Organisation structure focuses on the way Procurement is set up to operate within the organisation.
It looks at features of the internal procurement operating model that would include roles & responsibilities, how the procurement team is organised to manage category management, sourcing and supplier & contract management, obtaining investment for additional resources, objective setting, ensuring there are business sponsors for category projects and that there are well defined steering groups or category councils for all major categories of spend.
The importance of organisation structure
Making category management the single way of operating for procurement activity is a significant change-management challenge, and leading organisations have recognised that the commitment required to achieve this objective goes well beyond rolling-out a new process and educating the team.
The procurement operating model creates a firm foundation to build a sustainable category management function. Adopting these practices also sets a positive motivational tone across the procurement team. It demonstrates that the leadership team are addressing the structural internal procurement issues that often prevent category management from being embedded for the long term.
We often find that many of these practices are considered in isolation or only at the outset of a category management implementation. They need to be regularly reviewed and amended to make sure that they are operating effectively and that they are creating an environment where category management can thrive. To this end it is recommended that a member of the leadership team owns this element and any related organisation review process.
What our global category management survey tells us about organisation structure
The overall score for organisation structure across all respondents has increased from 40% to 45% compared with the 2019-20 survey.
The highest score was for Q3.1 at 79% stating that your category managers are responsible for both creating and implementing their strategies. The next highest score of 54% was for having category sponsors from the business which is one of our critical success factors.
The lowest scores were for Q3.2, having sufficient category manager resource at 29% and Q3.4, having a fully resourced central team driving best category management practices at 26%. Securing sufficient resources is a perennial problem for many procurement organisations. This is best resolved by proving how much value it brings to the organisation and creating a business case to sell it.
Leaders v Starters performance gap
1. Fully resource the core team driving your category management capability building so it meets your category teams’ needs including people, tools and technology.
2. Ensure you have sufficient category manager resources of the right calibre and experience, and they are correctly balanced between category management, sourcing and SRM activities.
3. Set up formal category steering groups or category councils for all key categories with broad active representation from the organisation to be the forum to discuss for all category issues. (Quick Wins)
4. Recruit active business sponsors from the organisation to head up all key category management projects to ensure senior executive support is available for the category teams.
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