Category management and the sectoral challenges
By Mark Hubbard |
Category Management is a well-established and robust process. Having said that, it does operate slightly differently from one organisation to another, and in one sector to another.
Given that the current COVID-19 crisis is affecting organisations in a range of ways, it is also reasonable to assume that a category management implementation will have a slightly different flavour to it now than it may have had last year.
This is not because category management itself has changed, but that the environment in which it is operating is different. This means that we need to make sure that the way we are using category management is tuned to match the needs of the marketplace and the business, which is largely about recognising which areas to influence.
Managing risk within the supply chain
As a simple example, in periods of steady growth, it is reasonable to assume that there is a general air of stability within supply chains. However, in a COVID-19 environment, we can see that there is a dramatic increase in risk as businesses struggle with the financial demands placed upon them and the challenges of finding capital to restart their business activities. This suggests that identifying and managing risk within a supply chain will be a significant part of the immediate future.
In other areas, it can be seen that falling demand and falling prices have dramatically impacted both overall levels of business and profitability. The oil industry, as a clear example, has seen both demand and price slashed, with a consequent impact on demand and supply chains. In this case, the issues for category management are likely to be broad-reaching, where category strategies are going to have to look at the impact of volume changes, bottom-line contribution, start-up impact as well as the more general risk of suppliers no longer being available to them, plus an uncertain point at which more sustainable profits can be generated again.
Following on from comments elsewhere, the challenge for category managers in supply chains in public health will be looking at what lessons can be learnt from the PPE difficulties faced and modelling what is necessary for any second COVID-19 wave. Of course, the challenges discussed in the linked article suggest that any immediate category management gains are likely to be hindered by some of the built-in structural difficulties (competing procurement organisations, anyone?) facing NHS procurement. However, it does suggest that category strategies in this area need to adapt to ensure that the evident issues and challenges now in place are properly dealt with.
Some might say that this level of adaption might lead to more tactical solutions, and that is a risk. However, we also need to recognise that the strategies developed do need to address current needs as well as any potential future nirvana of sunlit upland, and a fully recovered economy.
About Mark Hubbard
30+ years experience in procurement and supplier management, in line and consulting roles
Previous employment: Positive Purchasing Ltd, SITA,
QP Group, BMW, SWWS, Rover
Education: BSc in Engineering Metallurgy, MBA University of Plymouth
CIPS: Current Member