Category management may offer a huge boost for maturing functions, but it’s not without its challenges. By tapping into the experiences of peers who’ve been through some of these growth stages, teams can avoid some of the pitfalls of the process.
It’s a common benchmark of the maturity of a procurement function: do you have category management? But there’s no silver bullet to engage stakeholders and increase value – category strategies are, instead, better thought of as a way of organising expertise in procurement to integrate more directly with relevant areas of spend. It’s a hugely valuable approach, but not without it’s challenges and it’s worth reflecting on where some of those problems, the kind which we hear of frequently from our community, occur and what we might do about them.
At Collaborate Live, a series of hosted sessions at the World Procurement Congress in London last month, delegates took on these challenges and it became clear that a handful of issues stood out above the rest. The session was an extension of the Procurement Leaders Collaborate discussion platform, with contributors to the online debate leading the tables.
The conflict between local and global agendas
On a global basis, category management can suffer from a broader lack of category expertise and a rigidity of approach across jurisdictions where the nature of the markets varies drastically. On the other hand, if strategies have no centrally defined principles and controls, they lose the leverage that global spend can bring and risk becoming fragmented in approach.
Jukka Ahvonen, head of supply at Finnish oil-technology firm Outotec, led a discussion about the conflict in global and local agendas and how procurement could bridge this gap. One of the key takeaways was the need to listen to the regions and provide the flexibility to operate, while ensuring the team has a diverse mix of backgrounds and cultures. Perhaps most important, however, was the need to maintain good communication – an area, it was suggested in which procurement teams should certainly look to invest.
Complex or untouchable categories
It’s one thing to control spend on staplers and quite another to tell a marketer who they can or can’t work with. Not that procurement would necessarily do that, but the perception that procurement is simply a bean counter or even an unnecessary interference and a risk to the value of a supplier relationship. A further problem: once savings in the categories that might be considered ‘low-hanging fruit’ dry up, it’s these areas of spend that move into focus.
Carmen Sabatini, senior procurement director at Ciena, noted in her discussion that a distrust of the knowledge that procurement has of these areas was a key hurdle to overcome. Procurement must gain credibility with these stakeholders by bringing market intelligence and knowledge to the table, while at the same time allaying any fears about empire building.
Lack of interest from the business
An issue closely related to the first two points, Tony Roberts, director of procurement at Lafarge Tarmac, led a discussion about how to gain stakeholder support and what procurement should do to ensure that stakeholders are more engaged.
The importance of procurement speaking ‘business language’ rather than using procurement terms to help build understanding of the function across the wider business, was not lost on participants. For example, category management is a key tool for managing spend, but stakeholders don’t understand what this actually means. Conflict with stakeholders was also a delicate issue, specifically whether there should be a natural level in such relationships, and participants generally agreed that some conflict can be healthy.
"You can’t always be close to all the people all the time – you must pick your battles," said one. With these challenges in mind, spend insight, high-level relationship management skills and market intelligence were seen as vital to properly positioning the function to be able to build trust with difficult internal partners.
Find more discussions between procurement professionals around the challenges of category management and much more on Collaborate.
from Procurement Leaders Blog http://ift.tt/1IEEAAQ
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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.
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