Your organisation probably does Category Management in some form, but the truth is that most businesses are only scratching the surface and leave much of the available value on the table. Using our experience from more than 80 category management consulting assignments around the globe and findings from Future Purchasing's most in-depth category management research, we can help you unlock this value.Category Management has great potential to deliver value beyond traditional sourcing approaches by building greater alignment with stakeholder requirements and creating long-term strategies for managing spend.
It operates most successfully when it is directly integrated with two fundamental procurement processes:
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 transforms the long-term value achieved from an organisation’s total supplier spend and drives reduced cost, reduced risk, improved service and improved revenue.
Learn more: Category Management Definition
The checklist below summarises ten features of category management that differentiate it from traditional sourcing:
Category Management requires a much more collaborative approach to managing your spend with a greater focus on understanding your real business needs, working in cross-functional way with technical stakeholders, securing business sponsorship and using value levers creatively to systematically identify opportunities to increase value from your spend.
From our experience of implementing category management with more than 80 clients, we have identified five building blocks and 100 best practices that can help category management to be successfully embedded as a lever to driving better procurement performance.
1. BUILD: is the physical design, creation and continuous improvement of a practical category management methodology, process, toolkit and templates to facilitate the creation of compelling category and strategic sourcing strategies.
How can Future Purchasing help: Future Purchasing is a centre of excellence in the design and implementation of category management processes that actually work and motivate teams to use them. Our toolkit contains high impact and compelling summaries of each of the critical steps and tools in the process. Appealing to both category management professionals and relevant stakeholders, they can be readily customised to supplement client materials as required.
|(i) Process Steps: Clearly defined activities that provide a roadmap for all category management projects with flexibility on which guides and templates should be used.||(ii) Guides: Easy-to-understand 'how-to' guides that provide cross-functional category teams with information on every step, activity, tool and template in the process.|
|(iii) Templates: Clear, attractive, easy to complete templates that relate directly to defined process steps and are designed to prompt thinking and opportunity identification.||(iv) Governance: Regular reporting of category progress, both within the process and in key areas such as stakeholder engagement and insight development is built into the process.|
2. LEARN: is building technical and behavioural skills for procurement teams and category management awareness training for stakeholders.
How can Future Purchasing help: We deliver procurement learning programmes that build mastery. Programmes are typically a blend of on-line learning, formal classroom learning events, small group coaching sessions and individual coaching sessions.
We combine technical skills building with training and coaching in key behavioural and soft skills areas that enable category and supplier management practices to be more effectively deployed across geographic and functional boundaries.
3. LEAD: is the governance and operating model that embeds category management in an organisation and ensures its long-term sustainability.
How can Future Purchasing help: The 2016-17 FP Category Management Report confirms that moving from a Follower to a Leader in category management results in a 2.7x performance improvement – boosting average savings delivery from 2.6% to 7.7% and beyond. We have identified the Top 19 critical practices that drive this step-change and separate Leaders from Followers. We facilitate sessions with procurement leadership teams to agree current strengths and weaknesses for each practice, along with a prioritised list of improvements to implement over 12-18 months.
4. APPLY: is the practical running of a category management programme covering all category or sourcing projects under way across an organisation.
How can Future Purchasing help: Structure and rigour are crucial to delivering the promise of category management and we regularly provide hands-on support to category management teams. This includes communications and change planning, category prioritisation, category governance, progress tracking, holding formal gate reviews and proactive coaching interventions at the category project level to ensure successful completion of the category projects. We draw on our proven tools and team’s deep experience to ensure that category management programmes operate smoothly and deliver their targeted results.
5. DELIVER: is the end results produced by the category management activities and assessed through a range of metrics.
How can Future Purchasing help: We ensure clients achieve compelling and well communicated deliverables that demonstrate the value of category management and gain support from the stakeholder community. We ensure that category strategies identify all available value lever opportunities – including risk and revenue, as well as cost reduction. We support and challenge clients to deliver value in the short, medium and long term. We provide tools to ensure that the opportunities identified in category strategies are realised, measured and tracked as they are implemented.
Example tracking and reporting tools
|Category Management for Procurement Professionals|
|The Business Case for Category Management|
|Implementing Category Management|
|Category Group Planning|
|Track8 Procurement Software|
|Global Category Management Leadership Report 2017|
Download the FP 2019-20 Global Category Management Report and register your interest in receiving a copy of the full 84 page report.Read More
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& Next Practice Guides on ways to update, refresh and flexibly apply Category Management Processes.