Alas Smith and Jones – a conversation about Category Management

I recently met Mike Jones, one of the founders and directors of Optimum Procurement, along with Peter Rushton.  Jones started his procurement career in the automotive industry, then worked with David Rich-Jones at Caradon and at Xchanging.  He set up Optimum with Rushton some seven years ago, and runs the operational side of the business –  the ‘engine room’, as he calls it.

So our discussion focused on the delivery aspects of running an operational procurement team, but to get things going, we started by talking about people. As someone who employs and manages a growing team of professionals, I asked Jones what he looks for in his people.

What about the skills you  look for in your team?  Is “category management” a transferable skill across different spend areas? Or do you need to be deeply expert in a particular spend area?

For many categories, you can pick up the product knowledge relatively quickly, if you have the right set of behavioural and technical attributes  - negotiation skills, inter-personal skills and so on. Then we have what we define as “irregular” categories. Here, you need to have deep and specific knowledge. We see those categories as primarily Fleet, Energy and ‘real’ traded  commodities.

What about IT? Don’t you consider that an irregular category ? I’ve always thought software for instance was pretty specialist?

Well, you do need to convince your IT stakeholders of your competence, and talk their language. There is a learning curve, but in our experience that can be handled pretty quickly. What you’re buying is not intrinsically that complex, we believe, but there are a lot of protective stakeholders in that area!  The same thing applies in Marketing. I’m not saying these are easy categories, but they don’t require the deep and specific knowledge that we find is needed in the ‘irregular’ categories.

We’ve read a few things recently suggesting “category management is dead”.  There have been some disappointments with what it has delivered and the industry seems to be looking for ‘the next big thing’. Any thoughts on that?

I am still a believer. You can usually identify why a CatMan programme hasn’t worked in my experience. We saw an example recently – a very large firm, two years into a programme, not working in their view. But there were some clear issues. Limited support from the top for the programme, for instance, with  the lack of a real strategic imperative. Why exactly were they undertaking the programme? Then there were also capability issues amongst the procurement team.

Some commentators are suggesting that strategic relationship management – SRM or similar – might replace CatMan as the core procurement process or discipline. Is that possible?

A focus on SRM and innovation is integral to CatMan, they are not alternatives. Some people see CatMan as simply based on doing bigger and cheaper deals – but aggregation is only one of the eight levers for category management we use as standard in Optimum. All eight should be used for really effective CatMan. So SRM is really integral to CatMan – it is all about understanding the users and what they want.  And often changing relationships from transactional to strategic is a core aim within the way  we look at a category.

So one problem seems to be that category management runs out of steam after a while - what can you offer after 2 or 3 years of CatMan?

It should be a continuous process, not just focused on short term cost reduction. It’s about seeking value, which may lie in many different areas, being a catalyst for change and bringing opportunities to the business.

Thanks to Mike – and given the opportunity to use the Alas Smith and Jones joke again, I’m sure we will have more from him in the future. And for our younger readers, have a look at this if you don’t know what on earth I am on about!

Voices (2)

  1. Paul Gurr @ Provalido:

    I believe sometimes the reason category management isn’t perceived to work is because it’s just seen as a different way of allocating spend to buyers (rather than by BU or site or revenue stream etc.), and there is no real drive to change buyer behaviour. I cut my CM teeth in the same Rich-Jones Caradon environment and 15 years later am still a strong believer. If the category manager can build and maintain healthy relationships with their stakeholders and their suppliers, and develop deep knowledge of the supply market, then category management should deliver value far beyond cost savings on a continuous basis.

    1. Mike Jones:

      Hello Paul – thank you for commenting – as we know – adopt and trust the process and it will deliver for you – exceptional double digit cost reduction performance together with breakthrough process and operational improvements.

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