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Category Category Management 101Management 101
Peter MorichovitisChief Procurement Officer
22 March 2012
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“…a rigorous, fact-based, end-to-end process for proactively collaborating with stakeholders to develop and implement strategies that deliver significant value from an organisation's external spend.”The Faculty
“The entire science of the procurement subject applied to a single genre of expenditure.” CIPS
Category Management:Definitions
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Procurement Processes
Plan Engage Manage
Needs Analysis
& Start-up
Category & Market Analysis
Transition ContractStart-up
Supplier Relationship Management
Contract &Performance Management
Value Discovery
SourcingStrategy
Go to Market
Requisition RFQInventory Management & Warehousing
StatusTracking
Delivery & Receipt
InvoiceReceipting PaymentCatalogue
Purchase Order *
*
If Required* If Required*
Source-to-contract process
Procure-to-pay process
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“The entire science of the procurement subject applied to a single genre of expenditure [ie. category].” CIPS
“The entire science of the procurement subject” comprises the source-to-contract and procure-to-pay processes.
“Category management is the source-to-contract and procure-to-pay processes applied to a category.”
Where does Category Management fit in?
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Source-to-Contract MethodologyPlan Engage Manage
Needs Analysis
& Start-up
Category & Market Analysis
Transition ContractStart-up
Supplier Relationship Management
Contract &Performance Management
Indentify need
Gather baseline data
Prepare concept plan
Obtain stakeholderapproval
Indentify stakeholders& establish team
Kick-offteam
Gather detailedcategory data
Conduct market &supplier analysis
Develop &distribute RFI
Develop projectplan
Finalise specification
Develop costmodel
Create evaluationcriteria
Develop &distribute RFx
Evaluate proposals& risks
Conductnegotiations
Select supplier(s)
Obtain stakeholderapproval
Develop & evaluatesourcing options
Develop sourcingstrategies
Preparebusiness case
Develop Communication plan
Obtain stakeholderapproval
Manage supplier relationship
Finalise & execute contract
Communicate & celebrate
Develop operationalplan
Transition to contractmanagement team
Conduct projectreview
Value Discovery
Conductimplementation
Conduct internal &external assessment
Manage content &supplier performance
Manage stakeholder communications
Develop supplier relationships
Manage suppliercommunications
Develop jointbusiness plan
Manage contractvariations
Review categoryperformance
Develop options & recommendations
Obtain stakeholderapproval
Manage contract end
SourcingStrategy Go to Market
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Value Drivers
Plan and Engage
Competitive Bidding
Volume Aggregation / DisaggregationSpecificationImprovement
Market & Supplier analysis
Sourcing strategydevelopment
$
Demand Management
Usage optimisation
Fit for Purpose
Policy & Culture
Approval processes
Reporting
Vendor Management
Internal Compliance
Supplier Compliance
Supplier PerformanceManagement
Supplier RelationshipManagement
Value Discovery
$ $
Source-to-Contract
Procure-to-Pay
1. Plan 2. Engage 3. Manage
1.1 Needs Analysis
& Start-up
1.2 Category & Market Analysis
2.2 Transition 3.1 ContractStart-up
3.2 Supplier Relationship Management
3.3 Contract &Performance Management
1.1.1 Indentify need
1.1.2 Gather baseline data
1.1.3 Prepare Concept Plan
1.1.4 Obtain Stakeholder
approval
1.1.5 Indentify Stake-holders and establish
Category Team
1.1.6 Kick-offCategory Team
1.2.1 Gather detailedcategory data
1.2.2 Conduct market and supplier analysis
1.2.3 Develop &distribute RFI
1.2.4 Develop Project Plan
1.2.5 Finalise Specification
1.2.6 Develop CostModel (TCO)
2.1.1 Create Evaluation criteria
2.1.2 Develop anddistribute RFx
2.1.3 Evaluate Offers and risks
2.1.4 Conductnegotiations
2.1.5 Select supplier(s)
2.1.6 Obtain Stakeholder
approval
1.3.1 Develop and Evaluate Sourcing
Options
1.3.2 Develop Sourcing Strategies
1.3.3 PrepareBusiness Case
1.3.4 Develop Communication
Plan
1.3.5 Obtain stakeholder
approval
3.2.1 Manage supplier
relationship
2.2.1 Finalise and execute Contract
2.2.2 Communicate and celebrate
2.2.3 Develop Operational Plan
2.2.4 Transition to Contract
Management Team
2.2.5 Conduct Project Review
3.4 Value Discovery
3.1.1 Conductimplementation
3.4.1 Conduct internaland external assessment
3.3.1 Manage contentand supplierperformance
3.1.2 Manage stakeholder
communications
3.1.3 Develop supplier
relationships
3.2.2 Manage supplier
communications
3.1.4 Develop JointBusiness Plan
3.3.2 Manage Contract Variations
3.3.3 Review category
performance
3.4.2 Develop Options and
Recommendations
3.4.3 Obtain stakeholder
approval
3.4.4 Manage Contract end
1.3 SourcingStrategy
2.1 Go to Market
GCCC
CATEGORY MGMT
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Example: ICT Categories1. Telecommunication services
– Mobiles, Fixed Telephony, Transmission networks (including submarine and optic fibre ), microwave, radio networks, satellite services
2. Managed network services– Data Centre services, hosted services ( SaaS and/or IaaS), Co-lo facilities
3. Software– Enterprise applications, operating systems, client applications, licensing
4. Infrastructure– Desktop/Notebooks/Servers, mainframes, on-site storage, disaster recovery
infrastructure, WAN\LAN network elements (routers, firewalls, aggregation devices, accelerators)
5. ICT Professional– Subject matter experts and IT contractors\consultants, project managers,
network engineers, software developers, technical support, IT service/helpdesk operators
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Category Manager:The Perfect Skill Set
CIPSA White Paper 2011 – “How to match the right Category Managers to the right categories”
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Relative importance of Category Management attributes
The Faculty Research 2011
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Questions?
