We have been running a survey into what makes Category Management work since 2011, providing a unique insight into what differentiates a successful deployment of category management from a less developed approach.
The basis of the report which is produced is a suite of 66 questions which have been answered by nearly 400 people, across 10 sectors and a multitude of countries. With this wealth of information, we work with Henley Business School to analyse the results and develop a clear statement and template to guide CPO’s and for category management practitioners to follow.
Over the last 8 years, one of the regular features has been the difference in value delivered by those who operate as leaders in category management, and those who operate as followers. Consistently, leaders deliver more than twice as much overall value than followers do, while believing there is still a potential pool of value for them to access as they improve further.
This is a significant reason to pay close attention to the outcomes of the report: accessing that additional value more than pays for the investment in time and effort to get good at category management. The extra value is delivered both through using more value levers (different ways of delivering value) but also increasing the amount of spend under category management.
Value delivery increase
This increase in value delivery is driven by five particular outcomes which are identified within the research: best in class savings, teams have excellent understanding of category management, strong stakeholder support, excellent category strategies, and teams which identify all opportunities.
Even at this level, it is possible to test how well category management is being deployed by looking at these five factors. From the research, it is possible to see that strong performance in one or two areas will still not lead to the level of value delivery which is expected; it is necessary to advance across all five areas and is really worth understanding that, without strong stakeholder support, achieving value is really difficult. Procurement cannot operate within a vacuum.
The report goes deeper than this. By using statistical analysis, we have been able to isolate the particular practices which contribute most significantly to the delivery of the five factors described above. Because the linkage between these practices and the delivery of strong outcomes is so well defined, it is possible to target very specific development activities in those areas and to increase the likelihood of success. This means that the interventions needed to get to the greatest level of effectiveness, such as coaching, training and review, can be designed to be detailed and effective, without covering the whole range of possible interventions.
If you want to find out exactly how to intervene to get to a high level of value, you need to be reading this report.
The 2019 Category Management report is available from Future Purchasing, and you can register now to receive your preview copy.
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