If You Don’t Collaborate With Business Stakeholders To Agree A Pipeline Of Projects You May As Well Give Up On Category Management

Posted 24/03/2017

Developing a pipeline of sourcing projects is often an informal process

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: 

  • significant effort being wasted securing stakeholder support for projects
  • lack of procurement involvement in key projects
  • inadequate sponsorship
  • limited team resource provision by stakeholders
  • reduced benefit delivery

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

  • Confirm the major corporate initiatives for the business.
  • Discuss what is happening in the broader industry sector you operate in.
  • Consider the implications for procurement of these macro level factors. 

2.     Understand the Business Planning Cycle

  • Use the Finance team to identify and explain the business planning process.
  • Confirm how the process can be used to identify business projects and activities.
  • Map out the business cycle over the year and identify procurement interface points.

3.     Confirm Category Group Segmentation

  • Segment spend into level 1 category group, level 2 categories, level 3 sub-categories.
  • Validate segmentation with Procurement & stakeholders as necessary.
  • Confirm which category groups are in scope for the planning process.

4.     Conduct Research & Strategy

  • Undertake high level review of spend, budgets, markets and current contracts.
  • Generate ideas and assess the potential value improvement.
  • Identify the links, dependencies and synergies between sub-categories.

5.     Engage Business Stakeholders

  • Confirm key business units for each category.
  • Identify business unit strategies, plans and objectives.
  • Hold engagement meetings to generate initial ideas and confirm support level.

6.     Prioritise Opportunities & Create a Category Group Plan

  • Prioritise opportunities in a prioritisation grid and agree with relevant stakeholders.
  • Create a category group plan and obtain stakeholder approval.
  • Confirm target savings, allocate resources & agree timing 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?

Tagged by topic: Business & Stakeholder Engagement , Category Group Planning , Category Management , Category Management Survey

  by Simon Brown

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