Category Management – New Paper and Live Event on June 14th

In our new briefing paper, sponsored by managed services provider Comensura, we look at some interesting issues around factors that category managers need to consider when developing their strategies and plans.

It’s titled Understanding Culture and Stakeholders - Why Category Management Needs to be Aligned and Flexible.

We argue that managers need to look carefully at issues such as the culture of the organisation, and often need to dig down into the way different parts of their own organisation work. For instance, a certain category approach might work well for one business unit, division or even team within the organisation, but a very different approach to buying the same goods or services might be needed for another. “One size fits all” is rarely true in anything but the very smallest or most homogenous organisations.

The overall message for procurement leaders and category managers is two-fold. Understanding what makes your organisation and stakeholders tick is key, and must go beyond just reading the “formal” corporate statements. And category approaches, including the use of technology, approach to governance and the role of procurement (amongst other factors) must be flexible enough to deal with different needs, cultures and goals - even within the same organisation.

We are also pleased to announce a live event organised by Comensura and linked to the paper – on the morning of June 14th at the Doubletree Hotel near Victoria, London, I’ll be discussing the concepts and talking about how you can arrive at robust and effective category strategies that work for your organisation. We’ll also have a case study from Baljit Sidhu of Serco, talking about their experience around managing contingent labour. There will be time for questions and discussion too, it’s free of charge and you can register here.

Here is an extract from the paper, but you can download the paper now, free on registration, via this link.

Making a success of category management

Over the past 20 years or so, category management has become the dominant way of organising procurement activities. It groups an organisation’s spend into products or services that share similar characteristics and develops strategies to buy those items from the supply market in the best possible way.

It is an accepted truism that to execute category management successfully, procurement must consider the needs of internal stakeholders - that is, the people who hold budgets, specify and use the products or services being purchased. But really, those needs should be a proxy for the wider needs of the organisation. If we assume that stakeholders act in a manner that reflects the organisational goals, and that they are aligned with the wider strategies and plans, then procurement helping to meet their requirements is contributing to the whole organisation’s success.

So, for instance, if we talk about stakeholders being concerned about the service levels that a supplier provides and wanting to balance those against a potential cost reduction, that is presumably because that service feeds through into a customer benefit and ultimately competitive advantage.

In developing category strategies, procurement must therefore be very clear about the organisational strategy, goals and objectives, as well as considering the more personal drivers for key stakeholders who have an interest in each specific category or sub-category.

But we would argue (from experience, not all of it positive) that considering these factors is still not enough to make sure that the category strategies will turn out to be appropriate and successful. Procurement must also consider a less tangible but also important factor – what we might call the culture and operating style of the organisation, which is linked to, but somewhat different from, the overt and “official” strategy.

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