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Early in my procurement career, I made a common misstep – maybe you can relate to this story. I told an important marketing stakeholder how much money that I thought my team could help them save. I also shared the procurement savings goal that we had for their category area. I assured them that I was confident we could hit that goal. Big mistakes. I figuratively had the door slammed in my face. It took a long time, and a lot of work, to open up that door again. In my mind, I had put time and effort into understanding the goal. I reflected on how to achieve that goal and then built a strong business case. So, what went wrong? I forgot to align on what the business actually wanted. I jumped ahead instead of listening to Marketing’s needs first and spoke in a language that didn’t match those needs. This Is when I learned the importance of Total Business Alignment with your category management strategy.
With a category management approach, you can build a Procurement function that aligns seamlessly with the goals and objectives of the larger business. A successful category management program requires you to have an insights-driven approach to building relationships with stakeholders. With your stakeholders, you can collaboratively build a multi-year strategic roadmap with targeted projects and timelines tied to the needs of the business.
If you are early in your category management journey, moving forward can feel overwhelming. You may wonder where to start. Making progress is easier once you give thought to three key pieces: (1) direction setting, (2) work processes and (3) enablers.
In this blog post, we will touch briefly on the first two but delve more deeply into six key enablers of successful category management.
Direction Setting is exactly what it sounds like – putting into place a vision and strategy for what you want to achieve that aligns with the goals of the business. Direction setting work helps you answer the big picture questions: Where do I want to be in three years? What should I be focused on within my role to achieve this? How quickly can change occur in my categories? How do I manage and sustain change? Direction setting activities look different in different organizations. Some examples include:
The public sector organization that invites business stakeholders to a workshop to brainstorm and prioritize procurement improvements within stakeholder alignment and business planning.
The insurance provider that works closely with their advisory team to develop a clear procurement transformation vision.
The energy and utilities provider that communicates a multi-year organizational transformation to their procurement team and provides a clear direction around competency requirements and role descriptions to adapt to the change.
Work Processes start to get down to “the how” of category management. Work Processes address: How do I get in front of my project pipeline? How can I increase my project portfolio? What is the best way to create a solid plan? What is the right activity to execute, and with what resources and timing? A few category management-related work processes examples include:
The global manufacturer that develops a multi-year roadmap of category planning activities by category, subcategory and geography, and develops category councils to govern the first wave of completed plans.
The consumer goods and food manufacturer that undertakes a series of workshops to conduct category-level opportunity assessments to challenge the status quo around spend under management and savings levers.
The chemicals manufacturer who launches a centralized project portfolio tracker, so the entire global procurement team can see completed, in-process and planned procurement projects.
Enablers represent the competencies and performance drivers necessary for success, such as market intelligence, data and technology. Enablers help answer: How do I effectively find and use market data? What is important to depict in my spend data? What should I focus on to build my skills? What should I do if my data is not credible?
Numerous enablers support category management success. We will focus here on six of the key factors. Keep in mind that every procurement organization has its own unique maturity profile within each of these areas. Some organizations may be examples of the middle or advanced levels of a few enablers. Others may be just starting out. There is no right or wrong. The goal is to understand your starting point and keep moving forward.
Historically, procurement has performed in a bubble. That siloed approached doesn’t make the cut in today’s time. Instead, procurement needs to work with stakeholders to understand their goals and then demonstrate how procurement can help to achieve those objectives. You should focus on building strategic partnerships that drive proactive engagement instead of being stuck in a regulated or reactive mode.
To encourage stakeholder collaboration, make it easy to engage with procurement through the use of consistent tools and templates. You can even consider designing a service desk or concierge approach built around a strong procurement brand, to offer an easy, seamless experience for stakeholders.
Category management, not surprisingly, requires knowledge of the category. There are many ways to gain category knowledge, including:
learnings from past experiences
market data and trends
conferences / events
However, you have to go beyond simply gathering all of this information. Take your knowledge gathering to the next level and analyze what the information means for your industry and your business.
Analyzing spend is all about gathering insights from historical expenditure data to predict future needs. Spend Analysis includes collecting, cleansing, classifying and then analyzing the information to help define category scope, anticipate / achieve cost savings, increase efficiency of spend, and to help monitor and ensure compliance. Historic spend insights are not enough alone but can be a valuable input to validate with stakeholders, make informed decisions and present likely scenarios.
All of these insights must be captured somewhere. Use the information and data you’ve gathered to create a multi-year portfolio or plans to implement your projects phase-wise. This should be a living, working plan that you refer to and adjust often – not just file stored on someone’s desktop. Coming up with insights and opportunities is great, but it is meaningless without being translated to actions.
The final key enabler is your people! Use your multi-year plan to ensure you have the right resources and talent to execute and deliver for your stakeholders and the business. Good planning and resource alignment lead to a more robust pipeline. Clearly delineated roles working in a collaborative, proactive way yields optimal results.
There is no category management nirvana. You will always want to know more about your categories. You will thoughtfully consider new technologies to employ. Ever-changing market forces, such as the global pandemic, will require you to adopt new considerations and shift priorities for your business. Having a detailed, yet flexible, multi-year category management plan that you refer to regularly and share with team members and stakeholders provides the guardrails necessary to deliver on strategic business goals. To learn more, listen to our podcasts about getting started with category management.
Director, Client Delivery Services
Lynn Rideout is a Director within WNS-Denali’s Client Delivery Services team. She is responsible for developing and delivering procurement solutions and capabilities to WNS-Denali client organizations. Lynn has 20 years of procurement experience. She has led WNS-Denali’s global Category Management capabilities. She has previously worked as a Marketing Category Manager, as well as a procurement service operations leader. Lynn has worked with clients in a variety of industries, including manufacturing, consumer goods, financial services and pharmaceuticals. Lynn holds a degree in International Relations from the University of Pittsburgh’s Graduate School of Public and International Affairs, as well as a BA in Business and Political Science from Grove City College.