team to develop a breakthrough strategy for implementation. It is why every leading organisation struggles to find the perfect Category Manager – to find an individual capable of that sheer range of skill is difficult. And because relatively few organisations are Category Management leaders (28% of organisations globally as identified in the Future Purchasing Category Management Leadership survey) the market containing deeply experienced Category Managers is still relatively small.
Put simply: the true Category Manager is not simply applying good sense and sound judgment in the practical application of managing categories. They are highly skilled, highly experienced individuals who without possessing at least the 10 skills highlighted above will struggle to deploy category management.
Finally, the other phrase I hear a lot from within our profession is how category management isn’t rocket science. Taken literally of course it is not! but taken as a phrase where ‘rocket science’ denotes ‘something very difficult to understand’ then again, I would disagree with a statement that category management is not difficult to understand. Actually, my experience over the last 20 years of watching procurement teams trying to implement category management is that it is abundantly clear that it is actually extremely difficult to understand. This is why so many procurement organisations have decided to change the meaning of what category management is and some have even deployed a tick box exercise showing that key technical tools have been looked at as some kind of academic test, thinking that means category management is done. As a concept category management is not new, yet organisations try and try again and can still fail to implement it effectively. Why do they fail? Perhaps because they dismiss it as not being ‘rocket science’ and just the application of ‘common sense’.If you would like to understand how you can set up a true category management organisation that delivers breakthrough outcomes in business performance, then get in touch with Allison Ford-Langstaff .
Tagged by topic: Category Management