An Approach to Category Management Leading global excellence in procurement and supply
Category Management: CIPS define category management as: “the entire science of the procurement subject applied to a single genre of expenditure”. As such, a category manager is the ‘CPO of their category’ and carries a weight of responsibility for their organisation’s application of the category Leading global excellence in procurement and supply
Category Management Paul Rogers Leading global excellence in procurement and supply
The entire history of procurement Condensed into two slides for time poor executives Leading global excellence in procurement and supply
Trivia quiz • 1973 What global event taught us about market power? • 1983 Which McKinsey alumnus rocked our World? • 1990 The book that “changed the W orld”…was? • 1996 If one four box model is good, two must be…? • 1999 Why didn’t procurement people party like it was 1999? • 2001 Save 20%! Save 30%! Save 40%! The _ _ _ _ _ _ boom? • 2004 Consultants using the term “category management” • 2005 “Procurement” is so 20 th century, dahling ! It’s…what? • 2006 Why were trucks on bricks? What did that teach us? • 2008 The biggest bankruptcy filing in US history …9/15…? Leading global excellence in procurement and supply
Purchasing Procurement Category LABEL Management Supply chain Sourcing Competition Supply chain Lean BUZZ Agile Co-operation alignment Single Supply chain Low cost country Multiple sourcing SCOPE sourcing logistics sourcing Matrix based Reverse Auctions Pareto approaches Analysis TOOLS Spend ABC eProcurement analysis Analysis 1960s 1970s 1980s 1990s 2000s 2010s Leading global excellence in procurement and supply
The present Category management; a process, an organisational design principle, or a job title? Leading global excellence in procurement and supply
Where is the value? Source: Adapted from McKinsey Research 30 User or stakeholders 30 5 10 15 Category manager 10 15 5 40 Cross functional team 5 10 25 Demand Sourcing Contract management phase management Leading global excellence in procurement and supply
Generic model Benefits Category realization analysis Category management Market Category engagement planning Leading global excellence in procurement and supply
Category management overview Category Benefits analysis realization Mobilisation Category management Market Category engagement planning Leading global excellence in procurement and supply
The future Five key challenges and possible futures… Leading global excellence in procurement and supply
Five key challenges 1. How do we define the scope of the portfolios so that job scope is ‘do -able ’ and broadly of equal complexity? 2. How do we agree the boundaries of the role with subject matter experts within the organisation? 3. How do we find category expertise ( or do we need it?) 4. How do we resource for the peak workload associated with sourcing events as well as ‘ business as usual ’? 5. How can we ensure that the category manager remains agnostic when they have developed relationships with incumbent suppliers? Leading global excellence in procurement and supply
And the crystal ball, Paul? • Intermediaries will develop “proprietary” category insight for indirect categories – What will be the point of clients (trying to) duplicate their expertise? – IBM, Portland, CapGemini, xChanging etc • Capability shortages will also drive use of third parties for ‘sourcing’ / market engagement phases – Providers will offer ‘turnkey software -as-a- service’ contract renewals • Buyer-driven member-only social media solutions will emerge – ‘Trip Advisor for buyers’ in specific categories – Buyers rate suppliers and network in a closed community sharing category insights Leading global excellence in procurement and supply
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