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Five Building Blocks Central to Best-In-Class Category Management

Making category management a core business competence of modern procurement is a top priority.

For most organisations a structured approach to managing categories is the engine for delivering superior procurement performance.

Multi-site companies in the private sector and large government departments in the public sector require “one way of working” capable of unlocking value in webmastershall a fast and flexible manner. The management of categories is an essential procurement process to deliver this value.

The three core processes of Category Planning, Strategic Sourcing and Supplier Management are the key components of a successful approach. There are five building blocks that need to be in place for a successful approach. These are:

Build

Category management is a core process in procurement. It is the primary way of working. Building it in the right way requires a combination of clarity of vision, business alignment and proper coverage of the key category planning, sourcing and supplier management phases together with a full range of modern tools, techniques and templates.

Learn

Sponsors, stakeholders, category leaders and cross-functional team members need to be properly supported in the implementation. Modern learning and development approaches facilitate the creation and implementation of well structured sourcing and supplier management strategies, while ensuring sustainable capability.

Lead

Leadership, governance and the operating model for are central to success. This feature should be properly addressed by the CPO and senior members of the procurement leadership team. It is a complex area since most multi-country / global organisations operate through federal and decentralised structures.

Apply

Category management calls for a single, business-wide, fully adopted, standardised yet flexible process with easy access to guides, tools and templates. There should be real evidence of process rigour and disciplined execution in the adoption of the way of working. It should be fast, versatile, non-bureaucratic and applied in a consistent manner.

Deliver

Category management is a means to an end – the timely delivery of highly valued business benefits in line with the business case, and high return on investment. The precise mix of deliverables varies between different organisations but combines hard, tangible, bottom-line contribution with top-line revenue growth, innovation and operational support.

Category management has been the cornerstone of procurement excellence for more than a decade, but in many firms it has lost touch with business needs. Using the five building blocks is a formula for successful and profitable category management that can be implemented in any organisation.

Best practice is to embed these processes in an organisation. Procurement leaders who have done this also deliver demonstrably superior outcomes. To do this the importance of connecting with the broader business goals must be recognised. Stakeholder engagement and collaboration with internal stakeholders is equally important as is the ability to implement the strategy effectively.

In conclusion, there is major scope for improvment across all organisations with an ROI likely to be in excess of 10:1.

Future Purchasing is a centre of excellence in the design and implementation of category management processes.

Find out how Future Purchasing can support your initiatives in procurement transformation, cost reduction, category management and performance learning by visiting our web site here: Category Management by Future Purchasing. More category management information can be found in our knowledge hub:

 

 

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