Category Management - Critical Success Factors

Posted 06/11/2017

We’ve been busy this year undertaking category management training programmes with a number of global and European clients.

Very early on in the session we invite delegates to share what they think the organisation is doing well against 10 critical success factors (No. 1-4 and shown here in yellow post-its), and what they could improve (No. 6-10 and shown in pink).

From those I‘ve personally delivered there seems to be a theme emerging, and if it’s a theme that’s replicated in your organisation I thought it helpful to summarise some posts written earlier in the year to address these critical success factors:

  1. Business sponsorship: Each important category team or supplier relationship requires an executive sponsor to provide objectives and direction, help drive internal change and signal business commitment.
  2. Cross functional approach: Team working with procurement and business stakeholders is required in order to understand fundamental requirements, gather required data, identify all opportunities and build a joint strategy. More here.
  3. Opportunity pipeline: Throughout the process there is a need to challenge the status quo and identify improvement opportunities that range from quick win to major breakthrough - scheduled into an agreed implementation plan. More  here.
  4. Comprehensive value delivery: Reduced supplier prices are often a result of Category Management, however bigger benefits are delivered by taking out cost, reducing risk and increasing service levels and revenues. More here.
  5. Flexibility: Application of Category Management must be modulated to meet the specific needs of each category and ensure that effort is not wasted over analysing simple areas of spend – it is not a “one size fits all” approach. More here.
  6. Early Engagement: Category Management must be fully aligned with business activities and influence key cost drivers before they are locked-in e.g. specifications, demand patterns, use of competition etc. More here.
  7. External engagement: Market engagement during category strategy creation allows suppliers to share knowledge and experience from other customers and provides an opportunity for category teams to test more radical ideas.
  8. Comprehensive data: Facts and data drive the process with business requirements, supply market analyses, cost breakdowns, spend forecasts etc. being used to confirm the current situation and stimulate improvement ideas.
  9. Documented strategy: Findings, improvement opportunities and the implementation plan are documented in a 1-3 year category or relationship strategy that is approved and refreshed at an agreed frequency.
  10. Continuous improvement: Applying a consistent Category Management process across all spend areas will reduce variation in results, remove waste, allow standards to be set and generate ideas for on-going improvement. More here.     

More on the benefits to be gained from adopting this approach, and reinforced in the FP Category management report can be found here, and more on why your organisation needs GREAT category management here.  

If you’d like to discuss more about implementing any of these more in your organisation or to find out more about the training programmes we deliver please don’t hesitate to get in touch here.

Tagged by topic: Category Management , Learning and Development

  by Alison Smith

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