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Ep 03 Inside Procurement: Moving the dial from Category Management to Category Excellence
According to CIPS, category management is a “rigorous, fact-based, end-to-end process for proactively collaborating with stakeholders to develop and implement strategies that deliver significant value from an organisation’s external spend”. That’s more than a mouthful but certainly very comprehensive.
As an idea and a concept, category management has been around for many years. But in recent years, we’ve seen an evolution of the idea, a practical development that is having and will continue to have far reaching implications for the procurement professional of today and tomorrow. This has been driven by a host of factors: challenging economic and political conditions, digitisation, spiking demand for competitive quality and price, sustainability considerations, fair trade and ethical practices, and more.
What this means is the following:
- Category leadership requires a consolidated view of internal and external perspectives to enable informed decision making
- The category leader’s focus must also shift from a price-emphasis to Total Value – prompting the need for value-based partnerships with both the business and suppliers
- A shift from the traditional “negotiation and the ‘three bids and a buy’ strategy” to efficient and effective category sourcing, that integrates digital processes and tools (e.g. dashboards, analytics, interfaces, optimization tools, and digital P2P)
- The category leader’s mindset has to shift from event-based strategising to continuous, strategic business management
The key elements of progressive category management, therefore, include end-to-end management of the supply chain, strong market awareness, sound technical knowledge, excellent SRM, and excellent stakeholder relationships.
Category management, appropriately implemented, helps improve the entire value chain.
Technical definitions aside, there are two simple sentences that, to me, encapsulate what progressive category management is all about:
- Category leaders must treat sourcing categories as independent businesses and run them strategically to meet their respective customers’ needs and objectives
- This means that Category leaders must transform themselves to act as business owners, realising that they own the success and prosperity of their specific categories
In our latest podcast, we tackle how to move the dial from Category Management to Category Excellence, with plenty of practical tips to help unlock the key to procurement success!