Mondi Group is an international sustainable packaging and paper group employing 26,000 people with 100 production sites across 30+ countries. The firm drives the sustainability agenda, and the company’s values include passion for performance, driving efficiency through the whole value chain.
In 2012/2013, procurement built a strategic category management approach. Sourcing strategies were developed for every category to fully leverage procurement decisions. These enabled a transparent and structured approach for each spend category and built trust in the procurement team and its deliverables.
They are now ready to move forward to the next stage. Beatrix Praeceptor, the Chief Procurement Officer, explains that this is “to enhance cross-functional collaboration, so that the category managers work in a sourcing network with a greater emphasis on identifying broader value across the entire supply chain, and creating stronger involvement with the businesses.”
“The way we do that,” she explains, “is threefold.”
A three-step model for indirect category management
“Firstly, we have made a clear differentiation between direct and non-direct materials and services, bundling the non-direct materials side into one large team.
Secondly, we have put in place a shared service team, taking care of analytics and tactical sourcing, allowing the category managers to fully focus on the supply market and driving sourcing projects.
Thirdly, we are automating the request-to-pay process on local plant level, so that no person involved in procurement is using outdated manual working models.”
This approach for indirect, and the split of strategic sourcing, technical sourcing and operational buying, will be tested over time before the same model for direct is considered. This approach allows repetitive tasks to be split out from the sourcing and projects side, as these require different skill-sets. “To get to this point takes time,” said Beatrix, “because you need change management and people development to get there.”
The importance of people development
“You need very strong knowledge of your market, the supply base, product and the supply chain.” Technical skills are secondary, she believes, since you are working with experts across the industry. “It is equally important to have people who can identify opportunities, drive projects, manage multiple stakeholders, and steer cross-functional teams as we are all working to the same goal and the business will actually use and benefit from what is being sourced.”
She identifies project management and stakeholder management as the key skills, along with a good understanding of the business for which you are sourcing.
She believes that tactical procurement skills are less important, as they become displaced by e-auctions, e-tenders, and smart contracting. Also, analytical skills and how to use AI are becoming more important to recognise opportunities. “Negotiation skills,” she says, “will always remain important. We deliberately split our sourcing projects into pure price negotiation-based, which is straightforward for the buyer, versus change management projects which require a strong collaboration with other players along the supply chain..” Change management is another skill. Projects might involve evaluating demand, or changing a product or supplier. For this you need strong collaboration skills.
Two pieces of advice for your category management journey
Beatrix offers two pieces of advice.
“It is really important to have a diverse mix of people but they must have good stakeholder management skills and an understanding of their markets. They must have business acumen and consider the bigger business picture”.
“This is a different skill from what has been asked of pure buyers in the past,” she said.
She believes that category management works well when there is a structure that is the same across all categories, and you must define what category management means. “We created a bare-bones structure for each category to consider. This also increased buy-in outside of procurement, because people got to know the structure and language.”
Beatrix believes that procurement is becoming more and more exciting:
“To be successful, you need to have a much broader business understanding than before, which, although it makes it more challenging, also makes it more interesting.”
Chief Procurement Officer at Mondi Group