Managing Complex Categories; Beware the Complexity of Standardisation!

Are you a category manager? Or responsible for category management activities?  OK, so what do you think are the basic principles underpinning 'CatMan'?

If you ask any category manager that question, one answer that almost always comes to mind quickly is ‘aggregation’. That looks to use the buying power of the organisation in the most effective manner, bringing together spend across an organisation, aggregating demand in order to achieve better value from the market.

Often, that will be accompanied by supplier rationalisation, which addresses the range of suppliers providing the particular goods and services within the category.  And the third key principle is standardisation, we would argue.

As we say in our new short, sharp briefing paper, published now and available to download here, standardisation “involves focusing on the specifications and requirements for the goods or services the organisation buys and, where appropriate, refining and standardising those in the light of market availability and dynamics to achieve better value for money”. 

But... there are hidden dangers here. Will standardisation lead to unhappy stakeholders, who now aren’t getting the goods and services they really want, which in turn can lead to poor compliance with the category manager’s preferred suppliers or contracts? On the other hand, we’ve seen attempts at  standardisation that led to higher cost solutions. Stakeholders in such cases might have been happy with their product or service, but overall value for money wasn’t achieved.

And what about geographic issues? Once we start thinking about global spend categories, will the standardised solution really work in 35 countries or 200 regions? There are often cultural, social, political, regulatory differences, so what seems a great category strategy for England and the US can be an unworkable one in Brazil or Indonesia. Or even in Canada and Wales!

These are the sort of issues we get into in the paper, titled “Managing Complex Categories; Beware the Complexity of Standardisation!”  It’s sponsored by Marketing Services spend management company  ProProcure, and is available to download now, free on registration here. We hope you’ll take a look at it.

And here, to finish for today, is one of our key conclusions:

Don’t make assumptions about standardising products or services particularly when you’re looking at complex spend categories (e.g. with international requirements and supply markets). Standardisation is a good and appropriate goal – but has to be approached carefully.

More on the paper to come...

First Voice

  1. I an Heptinstall:

    Hi Peter, I’ve not looked at your paper yet, but I do have a different view of what CatMan should be about. Agregation, supplier reduction & standardisation are tools in our toolkit for sure, but that’s all they are. You can’t run an organisation force fitting a limited range of approaches to all categories.

    CatMan should be about deciding the way to get more of what your business’s needs from a category, and the making it happen. Some may benefit from aggregation, others will be best bought from a range of smaller suppliers. In some cases standardisation may result in “rounding up”, whereas allowing 5 different fit-for-purpose specs might be the right thing.

    What about the tools of supplier development, reverse marketing, and similar game changers?

    Pile it high & buy it cheep can be a good “quick win” but it is hardly strategic or sustainable. Unless maybe you are a big-brand consultancy that needs to “sex up” a simple short-term win as something new and innovative. Isn’t that where “strategic sourcing” came from?

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