Spotlight on Procurement: How does Category Management ......1. Internal Relationship Quality: Procurement team has very close and collaborative working relationships with the business,

Spotlight on Procurement:

How does Category Management Leadership unlock 49% –111% morevalue by transforming the partnership between procurement, businessand suppliers?

The 2014 - 15 Category Management Leadership Report

A Research Collaboration With Henley Business School, University of Reading

2© Copyright 2015, Future Purchasing Consulting Limited, All rights reserved.

Category Management Survey 2014 - 15 | Overview

Contents Page

About the Research 3

Executive Summary 4

Defining Category Management 6

The benefit of Category Management and the value levers that deliver it 7

Survey Structure 8

0. Overview 9

1. Build 16

2. Learn 27

3. Lead 37

4. Apply 42

5. Deliver 50

Summary 58

Ten Summary Recommendations from the Category Management Survey 59

Respondent Profiles 60

Specific ways that FP can help you to achieve Category Management leadership 61

Future Purchasing’s focus on Category Management leadership 62

About Future Purchasing 63

Contact Information 64

Index



Welcome to our 2014-15 Category Management Leadership Report. This is the

second report that we have produced in this series and we would like to thank the 352 individuals that took the time to complete the on-line survey that provides the basis for this research.

As previously, our research objectives are to identify the specific best practices that make the biggest difference to Category Management success, the extent to

which they are used and the additional value secured through their use. We also identify practical recommendations to help organisations execute each of the best practices identified and transform their Category Management capability.

This report has been produced in collaboration with Marc Day, Professor of Strategy and Operations Management at Henley Business School, University of

Reading. The survey questions were again designed around our five building blocks of Category Management: Build, Learn, Lead, Apply and Deliver. However, the question structures and analysis methodologies employed this time have been significantly strengthened thanks to Marc’s input. A new feature we have added to the report is the Category Management Performance Index -

which we have used to confirm the best practices that have most impact on organisation performance.

Encouragingly, the survey reveals that all respondents believe that optimising Category Management will deliver substantial value for their organisation –boosting current value delivery levels by 49% for leading organisations and up to

111% for the majority of respondents. We hope that the insights and recommendations in this report will help more organisations to achieve Category Management leadership.

About the Research

Introduction & Background Survey Respondents

Figure 1

Mark WebbManaging Director,

Future Purchasing

Simon BrownDirector,

Future Purchasing

Marc DayProf essor of Strategy & Operations

Management, Henley Business

School, Univ ersity of Reading

17% 69% 14%

350+15

North America Europe Rest of the world

Industry

SectorsOrganisations

The survey confirms that Category Management is the core process for most Procurement teams, yet there is perhaps still an unwillingness to fully embrace it in the procurement community, as well as stakeholders.

“Lean” communicates the benefit of the activity in one motivating word. In comparison, Category Management sounds relatively mundane, uninspiring and concerned with maintaining the status quo - consistent with the definition of management by Harvard University’s John Kotter: “Management is a set of processes that keep an organisation functioning. They make it work today…”

In the survey, Category Management as implemented by leading teams is more aligned with Kotter’s definition of leadership: “It is about aligning people to the vision, that means buy-in and communication, motivation and inspiration”. It is about transforming the way the category is driven in the future.

In our view, the label “Category Leadership” more accurately communicates the power that optimised Category Management delivers at the category level.

Category Management or Category Leadership?



The report is structured around an overview section and the five building blocks of Category

Management that we first defined in 2008. The 2014-15 findings confirm that each of these building blocks needs focus in order to achieve Category Management leadership.

LEARN

Executive Summary (1/2)

Three quarters of respondents identified Category Management as a “top three priority” for

their Procurement team. However, only 26% of respondents identified themselves as Category Management Leaders, with 74% rating themselves as Followers. Only 20% of all respondents have category strategies in place for more than 75% of their spend - a key indicator of whether Category Management is embedded. These numbers are consistent with the 2012-13 survey and confirm that whilst the importance of Category Management is

recognised, most organisations have in reality only partly embedded it. It is also worth highlighting that both Category Management Leaders and Followers believed that optimising Category Management would provide an additional 4.1% savings.

Category Management

is a top 3 priority for Procurement

Category Management is

embedded or optimised

26%

The creation of a standard process and toolkit that teams can flexibly apply to develop and

implement category strategies is the foundation of Category Management. The research proves that 87% of Leaders have made it their “one-way-of working” and they continually use it to drive and shape their day-to-day activities. They have also aligned it with organisational objectives and related business processes. Perhaps the most critical differentiator is that 79% of Leaders believe that their Category Management approach

identifies all value opportunities, not just volume consolidation and competitive leverage. This compares with only 43% of Followers and indicates the scale of hidden value that most organisations are missing.

Developing the Category Management skills of the Procurement team and business

stakeholders is given much more focus by Leaders. However, only 53% of Leaders and 35% of Followers believe that the full range of Category Management skills are well embedded. In addition, only 44% of Leaders and 21% of Followers rated their formal training as excellent. The main skills trained are Supplier Management, negotiation and behavioural skills. Leaders recognise the importance of awareness building with

stakeholders and 85% of them, compared with 33% of Followers, felt that their efforts were well received. In summary, the survey proves that leading organisations have benefited from designing and implementing a well thought through blended learning strategy.

Followers identify less

than half of available category value

Leaders make Category

Management their “one way of working”

Leaders strive to embed

Category Management skills

Less than a quarter of

Followers rate their training as excellent

BUILD

OVERVIEW

Survey Headlines

75%

87%

43%

53%

21%



Summary findings for the building blocks Lead, Apply and Deliver are detailed below.

Executive Summary (2/2)

Getting the governance and operating model right, together with securing real commitment

from business stakeholders is crucial for Category Management success. Clarifying roles and responsibilities is central to any operating model and the survey results show that 69% of Category Management Leaders have achieved this, compared with 24% of Followers. At the category level, driving change requires business support to help build consensus and navigate resistance. To help achieve this, 95% of Leaders recruit category sponsors from

the business with the support of senior executives and a compelling internal sales pitch. In general, the support from senior management is greater in leading organisations and joint objectives and delivery accountability are practical key levers to achieve this.

Leaders have clear roles

and responsibilities for category managers &

stakeholders

Followers struggle to

recruit supportive category sponsors

38%

An acid test for Category Management success is how well category managers can apply

the process. The survey demonstrates that this is a major competency gap for most organisations, with only 22% of Followers believing that they are excellent at applying the process, compared with 80% of Leaders. This issue is exacerbated by the fact that only 51% of Leaders and 27% of Followers have sufficient time for Category Management. Time availability from cross-functional team members is even more limited with only 17%

of Leaders and 16% of Followers reporting it as sufficient. Again, making Category Management a business process, rather than Procurement alone, by having joint objectives and joint accountability for delivery is one way to drive improvement in this area.

Few Followers believe

they are excellent at applying the Category

Management process

Even Leaders suffer from

insufficient time from stakeholders

APPLY

LEAD

Survey Headlines

69%

17%

22%

DELIVER The partly embedded status of Category Management is further evidenced by the fact that

only 57% of Leaders and 13% of Followers believe that their category strategies are excellent. As a result, there is a huge amount of hidden value available to all organisations. Leaders report average savings delivered from Category Management at 8.3%, although they believe additional savings of 4.1% are available by optimising Category Management -boosting current delivery by 49%. Followers report average savings delivered at 5.9% and

also believe that additional savings of 4.1% are available by optimising Category Management. Closing the performance gap with Leaders and achieving the additional savings that they have identified would boost their current savings by 111%.

More than half of Leaders

have excellent category strategies

Followers can more than

double their savings rate

57%

111%



Defining Category Management

What is Category Management? How is it Different From Traditional Sourcing?

Category Management is the strategic end-to-end process for buying goods and

services and managing suppliers that aligns business goals and requirements with supply market capability. It transforms the long-term value achieved from an organisation’s total supplier spend and results in reduced cost, reduced risk, improved service and improved revenue. It has great potential to deliver value beyond traditional Sourcing approaches by building greater alignment with

stakeholder requirements and creating long term strategies for managing spend.

An integrated approach to Category Management includes:

1. Strategic Sourcing: Development and implementation of sub-category level strategies using tools that can be also be used on a day-to-day basis.

2. Category Planning: Alignment with stakeholder priorities and annual

planning of Sourcing & Supplier Management projects.

3. Supplier Management: Management of supplier performance, ongoing value improvement and supplier relationship quality.

The checklist below summarises ten features of Category Management that

differentiate it from traditional Sourcing and Supplier Management.

1. Internal Relationship Quality: Procurement team has very close and collaborative working relationships with the business, is perceived as a trusted commercial advisor and as a result influences all supplier spend.

2. End-to-End Process: Category Planning, Strategic Sourcing and Supplier Management activities are integrated in a simple, but balanced, model that summarises how strategies are created and suppliers sourced and managed.

3. Cross-Functional Approach: Team working with business stakeholders at the category and supplier level is used in order to understand requirements, influence all cost drivers, identify opportunities and agree joint strategies.

4. Governance: Tailored governance structures are established at the programme, category and supplier level to provide direction, guidance, challenge and problem resolution for category and supplier teams.

5. Business Sponsorship: Each important category team or supplier

relationship benefits from an executive sponsor that provides objectives and direction, helps drive internal change and generate business commitment.

6. Early Engagement: Category managers are fully aligned with business

activities and influence key cost drivers before they are locked-in e.g. specifications, demand patterns, use of competition etc.

7. Supply Market Engagement: Supplier engagement during strategy creation

and at reviews allows suppliers to share knowledge and experience from other customers and provides an opportunity to validate more radical ideas.

8. Comprehensive Value Delivery: All value levers are systematically reviewed to generate the maximum number of potential improvement

opportunities - reducing cost, reducing risk or increasing business revenues.

9. Documented Strategy: Findings, improvement ideas and key choices made are summarised in 1-3 year category and supplier strategies that are formally

approved. Strategies are professionally implemented and results measured.

10. Supplier Relationships: Strong supplier relationships are developed and preferred customer status awarded by key suppliers, performance to contract

commitments achieved as standard and additional value delivered.

STRATEGIC

SOURCING

CATEGORY

PLANNING

SUPPLIER

MANAGEMENT

2

1

4

3

5

2

1

3

2

1

4

3

5

Initiate Project

Research & Analyse

Develop Strategy

Implement Strategy

Implement Contract

3

2 4

51

123

5

4

3

2

1

Review Benefits

Engage Business

Prioritise Projects

Initiate Supplier Management

Analyse Supply

Develop Supplier Strategy

Engage Supplier

Review Supplier Relationship

Figure 2:FP’s Category Management Model



The benefit of Category Management and the value levers that deliver it

The Value of Category Management The Six Types of Value and 15 Value Levers

Identifying and implementing value opportunities is the key outcome of

Category Management. This is what engages and motivates stakeholders and it raises a common issue for Procurement teams –creating a shared “value” language for Category Management that describes what has been achieved in terms relevant to stakeholders.

The framework in Figure 3 shows six types of business value that

Category Management can deliver along with 15 high level value levers that can be systematically applied to create this value:

• Price-Attack Value reduces prices paid through the use of value levers such as demanding ad-hoc price reductions and rebates, eliminating penalty payment etc. These are tactical and short-term

approaches that are only available to organisations with power.

• Price-Down Value reduces prices through value levers such as aligning prices across purchase points, consolidating volumes across regions and categories and maximising competitive tension. These levers are valuable, but are likely to be exhausted quickly.

• Cost-Down Value reduces fundamental cost drivers and has a more significant impact on costs. Value levers such as sharing forecast data, bundling requirements, standardising specifications and reducing whole life costs can produce major cost benefits.

• Cost-Out Value removes specific cost elements and is achieved by

using value levers such as improving production processes and the supply chain, reducing inventory and capital spend requirements. These value levers produce step-change impact on costs.

• Revenue-Up Value is about using suppliers to impact organisation revenues. Value levers such as improving product/service quality,

reducing time-to-market and proprietary access to key technologies are used. These value levers require close stakeholder working.

• Risk-Down Value reduces the supply risk that the organisation is exposed to. Value levers used include improvements to assurance of supply, conformance to specifications and substitution options.

Risk- down value has the greatest potential impact on performance.

Figure 3

Capability & CollaborationHIGH

1

11

6

5

8

10

3

4

12

7

13

14

15

Price-

Attack

Cost-DownPrice-Down Cost-Out Revenue-

Up

Risk-Down

SupplyRisk

Reputation Risk

CommercialRisk

PriceBench-marking & Levelling

Competitive Leverage

Volume Consolidation

Cost and Remuneration

ModelAnalysis

DemandManagement

SpecificationOptimisation

NegotiationPower

SupplierIntegration

SupplyMarket

Controlof Critical

Assets

Restructuring & Managing Key

Relationships

New ProductDevelopment and

Innovation Capture

9

Outsourcing, Offshoring

LCCS

Price-

Attack

Cost-

Down

Price-

Down

Cost-

Out

Revenue

- Up

Risk-

Down

Business value / impact

Bu

sin

es

s v

alu

e /

imp

act

Low

2

High

High

Capability & Collaboration

HIGH



Survey Structure

From the experience of implementing over 50 Category Management projects, the Future Purchasing team has identified five building blocks

and 100 success factors that ensure Category Management is successfully embedded. The survey was organised around these five building blocks and we have used the same overall structure for this report:

Example Success Factors

BUILD

LEARN

LEAD

APPLY

DELIVER

….. is the physical design, creation and continuous improvement of a

practical Category Management process and toolkit.

….. is strengthening the technical and behavioural Category

Management skills for Procurement teams and their business partners.

….. is the agreed governance and operating model approach that

embeds Category Management.

….. is the practical running of a Category Management programme

covering all projects underway across an organisation.

….. is the end results produced by the Category Management activities

and assessed through a range of metrics.

• Vision for Category Management adoption

• Close alignment with business goals• Category Management is the “one-way-of-working”

1

• Business unit briefings for top executives

• 70:20:10 blended learning approaches used• ‘On the job’ learning experiences formally planned

• Roles and responsibilities are clear

• Senior stakeholders act as sponsors• Middle management support Category Management

• Stakeholders have time for Category Management

• Category managers can apply the process well• Online project tracking and monitoring

• 80% of spend is covered by category strategies

• Stakeholders are jointly accountable for delivery• All value levers are assessed for each category

2

3

4

5

The five building blocks that ensure Category Management leadership


4:Apply


…

Structure of the Category Management Survey

Consistent with the previous survey, we have used the maturity responses

to divide respondents into ”Leaders” and “Followers”. This Leaders/

Followers segmentation has been used to analyse subsequent questions

and separate the results for the two groups. This approach has allowed us

to confirm that the outcomes and practices of the “Leaders” are

substantially different from the “Followers”.

In this section of the report we have also included three summary

analyses derived from more detailed findings contained in the report:

Seven priority practices that drive Category Management performance.

Category Management capability ranking by industry sector.

Additional value available by optimising Category Management.

Why is the Overview Section important?

The overview section allowed respondents to provide their insight on how

Category Management was set-up and performing in their organisation.

It also identifies the most important best practices for driving Category

Management performance and the relative capability of each industry

sector.

This information can be used to quickly benchmark any company’s

Category Management capability and performance. Benchmarking can

be undertaken against Category Management Leaders and at an industry

sector level.

Overview

Key takeaways

Category Management is far from being fully adopted as many

organisations still focus on RFPs, negotiation contracts.

Category Management remains a top 3 priority for most

Procurement teams.

Very few respondents have most of their spend covered by

category strategies.

Category Management performance is 4x greater for Leaders

than Followers.

Conclusions and RecommendationsFindings and Commentary

10


© Copyright 2015, Future Purchasing Consulting Limited, All rights reserved.

Conclusions

As with the 2012-13 survey, three quarters of respondents feel that their Category Management approach has not reached the embedded maturity level. This confirms that for most organisations Category Management is far from being fully adopted. For many organisations the focus is on RFPs and

negotiation, with only a few supportive stakeholders and limited availability of training and tools.

Respondents categorising themselves as Not Started, Basic or Improving were grouped together as “Followers” (74%). Those categorised themselves as Embedded or Optimised were grouped together as “Leaders” (26%). This two

level categorisation has been used to analyse subsequent questions so that we could establish whether the practices and outcomes of the “Leaders” were substantially different from the “Followers”.

Recommendations

Future Purchasing has identified five building blocks that ensure Category Management is successfully adopted and optimised by an organisation. At a

summary level these are:

Build – design a business aligned Category Management process and toolkit.

Learn – educate the team and stakeholders in the process and toolkit.

Lead – set up a suitable sponsorship and governance structure.

Apply – use structured programme management to drive progress.

Deliver – define measures of success and use to demonstrate value secured.

The first step is to systematically review each of the building blocks and develop a checklist of potential improvement topics. For each topic, current performance and desired performance 12 months out should be established by the Procurement leadership team. Priority topics should be identified.

The priority topics should be turned into a Category Management improvement plan. This should be supported with a business case that identifies the incremental value delivery targeted, along with the investment required.

Overview

At the front end of the survey we requested respondents to categorise their Category Management maturity according to the following groupings:

Not Started: No Category Management process exists. No toolkits or training.

Basic: No standardised approach to category strategy creation and implementation. Toolkits and training are limited and inconsistent. Stakeholders uninterested in concept. Focus is on negotiation with suppliers.

Improving: Some standardisation around approach to category strategy creation and implementation. Efforts have been made to standardise toolkits and training. A few stakeholders supportive. RFPs and negotiation take precedence over strategy creation.

Embedded: Full standardisation around approach to category strategy creation and implementation. Toolkits and training consistently available. Most stakeholders supportive – including Procurement line management. Category strategies given same focus as RFPs and negotiation.

Optimised: Full process and training standardisation. All stakeholders (including executives) fully supportive. Category Management is a real competence of the organisation. Category strategies reviewed and approved by business executives.

0%

10%

20%

30%

40%

50%

Not Started Basic Improving Embedded Optimized

Figure 4

0.1 How would you summarise the maturity of Category Management in your organisation?

Only 25% of respondents said they had embedded or optimised Category Management

Q

FollowersLeaders


11



Conclusions

Category Management remains a top priority for the majority of organisations. This is perhaps unsurprising given that only 5% of respondents claim to have fully optimised their approach. All teams recognise that further value is available, although the results suggest that Leaders recognise the opportunity to a greater

extent and are more focused on delivering it.

Recommendations

The five activities below will help to establish Category Management as a Top 3 priority for Procurement:

1. Create a vision, strategy and business case

• Clear vision and pragmatic change plan for enterprise-wide adoption of

Category Management.

• Credible business case with high return on investment.

2. Secure senior executive support and sponsorship

• Highly visible approach with well publicised executive sponsorship and associated mandate to act. Closely connected to business leaders.

• Readiness to act as sponsors of major categories.

3. Align with business strategy and planning processes

• Integration of Category Management with strategy and business planning cycle.

• Category Management explicitly aligned to related business initiatives.

4. Develop investment plan and resource allocation

• Fully approved investment plan covering talent development, resource levels, process adoption in-line with an overall ROI & benefit delivery plan.

5. Develop the team

• High quality Procurement leadership with positive role models.

• Up-skilling of Procurement teams via education and targeted coaching.

• On-going development of category managers via category projects.

Overview

As in the 2012-13 survey, one of our first questions was to confirm the relative importance of Category Management for each organisation. Consistent with the last survey, Category Management remains a key focus area with 75% of all Procurement teams making it a top 3 priority.

Overall, 84% of Leaders and 72% of Followers agreed or strongly agreed that it is a top 3 priority. The major difference between the two groups is the split across the strongly agree and agree categories. 63% of Leaders strongly

agree, compared with 28% of Followers and 21% of Leaders agree, compared with 44% of Followers.

0%

10%

20%

30%

40%

50%

60%

70%

Strongly

Disagree

Disagree Neither Agree

or Disagree

Agree Strongly

Agree

Leaders FollowersFigure 5

0.2 Category Management is a top 3 priority for our Procurement team in 2014

Category Management is a key focus area for 75% of Procurement teams

Q


12



Conclusions

Documented category strategies are key indicators that Category Management is embedded in an organisation. They are a tangible demonstration that spend is being managed in a controlled way and that attempts are being made to maximise value from supplier spend. Without a category strategy there is no

single document that details all category details such as category objectives, spend segmentation, internal business requirements, supply market dynamics, supply base performance, or available strategic options.

It is a reflection of the immature state of Category Management that only 30% of Leaders and 16% of Followers have more than 75% of their external spend

covered by category strategies. Leaders are also more likely to formally measure and report the percentage of spend covered by category strategies.

Recommendations

The five key activities below will drive up the value of spend covered by category strategies:

1. Spend Segmentation: Properly analyse and segment supplier spend into

discrete categories and sub-categories that reflect supply markets and internal business requirements. Prioritise the high spend categories.

2. Annual Category Planning: Consult with business stakeholders and jointly agree priority categories to increase their level of support and commitment to creating the strategy with cross-functional expertise.

3. Resource Allocation: Dedicate category manager time to strategy creation and ensure that regular progress is being made. Provide coaching support where there are early signs of slow progress.

4. Process Flexibility: Apply Category Management flexibly to match the situation - from light touch documentation of tactical categories through to full

cross-functional working and detailed strategies for complex spend.

5. Benefits Delivered: Publicise success stories to encourage commitment from sceptical stakeholders and Procurement staff. Emphasise all value delivered e.g. innovation captured, risk reduced as well as costs reduced.

Overview

A key performance indicator that reveals how well Category Management has been adopted by an organisation is the proportion of spend covered by category strategies. This measure is also one of the three metrics we have used in this study to calculate Category Management performance.

The survey shows that 71% of Leaders have category strategies in place for more than 50% of their supplier spend. The number reported in the 2012-13 survey was 76%, indicating a slight fall in category strategy coverage for Leaders over the past two years.

There is a significant difference with Followers, where only 39% have at least 50% of their spend covered by category strategies. However, this number has increased from 24% in the 2012-13 survey, suggesting a major focus on strategy creation for Followers over the past two years.

0%

10%

20%

30%

40%

50%

0% 1% - 24% 25% - 49% 50% - 74% 75% - 100%


0.3 The percentage of external spend covered by formal Category Strategies is?

71% of Leaders have category strategies for >50% of spend

Q


13



100

200

300

400

Not Started Basic Improving Embedded Optimised

The Category Management Performance Index has been calculated by combining the scores for three questions in the survey:

• Percentage of spend covered by Category Management.

• Percentage of Category Management projects reliably delivering to time.

• Strength of support for Category Management from the business's top management team.

Factor analysis was initially applied to eight questions that were perceived to measure the performance outcomes of successful Category Management. These questions were then tested to identify which had the strongest relationship with overall organisation performance - leading to the three above being shortlisted to create the Category Management Performance Index. All of the other survey questions were then tested against this index to identify the priority best practices that had most impact.

Conclusions

The top factors that drive Category Management performance are the priority areas that should be considered when building or refreshing a Category Management approach. Organisations operating at the ‘optimised’ level for these practices deliver Category Management performance 3-4x greater than those at

the ‘not started’ level. Although the performance gap is most significant for these top seven practices, there is typically a 100%+ Category Management improvement opportunity for all practices.

Recommendations

1. Continual improvement to Category Management process

Recommendation: Appoint a process owner and champions throughout the organisation. Ensure all improvements are captured and built into the process.

2. Category Management awareness sessions for stakeholders

Recommendation: Run sessions focused on role and needs of stakeholders. Include training for cross-functional team members in all projects.

3. Strong stakeholder support for Category Management

Recommendation: Understand stakeholder priorities and align Category Management. Assign Category Management objectives to stakeholders.

4. Formal Category Management objectives for category managers

Recommendation: Ensure cross functional working and creation and implementation of category strategies is included within objectives.

5. Quality of category strategies

Recommendation: Provide reference examples to demonstrate what good looks like. Provide coaching support to help category managers in first phase.

6. Central visibility of progress and performance across category projects

Recommendation: Use an online hub to track all projects. Use a standard structure and include all activity from strategy creation through to negotiations.

7. Alignment of Category Management with broader strategic objectives

Recommendation: Make explicit linkage between the Category Management strategy and business/functional strategies and plans.

Overview

Figure 7

0.4 What are the priority best practices identified by the survey?C

ate

go

ry M

an

agem

ent

Pe

rfo

rmance In

dex

Continual improvement to Category Management process

Category Management aw areness sessions for stakeholders

Strong stakeholder support for Category Management

Formal Category Management objectives for category managers

Quality of category strategies

Central visibility of progress and performance across category projects

Alignment of Category Management w ith broader strategic objectives

Category Management performance is up to 4x greater for Leaders compared with Followers

Q


14



Category Management capability has been calculated by combining the scores for all questions in the survey, except those three used to define Category Management performance (see page 13).

In Figure 7, the sectors have been arranged in order of their mean Category Management Capability. In most sectors there is a broad range of capabilities.

The three sectors reporting the highest mean capability in Category Management are Hotels & Leisure, Construction & Property and Manufacturing & Industrials.

The three sectors reporting the lowest mean capability in Category Management are Public Sector, Media & Marketing and Support Services.

Conclusions

The results show that no sector has a mean score at the “Optimised” or “Embedded” capability levels. All sectors have a mean score at the “Improving” capability level, apart from Support Services which is “Basic”. No sectors stand out as having a much greater Category Management capability. This reflects our

consulting experience, where we often see significant capability variation across different categories and geographies even in the same organisation.

Recommendations

A structured and detailed benchmarking of Category Management capability is a

worthwhile investment for organisations looking to strengthen their Category Management approach.

1. Sector Benchmarking: Comparison of Category Management capability with sector peers will provide insight and valuable comparisons. These comparisons will typically be of interest to executive stakeholders and can be

a useful lever to obtain resource and organisational focus.

2. Cross-Sector Benchmarking: Comparison with cross-sector Category Management Leaders will provide a wider understanding of the latest best practice being deployed. Although likely to be of less interest to executive stakeholders, this can help to identify a wide range of improvement

opportunities that can be adopted.

A quantitative approach to benchmarking provides metrics and a credible empirical basis for cost and benefit projections. Wherever possible, this approach should be supplemented with face-to-face meetings. These provide an opportunity to identify key learnings on the “how” as well as “what” of Category

Management improvement programmes. These discussions will identify any issues that were resolved or still remain along with key risks identified –providing a rich source of ideas for strengthening an improvement programme.

Ideally meetings should be held with the overall process champion for Category Management as well as practitioners that apply the process on a regular basis.

Overview

Figure 8

0.5 Which industry sectors have the best Category Management capability?

Category Management capability varies across sectors with Hotels & Leisure at the top and Support Services at the bottom

Q


15



Conclusions

The survey respondents are very clear - Category Management is not fully optimised in any organisation. There is a lot more value available to both the Leaders and Followers, with the potential to boost current saving rates by 49%-111%.

This is not surprising given that whenever a new CPO joins an organisation there is a business case created for more savings and other value delivery. The opportunity exists largely because Category Management has not been optimised. In many organisations a formal Category Management process exists, however it is not embedded in the organisation and category managers

spend most of their time on traditional procurement activities such as competitive Sourcing, negotiation and contracting. These are necessary and valuable tasks, but cannot alone deliver the full value that Category Management is capable of.

Recommendations

The recommendation is straightforward – develop a tailored plan to embed Category Management in your organisation. Key features should be:

1. Consider each of the five building blocks: This report is structured around the five key building blocks of BUILD, LEARN, LEAD, APPLY and DELIVER. Use the detailed topics and findings within each section to identify the most

important elements of a Category Management implementation plan for your organisation.

2. Be honest about the current situation: Category Management is not as well embedded as most organisations would like – or admit to. Be honest in your assessment of the current performance so that you can address the

issues that will genuinely move Category Management forward. This

3. Recognise that this is a transformation initiative: Embedding Category Management involves changes to current ways of working and good change management practices should be adopted. This includes forming design/ implementation teams with category manager representation, getting new

approaches approved by the leadership team and communicating constantly.

Overview

Category Management Leaders report average savings delivered from Category Management at 8.3%, compared with an average of 5.9% reported by Followers. Leaders therefore deliver 40% more savings than Followers.

Both Leaders and Followers believe that optimising their current approaches to Category Management will deliver additional savings beyond current levels. Leaders expect a 4.1% increase to current levels – increasing the total savings rate to 12.4% and boosting current performance by 49%.

If the Followers were to achieve the 12.4% potential savings rate identified by the Leaders, this would boost their current performance by 111%.

For Leaders, securing this increase would deliver an additional €86m based on the average respondent spend of €2,100m. For Followers, securing this increase would deliver an additional €137m using the same average spend.

0%

2%

4%

6%

8%

10%

12%

14%

Followers Leaders

Current Savings Rate Optimised Category Management Savings RateFigure 9

0.6 What additional value is available by optimising Category Management?Q

Leaders could increase savings by 49% by optimising Category Management, compared with a 111% increase for Followers

111% Increase to Current Sav ings

49% Increase to Current Sav ings


4:Apply

Category Management Survey 2014 - 15 | Build

…

The best Category Management processes actively promote stakeholder

engagement and the identification of opportunities, whilst making strategy

document completion easy and value adding. Leading organisations invest

time and resources to build a “fit-for-purpose” process that is aligned to the

ways of working, language and culture of the organisation. Some of the

key success factors for BUILD include:

• Aligning Category Management processes with broader organisation

goals and key initiatives.

• Building the processes with clarity of vision and coverage of the key

processes of Sourcing, Supplier Management and Category Planning.

• Developing a full range of tools and templates that are visually

appealing, brand compliant and easy to use to encourage engagement.

• Making the processes easily accessible, ideally through an on-line

system that promotes collaborative cross-functional activity.

Why is BUILD important?

What is BUILD?

BUILD is the physical design, creation and continuous improvement of a

practical Category Management process and toolkit. Processes typically

include Steps that outline the key activities in scope; Guides that detail how

to complete key activities; and Templates that ensure key activities are

documented easily and consistently by category managers. Processes are

best developed using a representative design team from across the

Procurement function.

Build

Key takeaways

Make essential elements of Category Management compulsory

e.g. project charter, business requirements, portfolio analysis.

Make Category Management the “one way of working” across

Procurement to drive more consistency in approach.

Align Category Management objectives with corporate

objectives to improve business performance by up to 200%.

Use a value lever model to systematically identify as many

value opportunities as possible.


17



0% 10% 20% 30% 40% 50% 60% 70% 80%

None / Don’t know

Post contract supplier management

Joint plan of activities with stakeholders

Forming cross-functional teams

Gathering internal & external category data

Creating category strategies

Implementing category strategies

Leaders Followers

Build

Category Management processes can be developed to harmonise a wide

range of tasks carried out by Procurement teams - from joint annual planning of Sourcing and Supplier Management activities with stakeholders, cross-functional team formation, category data gathering, strategy creation and implementation.

Creating and implementing category strategies based on data specifically

gathered is the top focus for both Leaders and Followers. For all activities, Leaders are more likely to cover them through their Category Management process. The activities where there is the largest gap between Leaders and Followers are:

• Developing an annual plan of Sourcing and Supplier Management activities

with stakeholders: 68% of Leaders vs 40% of Followers.

• Post-contract Supplier Management: 66% of Leaders vs 39% of Followers.

• Forming a cross-functional team: 69% of Leaders vs 47% of Followers.

• Implementing a category strategy: 77% of Leaders vs 57% of Followers.

Conclusions

Simply creating a category strategy is not enough to ensure success. Leaders are more likely to extend the scope of their Category Management process and provide explicit guidance on related activities.

By developing formal annual plans of sub-category Sourcing and Supplier

Management activity with stakeholder groups they ensure support and resource commitment for these teams.

Providing explicit guidance on setting-up cross-functional teams with stakeholders helps equip category managers to succeed with this critical task.

Leaders see the development of category strategies as a tool to achieve the

desired transformation, not as an end in themselves.

Recommendations

The five key best practices below will boost the effectiveness of the Category Management process deployed:

1. Supplier Management: Integrate Supplier Management into the overall Category Management process. This allows the linkages and dependencies between Category and Supplier Management to be identified and managed.

2. Annual Category Planning: In addition to traditional category strategies

(usually developed at the sub-category level to make them implementable), develop a process to identify and agree priority projects with stakeholders.

3. Working with Stakeholders: Provide practical “how-to” advice to category managers on establishing and managing cross-functional teams. These are required to develop category strategies and share ownership of objectives.

4. Focus on Implementation: Define implementation activities such as supplier selection, negotiation and contracting as well as driving internal change –which is often a requirement for breakthrough delivery.

5. Review, Learn and Improve: Capture all lessons learned from all category projects and supplier relationships. These should be shared across the team

and used to drive continuous improvement plans.

1.1 What activities does your Category Management process cover?

Figure 10

Category Management processes used by Leaders integrate a broader range of activities than those of Followers

Q


18



0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree

Neither Agree or Disagree

Agree

Strongly Agree

Leaders Followers Conclusions

Category Management has never been embedded in an organisation through exhortation only and there are many examples of toolkits “sat-on-the-shelf” gathering dust. However, the approach to mandating specific activities and outputs must be customised to the environment in each organisation.

A simple unambiguous framework or structured way of working with firm leadership commitment makes adopting Category Management straightforward for Procurement and stakeholders. Leaders have documented their mandated steps in a Procurement policy that is supported with compliance measurement and defined consequence management.

Where there is no framework or leadership commitment to a Category Management way of working, there is always going to be limited adoption of the approach and coverage of the total spend.

Recommendations

Before identifying which activities and outputs should be mandated it is necessary to design a process modulation approach. Process modulation ensures that the toolkit is applied flexibly and therefore perceived as relevant for all categories. Only the most complex categories are subjected to the full range of Category Management tools and techniques.

Modulating the process results in simple categories having a fewer number of mandatory activities and outputs compared with complex categories. Modulation criteria that can be applied consistently across the categories need to be identified and agreed. Typical criteria that could be considered include:

Spend

Geographic scope Stakeholder complexity Supply market complexity Business impact Size of opportunity

Clarity of requirements

Build

There is a gap between Leaders and Followers in terms of their willingness to

mandate some of their Category Management activities, with 87% of Leaders versus 62% of Followers strongly agreeing or agreeing that they make some of their process mandatory.

None of the Leaders disagreed with the statement that they make some of their process mandatory, compared with 20% of Followers.

Given the performance gap between Leaders and Followers, there appears to be a real benefit in making essential elements of Category Management compulsory.

In the 2012-13 survey, 98% of Leaders and 53% of Followers strongly agreed or agreed that they made some of their process mandatory. This demonstrates

that over the past two years the levels of mandation used by Leaders has decreased, whilst Followers have remained broadly consistent.

Figure 11

1.2 Some of the activities in our Category Management process are mandatory

87% of Leaders, versus 62% of Followers, mandate parts of their Category Management process

Q


19



0% 10% 20% 30% 40% 50% 60% 70%

Strongly Disagree

Disagree


Agree

Strongly Agree


Category Management is the core way of working for most Procurement teams. It provides the foundation for all Procurement activity by defining key tasks and how they will be undertaken. It provides a common language and ensures thata consistent approach is deployed to deliver value to from supplier spend.

Hence, it is essential that the organisation understands the fundamental Procurement approach being used. Procurement teams without this clarity work in unreliable ways, struggle with credibility and deliver limited value.

Recommendations

Leaders make Category Management their ‘one way of working’ by driving all activity through a single Category Management structure. The specific details will always be bespoke to an organisation and dependent on factors such as size, geographies, consistency of business operations, categories in scope etc. However, the structure should include a number of capabilities that are

consistently defined such as:

1. Business Alignment & Stakeholder Engagement• Procurement objectives, targets and measures.• Governance, reporting and reviews.

2. Structure, Governance & Operating Model• Defined roles & responsibilities for Procurement.• Matrix organisations structures and role descriptions.

3. Leadership, People & Team Strength• Objectives, targets and measures.

• Competency structures and education provision.

4. Process Excellence and Technology• Spend category naming conventions and hierarchies.• Savings measurement process.

5. Category and Supplier Value Management

• Category Management toolkit.• Supplier Management toolkit.

Build

Overall, only 12% of total respondents strongly agreed that Category

Management was the ‘one way of working’ for their Procurement team.

Leaders have clearly made significant progress in this area, with 87% agreeing to some extent that it is their ‘one way of working’. Only 39% of Followers share the same positive perspective, with 35% of Followers disagreeing with the statement.

In the 2012-13 survey, 92% of Leaders and 46% of Followers felt that Category Management was the ‘one way of working’ for their Procurement team. This suggests that over the past two years there has been a slight drop in how well embedded Category Management is across all organisations.

Figure 12

1.3 Category Management is the "one way of working" for Procurement activity

87% of Leaders, versus 39% of Followers, see Category Management as the “one way of working” for Procurement

Q


20



Conclusions

The survey demonstrates that success in Category Management does not occur when Procurement teams work in isolation. The most successful teams have explicitly aligned their Category Management approach with their organisation’s strategic business objectives.

Strategic business objectives should be analysed to identify where they can be supported and delivered by Category Management and the Procurement team.

Leaders establish a two-way relationship between Procurement teams and business stakeholders when setting and managing objectives. In addition to aligning with business objectives, Procurement teams contribute to the business

strategy and objective setting process.

Recommendations

Five key steps to align Category Management with broader strategic objectives:

1. Integration With Business Strategy & Budget Planning Processes: Align

the Procurement team’s timetable of annual Category Planning activities and objective setting with the strategy/budgeting timing of stakeholders.

2. Account Manage Key Business Units: Assign senior members of the Procurement team to manage key stakeholder groups. Ensure regular dialogue is undertaken to understand key issues and initiatives planned.

3. Analyse Formal Objectives: Systematically review organisational and business unit strategic objectives and identify the implications for the Procurement team at the functional and individual category levels.

4. Document Procurement Objectives: Use the same format as business stakeholders to detail Procurement’s strategic objectives, targets and

measures. Complete this at the functional and category team level.

5. Align Procurement Objectives: Test all of Procurement’s strategic objectives to demonstrate how they support both the overall organisation’s strategic objectives and those of the key business units.

Build

There is an extremely strong correlation between Category Management

performance and alignment with an organisation’s broader strategic objectives. Those organisations that strongly agreed with this statement reported performance that was 209% greater than those that strongly disagreed.

92% of Leaders strongly agreed or agreed that their Category Management was well aligned with their organisations broader strategic objectives. This

compares with 54% of Followers.

None of the Leaders disagreed with the statement that their Category Management was well aligned, compared with 18% of Followers - indicating that this is a key differentiator between Leaders and Followers.

In the 2012-13 survey, 92% of Leaders and 58% of Followers strongly agreed

or agreed that their Category Management was well aligned with their organisations broader strategic objectives. This demonstrates that over the past two years the levels of alignment achieved by both Leaders and Followers has remained consistent.

0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree


Agree

Strongly Agree


92% of Leaders, versus 54% of Followers, believe their Category Management is aligned with their organisation’s strategic objectives

1.4 Category Management is well aligned with our organisation's broader strategic objectivesQ


21



Conclusions

As most organisations spend 50%-80% of their revenue with external suppliers, Procurement has a very important influence on business success by controlling costs and generating performance improvement opportunities.

Leaders have a more mature view of how Category Management should be

positioned within their organisations. They understand that Category Management with its cross-functional collaborative approach touches most parts of an organisation and therefore should be aligned and integrated with other business processes. This will ensure the organisation receives the best value for money from its suppliers through improved supplier performance and innovation.

Recommendations

To maximise the potential impact of Category Management, it is essential to align it with related business processes such as budget setting, capex approval, marketing, sales and new product development. Steps to achieve this are:

1. Identify Related Processes: Review the Category Management process from end to end and identify interfaces with related business processes.

2. Identify Issues: Confirm any alignment issues that exist at interfaces - this could be overlaps, ambiguities or overlooked dependencies.

3. Review Documentation: Assess Category Management and business

processes to see how well issues identified are currently addressed.

4. Prioritise Processes: Decide which interfaces will most benefit through further alignment and which processes and documents need to be changed.

5. Agree Alignment Changes: For each priority alignment area, determine changes needed – this may require stakeholder input and agreement.

6. Document Changes: Update existing processes or add new materials where required to document agreed changes.

7. Communicate Changes: Agree and implement communication requirements – target audience, communication methods and timings.

Build

There is a strong correlation between Category Management performance and

aligning Category Management with related business processes. Those organisations that strongly agreed with this statement reported performance that was 154% greater than those that strongly disagreed.

92% of Leaders strongly agreed or agreed that their Category Management process is well aligned with related business processes such as new product

development, budget setting and marketing strategy etc. This compares with 31% of Followers.

3% of the Leaders disagreed with the statement that their Category Management process is well aligned with related business processes, whereas 30% of Followers reported that this was the case - indicating that this is a key

differentiator between Leaders and Followers.

0% 10% 20% 30% 40% 50% 60% 70%

Strongly Disagree

Disagree


Agree

Strongly Agree


1.5 Category Management is well aligned with related business processes (e.g. new product development, budget setting, marketing strategy)Q

92% of Leaders, versus 31% of Followers, believe that their Category Management process is aligned with related business processes


22



0% 10% 20% 30% 40% 50% 60%

Not Available

Poor

Average

Good

Excellent


Process models, guides and templates are the foundation of Category Management and are also a key communication tool with category managers and stakeholders throughout the organisation. The survey results indicate that both Leaders and Followers have an opportunity to improve in this area.

Leaders use consistent and well-structured processes with clear guides and intuitive templates that are easy to complete. They have developed attractive materials that motivate users and guide them to complete activities thoroughly.

Followers often believe that their teams do not require a well thought through toolkit and often use a complex and inconsistent mixture of different approaches

and documents.

Recommendations

A best practice process and toolkit should be customised to meet specific organisation needs and increase adoption. This is best created through a design

team that represents all parts of Procurement. Key components are:

1. Process steps: These are clearly defined activities that provide roadmaps for all Category Management activities. They have multiple levels of detail for different audiences and allow consistent project plans to be created. They

should define where specific guides and templates should be used and incorporate all agreed flexibility in process application.

2. Guides: The process must be supported by insightful and easy to understand “how-to-guides” that provide category teams with information on every step, activity, tool and template in the process. These should allow users to access

information at different levels and avoid over-complication. Practical checklists should be developed wherever possible to drive application.

3. Templates: These should be clear, attractive and easy to complete and directly relate to defined process steps and guides. Leaders often consolidate relevant templates into a standard strategy document that can be customised

to specific category needs. Completed templates are the documents that should be presented at decision gates.

Build

Overall, only 5% of respondents rate their Category Management guides and

templates as excellent.

67% of Leaders rated their Category Management guides and templates as excellent or good. This compares with 27% of Followers.

6% of the Leaders rated their Category Management guides and templates as not available or poor, compared with 40% of Followers.

The results are a significant drop from the 2012-13 survey when 83% of Leaders and 52% of Followers rated their Category Management guides and templates as excellent or good.

Figure 15

1.6 How do you rate your Category Management "How-To" guides and templates?Q

67% of Leaders, versus 27% of Followers, believe that their Category Management guides and templates are excellent or good


23



0% 10% 20% 30% 40% 50% 60% 70%

Strongly Disagree

Disagree


Agree

Strongly Agree


Leaders and Followers both recognise that they have to continually improve their Category Management processes. The very strong correlation we have identified with the Category Management Performance Index proves that this is time very well invested.

Continual improvement to Category Management demonstrates a positive recognition that the process is rarely optimised and needs focus. It also reinforces the fact that Category Management is critical to the success of the Procurement team and is often a key way to recruit, develop and retain high quality Procurement staff for the long term.

Recommendations

Some key recommendations for implementing a continual improvement approach to Category Management are:

1. Process Owners: Appoint a process owner and champions throughout the

organisation that have the responsibility for ensuring that the toolkit meets the needs of practitioners and providing a local point of contact.

2. Incremental Changes: Ensure all learnings and improvements are captured across the organisation and systematically built into the process and shared. Consider appointing parts of the process to specific process owners.

3. Major Changes: Plan to fully refresh the Category Management process and approach every 2-3 years to ensure it remains fit for purpose, incorporates all latest best practice and is regularly re-energised.

4. Communications: Make sure there is regular communication within the Procurement team and stakeholder community about major successes to

help build commitment and share learnings.

5. Benchmarking: Periodically, explore what other Procurement organisations are doing with their Category Management approach and pick up innovations and new ideas. Use external benchmarks to combat complacency.

Build

Continually improving Category Management process to perform better over

time has the strongest correlation with Category Management performance. Those organisations that strongly agreed with this statement reported performance that was 287% greater than those that strongly disagreed.

This question also has the strongest agreement between Leaders and Followers. Overall, 68% of all respondents strongly agreed or agreed that they

improved their Category Management process to perform better over time.

92% of Leaders strongly agreed or agreed that they improved their Category Management process to perform better over time. This compares with 60% of Followers.

None of the Leaders disagreed that they improved their Category Management

process to perform better over time, whereas 15% of Followers reported that this was the case.

Figure 16

1.7 We continually improve our Category Management process to perform better over timeQ

92% of Leaders, versus 60% of Followers, continually improve their Category Management process to perform better over time


24



0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree


Agree

Strongly Agree


Ultimately Category Management is about finding additional value for the organisation from its supplier spend. It provides exciting opportunities to challenge the status quo and look at new ways of doing things. The process and toolkit needs to be organised to support this central objective in a systematic way

with a common language that can be used across the team and stakeholders. The Leaders have again made more progress in this area, with the majority believing they have identified all available value opportunities.

Recommendations

To provide the focus on value, Leaders have incorporated “value levers” into their Category Management process. These provide a structured approach to categorising opportunities. They also encourage category teams to

Build

Overall, 52% of all respondents believe that their Category Management

process ensures all value improvement opportunities are identified, not just volume consolidation and competitive leverage.

79% of Leaders strongly agree or agree that their Category Management process ensures all value improvement opportunities are identified. This compares with 43% of Followers.

3% of the Leaders strongly disagree or disagree that their Category Management process ensures all value improvement opportunities are identified, compared with 29% of Followers.

Figure 17

1.8 Our Category Management process ensures all value improvement opportunities are identified, not just volume consolidation and competitive leverageQ

79% of Leaders, versus 43% of Followers, strongly agree or agree that their process identifies all value improvement opportunities


1

11

6

5

8

10

3

4

12

7

13

14

15

Price Attack

Cost DownPrice Down Cost Out Revenue-Up

Reduce Risk

Supply Risk

Reputation Risk

CommercialRisk

PriceBench-marking & Levelling



Cost and Remuneration

ModelAnalysis

DemandManagement

SpecificationOptimisation

NegotiationPower

SupplierIntegration

SupplyMarket

Controlof Critical

Assets

Restructuring & Managing Key

Relationships

New ProductDevelopment and

Innovation Capture

9

Outsourcing, Offshoring

LCCS

Price Attack

Cost Down

Price Down

Cost Out

Revenue-Up

ReduceRisk

Business v alue / impact

Bu

sin

es

s v

alu

e /

imp

ac

t

Low

2

High

High


systematically examine all possible value levers that could

be applied to the category - broadening the search for value. The FP value lever model is shown

below. Accessing the broader range of value levers provides greater business

impact and value flow – reducing

costs, reducing risk and potentially increasing revenues. This

requires increased levels of internal and supplier

collaboration. It also

requires a more capable Procurement team. See Page 7 for more detail on value levers.

Figure 18


25



0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree


Agree

Strongly Agree


Procurement Leaders are well ahead of Followers in making sure they have strong alignment between Category Management activities and the post-contract Supplier Management activities. The two processes should be connected to ensure that the value identified in Category Management is then delivered during

the contract phase.

Too often value leaks from a contract due to a lack of vigilance from the Procurement team, poor supplier performance management techniques, inadequate resourcing and weak contract management discipline.

Recommendations

Whether Supplier Management is integrated into an overall Category Management approach or left as a standalone activity, the interfaces and dependencies between the two activities needs to be aligned. Four areas should be focused on:

1. Expected Benefits: During the category strategy development and Sourcing phases opportunities are identified that can only be implemented post-contract. These should be identified in supplier selection recommendations and built into the supplier mobilisation plan so that they are not forgotten.

2. Post-Contract Roles & Responsibilities: Key internal staff responsible for

managing the supplier following contract award should be identified early during the Category Management process. Ideally, these people should be members of the category strategy team and/or supplier selection team.

3. Performance Scorecard: The business requirements defined during the category strategy development step should be constantly updated during the

supplier selection phase and used as the basis for the performance scorecard used to manage the supplier.

4. Supplier Segmentation: During the category strategy phase, existing supplier(s) importance should be identified using the agreed segmentation tool. Likely segmentation of future suppliers should be considered as part of

strategy finalisation to help determine the Supplier Management approach.

Build


aligning Category Management with post-contract Supplier Management activities. Those organisations that strongly agreed with this statement reported performance that was 151% greater than those that strongly disagreed.

74% of Leaders strongly agreed or agreed that their Category Management

process is clearly aligned with post-contract Supplier Management activities. This compares with 34% of Followers.

5% of the Leaders disagreed with the statement that their Category Management process is clearly aligned with post-contract Supplier Management activities, whereas 40% of Followers reported that this was the

case - indicating that this is a key differentiator between Leaders and Followers.

Figure 19

1.9 There is clear alignment between Category Management and post-contract Supplier Management activities across our organisationQ

74% of Leaders, versus 34% of Followers, believe that their Category Management and Supplier Management activities are aligned


26



Conclusions

Category and supplier strategy development is not a core functionality for many e-sourcing platforms and the technology companies have limited grasp of the value that can be created by cross-functional team working and opportunity identification – hence the low support levels reported.

Teams often to default to using simple Word or PowerPoint documents to create category and supplier strategies, with materials scattered across many hard drives and in many different formats. An Excel spreadsheet is often used to consolidate and track all projects underway. This may be manageable for smaller teams, but for global multi-site Procurement teams it is inefficient.

Recommendations

Providing Category Management processes, tools and templates in an easy to use “e” enabled Procurement platform is a great way to embed Category Management and encourage Procurement teams to use it. Key attributes are:

1. Category Management Toolkit: Easy to use “best-in-class Category Management toolkit to create high quality category & supplier strategies by using intuitively designed Category Management guides and templates.

2. Transparency & Project Control: Provision of real-time information for all projects with access to up-to date strategy documents and transparency on

project progress.

3. Cross-Functional Collaboration: Attractive interface that allows cross-functional stakeholders to participate fully with project and benefit from visibility of outputs and efficiency from workflow and discussion forums.

4. Knowledge Management: Storing and sharing of vital project information in

one place, so that materials are always readily available and reduction in risk of key knowledge being lost when staff rotate, get promoted or leave.

5. Governance Structure: Set approval points that ensure category and supplier projects are completed on time and to a consistent quality, with provision for electronic approvals to drive more transparent decision-making.

Build

This question demonstrates strong alignment between Leaders and Followers.

Overall, 38% of respondents believe that their current e–sourcing platform supports the development of category strategies.

37% of Leaders strongly agree or agree that their current e–sourcing platform supports the development of category strategies. This compares with 38% of Followers.

38% of the Leaders strongly disagree or disagree that their believe that their current e–sourcing platform supports the development of category strategies, compared with 45% of Followers.

0% 10% 20% 30% 40%

Strongly Disagree

Disagree


Agree

Strongly Agree


37% of Leaders, versus 38% of Followers, believe that their current e–sourcing platform supports the development of category strategies

1.10 Our current e–sourcing platform supports the development of category strategiesQ


4:Apply


…

What is LEARN?

Learn

Key takeaways

Design a long term blended learning programme based on a

formal competency framework and regular skills review linked

to personal development planning.

Embed capability by adopting learning methods that extend

beyond the classroom to real projects and knowledge sharing

with peers.

Reinforce behavioural change management & facilitation skills

in addition to technical Category Management skills.

Ensure line managers and stakeholders understand and have

the capability to play their critical role in embedding Category

Management.

LEARN is creating awareness as well as building a technical and

behavioural Category Management skillset for Procurement teams and more

widely across the business. At the executive level, this involves briefings to

explain Category Management and outline the programme objectives and

deliverables. For stakeholders the focus is on Category Management as a

way of working, the benefits they will receive and the role they need to play.

For Procurement LEARN provides a suite of blended learning activities

covering technical, behavioural and change management skills learnt in the

classroom and through coaching, certification and action learning groups.

Why is LEARN important?

Sponsors, stakeholders, category leaders and cross-functional team

members need to be properly trained in the implementation of Category

Management by well-designed, modern learning and development

approaches:

• Individuals learn in different ways. Some will learn by reading detailed

guides before trying new tools whereas others learn by doing. Some

learn through visual means such as diagrams and pictures, whilst

others prefer to see the written word.

• These different learning styles and approaches need to be carefully

considered in the learning design and the major preferences need to

be incorporated and catered for.

• Category Management is a business process and category managers,

stakeholders and line managers need to know how to apply the

process to be successful.LEARN



Category Management Survey 2014 - 15 | Learn

0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree


Agree

Strongly Agree


The 2014-15 survey findings clearly demonstrate that Category Management Leaders strongly advocate the use of training to improve the capability of their teams to deliver better results. It is imperative that training is targeted at the right areas and this is best achieved by using a well structured competency

framework that identifies precisely the skills required for Category Management.

Competency frameworks also provide a tool for measuring and tracking capability levels across the team over a number of years. The impact of skills improvement initiatives can be identified via changes in competency levels.

Aligning specific Category Management competencies with relevant job roles and articulating the expected performance level for each job role is essential.

Recommendations

An organisation that seeks to improve its Category Management performance

should understand the type and level of each skill required to deliver the improvement – and define these in a competency framework. Online tools speed up this process and the key steps in designing and using a framework are:

Step 1: Design Assessment Process Confirm organisational structure & job descriptions.

Run workshop to agree competencies & target scores for all roles.

Step 2: Develop Competency Model Set up frameworks with agreed job roles, competencies and scores. Confirm reports required and reporting levels.

Step 3: Complete Competency Assessment

Team members complete the self assessment. Managers and peers complete 360° assessments.

Step 4: Analyse & Define L&D Needs Create reports for teams and individuals to identify skills strengths & gaps. Agree programme of blended learning activities to address gaps and improve

skills including training, coaching, peer learning and real-life work projects.

Learn

There is an extremely strong correlation between Category Management

performance and the use of a competency framework that includes Category Management skills. Those organisations that strongly agreed with this statement reported Category Management performance that was 169% greater than those organisations that strongly disagreed.

Category Management Leaders have clearly identified the need to include

Category Management specific skills in their overall procurement competency framework, with 76% indicating that this has been achieved. Only 31% of Followers indicated that their competency framework detailed the skills required for Category Management and 40% of Followers actively disagreed.

Leaders achieve a performance benefit from their use of well structured

competency frameworks that define the key skills required to undertake Category Management effectively. Competency frameworks are the 'building blocks' for capability development and their use correlates with improved performance.

Figure 21

2.1 We use a well-structured competency framework detailing the skills required for Category ManagementQ

76% of Leaders, versus 31% of Followers, use competency frameworks that details Category Management skills




Conclusions

Category Management is a cross-functional way of working and requires support and commitment from business stakeholders. It is vital that stakeholders understand what Category Management is all about, the value it will bring and their role in applying it. The survey results demonstrate that the majority of

Leaders have recognised this need. In contrast, two-thirds of Followers have a significant opportunity to improve their Category Management performance by focusing on stakeholder awareness building. However, the results suggest that significant effort will be required to change some strongly held negative perceptions.

Recommendations

Category Management will fail if stakeholders do not understand their role and play their part. Appropriate tailored communications and training for three principal groups is key. Effective activities could typically include the following:

1. For Senior Executives: Short awareness briefings focused on the benefits that the new ways of working will deliver; how it will align with their needs; and what input or support is required from them and their teams. Ideally, business executives and Procurement should be jointly responsible for agreeing category specific targets and delivering them.

2. For Category Project Sponsors & Steering Team Members: Short awareness workshops focused on why the process is being adopted and comparing it with traditional Sourcing; experiences of other companies; what it will consist of at a high level; typical level of benefits expected; what their role and responsibilities will be; how the process will work; governance

processes; timings; and potential interventions they may need to make.

3. Cross-Functional Team Members: Formal training on the rationale for Category Management; process overview and their specific responsibilities within it. Key areas of focus will include the importance of identifying opportunities to obtain more value and the types of value levers available;

detailed process activities; potential barriers to change; and stakeholder support and communications required.

Learn

The Category Management Performance Index indicates that building

Category Management awareness with stakeholders is the second most important practice for driving improvement. Respondents that strongly agreed with the statement reported performance that was 269% greater than those that strongly disagreed.

85% of Leaders believed their Category Management awareness building with

stakeholders was positively perceived, compared with only 33% of Followers. Only 3% of Leaders felt stakeholders were negative which contrasts greatly with Followers – where 31% felt this way.

In the 2012-13 survey, only 11% of all organisations trained stakeholders in Category Management. Due to this small response rate, we decided to change

the question in this survey to focus on the more widely used approach of awareness building and communication. Both Leaders and Followers clearly use this lighter touch approach more frequently than formal training.

0% 10% 20% 30% 40% 50% 60% 70%

Strongly Disagree

Disagree


Agree

Strongly Agree


2.2 Our Category Management awareness building is perceived positively by the majority of our Stakeholders

85% of Leaders, versus 33% of Followers, believe stakeholders were positive about their Category Management awareness building

Q




0% 10% 20% 30% 40% 50% 60% 70%

Web based virtualworkshops

eLearning

Formal qualificationprogramme

Internally runworkshops

Externally runworkshops

Individual coaching

On The Job' Learning

Leaders Followers

The three most effective training approaches are ‘on the job’ learning, individual coaching and externally run workshops

These three different modes of learning should

be combined and integrated to create the most powerful and sustainable learning and skills development.

Learning works best when it takes placein the context in which the skills andbehaviours are to be used and needsto be put into practice as soon as

possible after it is acquired,otherwise it is quickly forgottenor ignored.

Learners also need to know whothey can turn to for help and supportin the workplace - with clear rolesfor line managers & colleagues.

Learn

We asked respondents to rate the effectiveness of a range of training

approaches on a six point scale from Very Poor to Very Effective. Figure 23 shows the consolidated Very Effective and Effective responses for each of the seven training approaches.

There is a very strong scoring consistency and ranking between Leaders and Followers, although Leaders consistently rated each approach higher than the

Followers did.

‘On the job’ learning is viewed as the most effective training approach - with 60% of all respondents rating it as very effective or effective.

Virtual workshops is the approach seen to be least effective - with only 15% of all respondents rating it as very effective or effective.

Figure 23

2.3 Which training approaches are most effective for the Procurement team?Q

Conclusions

Leaders and Followers recognise that ‘on the job’ learning, individual coaching and externally run workshops are the best methods to embed learning. In practice, we have observed that Leaders have professionalised their approach to each of these three methods and also make efforts to measure their impact.

Leaders also align their activities so that competency gaps are identified and addressed through blended programmes. Followers tend to rely on “sheep dip” training, with little in the way of structured follow-up mentoring and coaching.

Recommendations

The well researched 70:20:10 model (Lombardo and Eichinger) should be placed at the heart of learning programme design to ensure that learning is fully embedded. This model is based on the following principles:

Formal classroom programmes generate only 10% of adult learning. Coaching and mentoring generates 20% of adult learning. On-the-job learning from real life projects generates 70% of adult learning.

Learning Through Experience

LearningThrough Others

Learning Through Structured

Courses

Well-Defined Integration

Between the Three

Approaches20%

Coaching & Mentoring

10%

Formal Learning

70%

Real-life Projects

Figure 24




0% 10% 20% 30% 40% 50% 60% 70% 80%


Learn2.4 How well embedded are the following Category Management skills? Q

We asked respondents to rate how well embedded a range of 11 Category

Management skills were in their organisation, using a five point scale from Very Poorly Embedded to Very Well Embedded.

Figure 25 shows the consolidated Very Well Embedded and Well Embedded responses for each skill.

The percentage of Leaders believing they have Very Well Embedded or Well

Embedded skills is an average of 53% across the 11 Category Management competency areas. This compares with an average of 35% for Followers.

Supplier Selection is the best embedded skill - with 79% of Leaders, versus 57% of Followers, indicating that it is very well or well embedded.

Internal selling is the least embedded skill - with 36% of Leaders, versus 7% of

Followers, indicating that it is very well or well embedded.

Conclusions

Overall, the key competencies of Category Management are not very well embedded - with an average of 53% of Leaders and 35% of Followers believing they had Very Well or Well Embedded the range of skills.

Whilst Leaders appear to have supplier selection, contracting and cost analysis

skills well embedded, project management, internal selling (influencing) and leadership skills are less evident. All Category Management skills are less embedded for Followers than Leaders. The largest difference is in leadership/behavioural skills and internal selling, where Leaders performance is between three and five times greater than Followers.

Recommendations

As already discussed, embedding Category Management skills requires a blended learning approach using the 70:20:10 model. In terms of making the skills development as effective as possible, leading organisations are combining

technical and behavioural skills training.

This is not generic behavioural training, but contextualised and aligned with the key activities in the Category Management process. This makes it highly relevant to the challenges and barriers that category managers often encounter. They understand where particular skills are applicable to their own unique

relationships and activities.

Typical behavioural topics that are covered include:

Influencing styles and becoming a trusted advisor

Building and facilitating cross functional category teams

Building a compelling case for change

Communication skills

Consultative selling

Creative thinking and problem solving

Supplier relationships & building trust

Conflict management

Supplier Selection

Negotiation

Supply Mkt Analysis

Business Requirements

Contracting

Cost Analysis

Supplier Management

Risk Management

Leadership/Behavioural

Project Management

Internal Selling

46% of Leaders, versus 17% of Followers, believe they have very well embedded or well embedded key leadership/behavioural skills




0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree


Agree

Strongly Agree

Leaders Followers

Learn

Overall, 41% of all respondents strongly agreed or agreed that that ‘on the job’

learning experiences are formally planned and executed for category managers.

45% of Leaders agree or strongly agree that ‘on the job’ learning experiences are formally planned and executed for category managers, compared with 39% of Followers.

25% of the Leaders disagreed or strongly disagreed that ‘on the job’ learning experiences are formally planned and executed, compared with 41% of Followers.

Figure 26

2.5 ‘On the job’ learning experiences are formally planned and executed for category managersQ

45% of Leaders and 39% of Followers, believe that ‘on the job’ learning experiences are formally planned and executed for category managers

Conclusions

The relative importance and value of ‘on the job’ learning is often not recognised, resulting in these type of learning experiences not receiving the level of formal planning and execution associated with, for example, classroom training.

The 70:20:10 model demonstrates that adult learning works best when it takes

place in the context in which the skills, practices and behaviours are to be used i.e. the workplace and on real projects. The survey results demonstrate similar low scores for both Leaders and Followers, suggesting that they both have an opportunity to increase learning through this very powerful method.

Recommendations

Like all forms of skills development there needs to be a structured approach to maximise the impact of ‘on the job’ learning. Three key elements are:

1. Prioritise Skills for Development: Use a competency assessment (positioned as a training needs analysis) structured around the key activities

in your Category Management process to identify the skill areas to target.

2. Identify Potential Projects: Create a transparent pipeline of upcoming category and supplier projects and identify which specific skills could be improved through participation in the project.

3. Create Action Learning Groups: Cross-category (for maximum diversity of

experience and knowledge sharing) forums are created with 4-6 members to discuss experiences and application of tools and skills on a monthly basis.

These forum sessions should be facilitated, allowing each person to report their progress on projects and receive constructive challenge from others.

Learning goals (3-6-12 months) are set prior to the project and rigorously

reviewed, refreshed and linked to personal & career development planning.

This powerful approach successfully transfers the responsibility for learning to the action learning groups and results in sustainable skills improvement and enhanced performance. Participants keep a learning log of what has been tried out and what has been achieved.




Learn

This is one of the most clear-cut difference between Leaders and Followers

across the survey responses. Leaders are three times more likely than Followers to support category managers with expert line manager coaching.

This contrast is reinforced by the fact that only 2% of Leaders do not support category managers with line manager expert coaching – compared with 41% of Followers.

The Category Management Performance Index indicates that expert coaching is a strong driver of Category Management performance. Respondents that strongly agreed with the use of line managers as expert coaches reported performance that was 177% greater than those that strongly disagreed.

0% 10% 20% 30% 40% 50% 60% 70%

Strongly Disagree

Disagree


Agree

Strongly Agree


2.6 Procurement line managers support their Category Managers with expert coaching

92% of Leaders, versus 27% of Followers, ensure that Procurement line managers support their category managers with expert coaching

Q

Conclusions

Leaders in Category Management recognise that line manager coaching is integral to improving the skills of the category managers and making the classroom training they have received ‘stick’. In our experience, Follower organisations tend not to recognise the important value that coaching can

contribute and their line managers are often not sufficiently experienced in Category Management themselves to provide expert coaching.

Recommendations

Research shows that coaching and mentoring typically generate 20% of adult

learning. Line managers have a key role to play in this learning method and must be involved in the design and implementation of post-classroom coaching. They need to flex between two roles:

For each phase of the Category

Management process they ask key technical questions that will both develop and challenge the category manager’s thinking. They also provide insights and expertise in the

specific tools, and how they can be applied.

Example Question: How have you prioritised the business requirements?

Mentor

Actively applying specialist

process and category content knowledge

With this approach, the coaching

questions are designed to enhance the category manager’s learning, development and growth. They should particularly focus onbuilding stakeholder support and

successful behaviours.

Example Question: What are the likely stakeholder barriers and how will they be dealt with?

Coach

Asking non-specialist questions to

build self understanding & sustainability




Conclusions

Category Management Leaders invest more time in planning and designing their training programmes to ensure the training is rated as “excellent” by their teams. They select world class providers with experienced trainers who balance practical on the job experience with excellent coaching, facilitation and workshop delivery

skills. They custom configure seminar/workshop design and materials to each individual client’s unique challenges and also align them to overall learning objectives and strategies.

Recommendations

Category Management training is one of the biggest investments made by Procurement teams. Five critical success factors to ensure it gets rated as “Excellent” are:

1. Prioritise Skills for Development: Use a competency assessment (positioned as a training needs analysis) structured around the key activities in your Category Management process to identify the skill areas to target.

2. Use a Design Team: Set up an educational design team with category manager representation to ensure the training addresses the real competency

gaps and delivers measurable performance improvement.

3. Pre-Workshop: Engage line managers to provide coaching support before and after the event; use role competencies as a benchmark; issue welcome packs; and link rewards to the transfer of learning back to work.

4. During Workshop: Build readiness to learn; clarify personal objectives and benefits; use the experience of the participants; use a variety of active learning methods to keep interest and energy high (70% doing/30% input); use relevant case studies and role playing exercises to practice skills; and combine technical skills training with behavioural skills training.

5. Post-Workshop: Encourage “back on the job” application of learning with agreed action plans; coaching support from the learner’s manager, peers or external coaches; frequent refresher materials, communications and activities; link to personal and career development planning; and track skills improvement by repeating competency assessments each year.

Learn

Formal classroom training is the key activity in many organisations’ Category

Management improvement plans. This is typically provided internally or through specialist consultancies or training providers (the internal /external split was roughly equal in the 2012-13 survey).

The survey results show that 44% of Leaders agreed that their training was of an excellent standard, compared with 21% of Followers.

48% of Followers (who represent 74% of the total survey participants) disagreed that their training was excellent, compared with 19% of Leaders.

The differences may be due to Leaders ensuring that training is fully tailored to their environment – with time invested in planning course content, agendas, style of delivery and outputs expected. Or it could be they have invested more

time in terms of course length and selecting well matched suppliers.

0% 10% 20% 30% 40%

Strongly Disagree

Disagree


Agree

Strongly Agree


2.7 Our Category Management training for the Procurement team gets rated by participants as excellent

44% of Leaders, versus 21% of Followers, rate their Category Management training as excellent

Q




0% 10% 20% 30% 40% 50% 60% 70%

Leaders Followers

Learn

Figure 29

2.8 Which Category Management skills have the Procurement team been trained in over the last 12 months? Q

52% Of Leaders, versus 31% of Followers, have trained their teams in the 11 core Category Management skills

Supplier Management

Negotiation

Leadership/Behavioural

Supplier Selection

Risk Management

Cost Analysis

Supply Mkt Analysis

Contracting

Internal Selling

Business Requirements

Project Management

Overall there is a substantial gap between the amount of skills training

undertaken by Leaders and Followers. This is demonstrated by the fact that the 11 core Category Management skills were trained on average by 52% of Leaders, compared with an average of 31% for Followers.

The top three skills trained by Leaders were Supplier Management, negotiation and leadership/behavioural skills. In contrast, the top three skills trained by

Followers were negotiation, risk management & cost analysis.

The bottom three skills trained by Leaders were business requirements, internal selling and project management. The bottom three skills trained by Followers were Supplier Management, internal selling & project management.

We also analysed the correlation between Category Management performance

and the training of specific skills. The top five skills that had most impact on performance along with the performance difference between respondents embedding the skill Very Poorly or Very Well are: Leadership/behavioural (200%), cost analysis (191%), business requirements (156%), project management (135%), negotiation (133%).

Conclusions

The low frequency of training delivered by Followers is a key reason why only 35% of them believe that Category Management skills are embedded (Q2.4) and only 22% believe their that category managers are excellent at applying the Category Management process (Q4.5).

In comparison with the 2012-13 survey, Supplier Management, negotiation and behavioural skills have become more popular areas for development in 2014-15. Negotiation is always a popular area for development, but increasingly Procurement teams are focusing on behavioural and leadership skills including internal influencing, facilitation and leadership. This is in recognition that technical

skills are fundamental to delivering value, but they cannot be applied effectively without securing stakeholder support first.

Our analysis of the impact of training on Category Management performance shows that training business requirements and project management has relatively high benefit, but they are currently low priorities. This is probably due to learning

topics being agreed with little outcome based evidence.

Recommendations

To ensure classroom training adds most value:

1. Prioritise Skills for Development: Use a competency assessment (positioned as a training needs analysis) structured around the key activities in your Category Management process to identify the skill areas to target for classroom training. Prioritise the individuals that will most benefit.

2. Apply 70:20:10 Principles: Align classroom activities with ‘on the job’

learning and coaching activities so that the maximum number of opportunities to learn, practice and get feedback on a target skill are leveraged. Do not undertake classroom training until there is an opportunity to use the skill.

3. Measure Impact: Agree targets with line managers and evaluate training outcomes in-line with the Kirkpatrick approach so that the benefits of training

are captured. Use learning logs to capture intangible benefits and consolidate all benefits so that the overall impact of training can be assessed.

Top 5 Impact: 200% performance uplift








0% 10% 20% 30% 40% 50% 60%

Strongly Disagree

Disagree


Agree

Strongly Agree


There is a significant difference between the ability of Leaders and Followers to share best practice category and process knowledge – with Leaders reporting a capability 4x greater than the Followers.

Leaders recognise the value of investing in a learning culture and look for ways

to share category data, reports and best practice activities across their teams. Sharing knowledge is vital to enable organisations to think differently, learn from previous experience and transfer knowledge to improve overall performance.

Recommendations

There are a number of factors that can help to address the challenge of knowledge management in large and complex organisations:

1. Category Knowledge Management Create formal and informal category networks that cut across boundaries

of organisation and geography so that communications are stimulated and capable staff can be rotated across locations and sub-categories.

Ensure all category strategy templates such as historic spend analysis, supply market analysis, technology roadmap etc are completed consistently across the organisation and updated frequently.

Use online Sourcing, Category Management and SharePoint tools to provide access to the populated category strategy templates and share ad-hoc knowledge through online wikis and discussion groups.

2. Process Knowledge Management Create a network of process champions and give them the responsibility of

identifying process innovations and best practices created by category managers that they are connected to and sharing these centrally.

Schedule regular 30 minute online training sessions that are available across the organisation, focusing on specific skill areas and highlighting the latest innovations and practical case studies.

Build worked examples of the latest innovations and make these available electronically so that all team members have access to the latest thinking and are able to continuously improve the current best practice.

Learn


sharing best practice category & process knowledge across an organisation. Those organisations that strongly agreed with this statement reported performance that was 160% greater than those that strongly disagreed.

Overall, 30% of respondents agreed or strongly agreed that that they are highly effective at sharing best practice category & process knowledge across their

organisation.

69% of Leaders agree or strongly agree that they are highly effective at sharing best practice category & process knowledge, compared with only 16% of Followers.

10% of the Leaders disagreed or strongly disagreed with the statement that

they are highly effective at sharing best practice category & process knowledge, whereas 43% of Followers felt that this was the case.

Figure 30

2.9 We are highly effective at sharing best practice category & process knowledge across our organisationQ

69% of Leaders, versus 16% of Followers, believe that they are highly effective at sharing best practice category & process knowledge



…

What is LEAD?

Lead

Key takeaways

It is essential to have clear unambiguous roles &

responsibilities for everyone involved in Category

Management.

Procurement Leaders must visibly “champion” Category

Management within the organisation and be seen as role

models.

Having supportive business sponsors heading up category

projects can improve performance by 197%.

Gaining the support and enthusiasm for Category Management

from middle managers is another key to success.

LEAD is the agreed governance and operating model approach that embeds

Category Management in an organisation and ensure its long term

sustainability. It is the symbolic “cement between the bricks” that binds the

whole Category Management way of working together. This includes

executive sponsorship of the programme; alignment with broader business

goals; category sponsorship by individual business stakeholders; cross

functional participation in category projects; clear objectives and

responsibilities for all involved.

Why is LEAD important?

Making Category Management the single way of operating for

Procurement activity is a significant change management challenge and

leading organisations have recognised the commitment required to

achieve this objective goes beyond processes and education:

• Visible executive commitment of time, interest and supportive

interventions through cross-functional steering groups.

• Documented roles and responsibilities provides clarity on expectations

for all parties involved from Procurement, stakeholders and sponsors.

• Strong category sponsorship and leadership with clear guidelines for

approval of category projects is required to provide a robust and

transparent decision-making process.

• Ensuring that Category Management objectives are formalised for

both Procurement and stakeholders and that high quality resources

are provided will help ensure projects are set-up for success.

Category Management

LEAD



Category Management Survey 2014 - 15 | Lead

Conclusions

Leaders recognise that Category Management can only be fully effective when it is embedded as a core business process and adopted by stakeholders as well as Procurement. This requires roles and responsibilities for each major Category Management activity to be clearly defined and documented. This removes

ambiguity and ensures that category managers and stakeholders are clear on their remit and support they can expect from each other. In some Follower organisations, certain Category Management practices are adopted by Procurement, but in isolation from the rest of the business and in these cases stakeholders have little understanding of their own roles and those of

Procurement – leading to lost opportunities and poor internal relationships.

Recommendations

Undertake an operating model assessment and refresh the organisation design. Implement clear roles for Procurement for each category - driving, leading or

supporting. The diagram below outlines the main differences between the three roles for a category manager.

Lead

Clarifying roles and roles and responsibilities does not imply a centralised

Procurement model. The responsibilities should flex by category, dependent on opportunity size, capabilities, sensitivity and business risk.

The survey demonstrates that 69% of Leaders strongly agree or agree that they have clarified Category Management roles and responsibilities for Procurement. This compares with only 24% of Followers.

Leaders have made significantly more progress in this area with only 11% disagreeing that they had clarity on roles and responsibilities. This is in stark contrast to the Followers, where 49% disagreed that they had clear roles and responsibilities.

In the 2012-13 survey, 90% of Leaders and 37% of Followers strongly agreed

or agreed that they had unambiguous roles and responsibilities. This suggests that over the past two years the levels of role clarity have dropped significantly.

0% 10% 20% 30% 40% 50%

Strongly Agree

Agree


Disagree

Strongly Disagree


Procurement Role

Supporting Leading Driving

► Supports with supply market information, analysis and

negotiation skills

► Takes a more leading role but with stakeholders

involved in key decision points

► Drives Category Management process with limited

stakeholder involvement

StakeholdersProcurement

INVOLVEM ENT LEVEL

Leader

CM

Leader CM Leader CM

3.1 Category Management is fully embedded in our organisation with clear, unambiguous roles and responsibilities for Procurement

69% of Leaders have clear Category Management roles and responsibilities for Procurement versus 24% of Followers

Q




0% 10% 20% 30% 40% 50% 60%

Strongly Agree

Agree


Disagree

Strongly Disagree


Category Management has to be embraced at all levels in the Procurement organisation and this starts with the top team. Where Procurement teams know that their leadership are committed to Category Management and promoting its use internally and with stakeholders, they are more likely to embrace it

themselves.

Conversely, where there is active or tacit lack of support from the Procurement leadership team, members will not commit the effort required to make Category Management successful.

Recommendations

The six key activities below will ensure that Procurement Leaders demonstrate their understanding and support for Category Management.

1. Process & Education Design: Give the leadership team a feeling of

ownership by involving them in the design and approval of the Category Management process and education programme.

2. Walk the Talk: Provide ‘train-the-trainer’ for all leadership team members so that they thoroughly understand all of the Category Management tools and are competent to coach team members in their application.

3. Wave Programme: Develop an annual rolling programme of prioritised Category Management projects across the organisation. Ensure all leaders have delivery projects that are part of this programme.

4. Project Reviews: Hold regular wave programme reviews with leadership team attendance. Use these reviews as opportunities to challenge, support

and ensure that the deliverables created are of a professional standard.

5. Formal Objectives: Ensure that the leadership team have formal Category Management objectives – not just the category managers. These could include % of spend covered by formal category strategies etc.

6. Stakeholder Engagement: Lead the team in planning the next wave of

category and supplier projects with executive stakeholders . Ensure Category Management language and principles are consistently reinforced.

Lead

This question was prompted because we have encountered a number of

Procurement leadership team members that are not convinced that Category Management is possible or value adding for their organisation. These individuals tend to focus on the traditional Sourcing activities of competitive tenders, negotiations and contracting and may not have participated in a Category Management implementation at a more junior level.

This often creates a very powerful internal resistance to Category Management from within the Procurement team. The survey results demonstrate that Leaders have overcome this opposition and 87% report that their leadership teams understand and support Category Management. This compares with only 56% of Followers.

21% of Followers (representing 74% of the total survey participants) reported that their Procurement leadership team did not understand and support Category Management, compared with 0% of Leaders.

Figure 32

3.2 Procurement leadership fully understand and support Category Management

87% of Leaders, versus 56% of Followers, have Procurement leadership teams that understand and support Category Management

Q




0% 10% 20% 30% 40% 50% 60% 70% 80%

Strongly Agree

Agree


Disagree

Strongly Disagree


Supportive sponsors are a well known component of successful Category Management and Leaders have recognised their criticality. At its best Category Management is about driving significant change at the category level and delivering breakthrough results. An influential sponsor will help to smooth the

path and ensure successful implementation of the changes required.

Securing the right level of sponsorship requires Procurement to articulate a vision of how successful implementation of the Category Management strategy will support the business’s strategic objectives. It also requires teams to demonstrate clear plans that include detailed activities and responsibilities as

well as identified risks and related contingency plans.

Recommendations

Identifying and securing a supportive business sponsor with the right profile is worth taking the time to get right. Characteristics to look for and key activities to

complete with them include:

1. Authority: Ensure that your sponsor has sufficient authority and influence to allocate resources and take decisions to help you achieve success. This could include influencing other senior stakeholders that use the category.

2. Time Availability: Be clear about expectations of time and make sure that

the sponsor is willing to allocate sufficient time to the project. They need to be aware of the stages at which they will need to be involved.

3. Stake In The Outcome: Align category objectives and targets with those of the sponsor’s business unit to ensure that the they have a real incentive to make the project successful.

4. Vision: Co-develop a vision with your sponsor for the success of the project. Use this to develop a change plan that to shows how you will achieve the Vision and test this regularly with the sponsor.

5. Category Management Understanding: Brief your sponsor on the key benefits and deliverables of Category Management and involve them in

identifying and resolving major issues and project communications.

Lead


the presence of category project sponsors from relevant functional areas of a business e.g. CIO for major ICT projects etc. Those organisations that strongly agreed with the statement reported Category Management performance that was 197% greater than those that strongly disagreed.

Category Management Leaders have clearly identified the need to secure

relevant category sponsors from outside of Procurement, with 95% indicating that this has been achieved. Only 38% of Followers indicated that they had supportive category sponsors.

None of the Leaders disagreed with the statement that they had supportive business sponsors for category projects, whereas 24% of Followers felt that

this was the case.

3.3 Category Management projects have supportive sponsors in the right areas of the business

95% of Leaders, versus 38% of Followers, have supportive sponsors in the right area of the business

Q

Figure 33




Lead

We tested stakeholder support at three levels - top management, middle

management and category stakeholders (involved in projects).

Both Leaders (71%) and Followers (56%) believe it is category stakeholders who demonstrate the strongest level of support for Category Management.

Top management provide the next level of support, with 64% of Leaders, versus 30% of Followers agreeing that they receive strong support.

Middle management provide the weakest level of support, with 53% of Leaders versus 27% of Followers agreeing that they receive strong support.

There is a strong correlation between Category Management performance and stakeholder support with those that strongly agreed reporting performance that was an average of 255% greater across the three stakeholder groups.

0% 10% 20% 30% 40% 50% 60% 70% 80%

Category Stakeholders

Middle Management

Top Management

Strongly Agree/Agree Neither Strongly Disagree/Disagree

0% 10% 20% 30% 40% 50% 60% 70% 80%

Category Stakeholders

Middle Management

Top Management


Figure 34 Conclusions

Cross-functional team working - combining commercial skills from the Procurement team with technical skills from the business - is a fundamental principle of Category Management. Securing time from technical stakeholders requires support and commitment from top management and most importantly

the middle management layer that directly controls the technical team members.

The survey results shows that there is still much work to be done to achieve an acceptable level of support for Category Management from middle management. This lack of support is an issue for both Leaders and Followers and a top priority to resolve in many organisations.

Recommendations

The change management activities that we recommend to make Category Management relevant to stakeholders (especially middle management) and strengthen their support includes:

1. Organisation & Business Unit Objectives: Understand the strategy, objectives, plans and metrics of the organisation and it’s divisions. Align category objectives and activities with these and communicate clear links.

2. Supplier Management: Jointly prioritise projects with stakeholders and ensure they understand that specific suppliers, not just categories, can be

prioritised and addressed using a structured Supplier Management approach.

3. Category Objectives: Set category objectives jointly with stakeholders and share accountability for delivery of these objectives. Ensure objectives are formally included in stakeholder personal development plans (PDPs).

4. Category Sponsorship: Encourage key stakeholders to sponsor Category

Management teams. Consider using the term “Accountable Executive” rather than sponsor to emphasise the magnitude and active nature of the role.

5. Communications: Agree and implement a communication and influencing strategy for all key stakeholders. Ensure they understand the status of relevant category workstreams and are involved in key decisions.

Leaders

Followers

58% of Leaders feel that top and middle management strongly support Category Management compared with 29% of Followers

3.4 There is strong support for Category Management stakeholders outside of ProcurementQ



…

Why is APPLY important?

Key takeaways

Given that Category Management is a cross-functional activity,

securing sufficient time from stakeholders is crucial.

Setting joint objectives for category managers and

stakeholders is an excellent way of driving up cross functional

collaboration.

Delays in implementation of category strategies reduce in-year

savings by an average 11.75%.

Having a clear overview of all category projects to track

progress against milestones is important to ensure projects are

on time.

ApplyWhat is APPLY?

APPLY is the practical running of a Category Management programme

covering all projects underway across an organisation. This includes

essential aspects of programme management, such as managing overall

change management issues, risks, targets and milestones, category

prioritisation, resource management, progress tracking, management review

meetings and more formal gate reviews plus reporting.

Structure and rigour are crucial to delivering the promise of Category

Management. Leading organisations invest considerable resources in

upstream planning and downstream control of Category Management

projects to assure the delivery of targeted savings and value. Some of the

key aspects mentioned in the survey include:

• A standardised category prioritisation approach that is applied

consistently across all spend, considers risk and resource requirement

thereby ensuring that the right projects are worked on.

• Procurement leadership team that owns an overall delivery plan and

identifies specific projects their timing, value, risk and status so that

interventions can be made where required.

• An agreed approach to formal decision gate reviews that formalises

communications and involves stakeholders to help build momentum

and address issues.

• Applying project management skills to help modulate the approach for

different categories and thereby accelerate delivery.

APPLY



Category Management Survey 2014 - 15 | Apply

Conclusions

Followers have a serious challenge in obtaining enough time from their own category managers, whereas Leaders have made some progress with this issue.

Both Leaders and Followers are operating Category Management with restricted stakeholder involvement. Given that Category Management is a cross-functional

activity, securing sufficient time from stakeholders is crucial. Otherwise, it becomes a Procurement centric activity that has no business input and support -using a limited range of value levers and delivering limited results.

Recommendations

For category managers, the first step is to analyse workload and reduce low value added activities (e.g. P2P) or create a separate team to handle these. A Category Management plan should be created for each individual – built and agreed by the category manager and their line manager.

For stakeholders, there are a number of key interface points in the Category

Management process where they need to participate. Focus on these points of contact and optimise the stakeholder time required:

1. Category Project Kick-off Meeting: Share understanding of Sourcing history, supplier performance, relevant internal strategies and changes, stakeholder concerns and identify opportunities.

2. Business Requirements: Confirm performance needs and wants of the business, identifying areas of flexibility and potential change, along with current performance levels.

3. Strategic Options Generation and Evaluation: Contribute to the identification of value opportunities, the strategic way forward and potential risks and acting as an internal ambassador.

4. Sourcing Strategy Approval: Senior business stakeholders should be part of the category team governance structure and part of the category strategy approval process.

5. Implementation Planning: Senior business stakeholders will be required to agree timings and commitments to significant operational changes and providing internal resources required to implement the strategy.

Apply

0% 10% 20% 30% 40% 50% 60%

Followers

Leaders


51% of Category Management Leaders agree or strongly agree that their

category managers have sufficient time for Category Management activities –compared with only 27% of Followers. 52% of Followers actually disagreed or strongly disagreed that their category managers had sufficient time, compared with 23% of Leaders.

In contrast, when it comes to stakeholder time commitment both groups report

that insufficient time is available. 17% of Leaders and 16% of Followers agreed or strongly agreed that stakeholders provided sufficient time. 47% of Leaders and 65% of Followers disagreed that stakeholders provided sufficient time.

0% 10% 20% 30% 40% 50% 60% 70% 80%

Followers

Leaders


Figure 35

Category Managers

4.1 Category managers and stakeholders have sufficient time for Category Management activities

Stakeholders

Only 17% of Leaders and 16% of Followers believe that stakeholders provide sufficient time for Category Management

Q




Conclusions

In the previous survey, the 45% of Leaders set formal objectives for stakeholders. This number has dropped to 29% which means Procurement would appear to be fighting an uphill battle to encourage more stakeholder support for Category Management objectives. So why is this happening?

It is possible that Procurement teams have not been successful in persuading their business stakeholders of the value of Category Management and the importance of it being a cross-functional cross business way of working that benefits all parties, not just Procurement. More proactive communication is needed to reverse this damaging trend.

Recommendations

1. Annual Planning: All organisations have annual planning or budgeting cycles that set the corporate level financial targets. For Procurement teams this often means a specific budget target to meet and a set of specific cost reduction

targets. If these savings targets are stretching in any way, Procurement cannot deliver them in isolation and rely heavily on input and co-operation from their stakeholders – to access all commercial and technical opportunities. Therefore it is essential that the accountability for target setting and delivery are agreed and owned jointly by Procurement and business stakeholders.

This will leverage and integrate their activities in a much more impactful way. Direction from a Procurement capable CFO helps here.

2. Annual Category Planning: This is a joint planning activity to prioritise category and supplier projects to be tackled in the next cycle. It helps to facilitate a closer working relationship between Procurement and its

stakeholders. It encourages both parties to work together, to share ideas, to challenge thinking and to co-operate in a much more structured way to deliver joint objectives.

3. Personal KPIs: Formalise joint accountability for delivery of Category Management projects by formally embedded in both parties’ annual personal

KPIs. This reinforces the need to work together for mutual benefit.

Apply

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Followers

Leaders


97% Leaders agree or strongly agree that their category managers have

formal objectives for Category Management – compared with 59% of Followers. None of the Leaders and only 19% of Followers disagreed or strongly disagreed with the statement.

In contrast, when it comes to stakeholders having formal objectives for Category Management there is a significant drop in numbers compared with

category managers. Only 29% of Leaders and 19% of Followers agreed or strongly agreed that stakeholders have Category Management objectives. 48% of Leaders and 61% of Followers disagreed that stakeholders have formal objectives for Category Management.

In the 2012-13 survey, the category manager responses were similar, however

45% of Leaders had stakeholders with objectives - so a big drop has occurred.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Followers

Leaders


Figure 36

4.2 To what extent do category managers and stakeholders have formal objectives for Category Management?

Only 29% of Leaders and 19% of Followers have formal Category Management objectives for stakeholders

Q

Category Managers

Stakeholders




Conclusions

Delivering target Category Management savings is a challenge for both Leaders and Followers and this will undermine credibility with stakeholders and sceptical members of the Procurement leadership team.

Delays in implementation can cause serious impact on the organisation in terms

of operational delivery issues, resources tied up for too long and financial savings delay. Delays also damage Procurement’s credibility as project leaders. Additionally, the start of planned projects will be delayed while outstanding projects are completed – creating a negative multiplier effect.

Recommendations

Leaders in Category Management display the following characteristics when it comes to implementation:

1. Robust Project Management Capability• Consolidated programme plan showing all category and supplier initiatives.

• Web-based project tracking via agreed activities and deliverables.• Category managers trained in project management skills.• Risks identified and managed.• Transparent approach to setting milestones with management challenge.• On-line availability of category team outputs.

2. Strong Stakeholder Engagement in Milestone Review Meetings • Regular performance progress review meetings with stakeholders.• Well structured format and expectations for decision gate review meetings. • Deliverables focused approach with clear mandatory elements.

3. Resource Allocation and Capacity Planning

• Regular review of resources used and future requirements.• Contingency plan in place if commitment drops off.• Fast interventions to rectify slippages or shortfall in resources.

Apply

0% 10% 20% 30% 40% 50% 60%

81 - 100% of the time




0 - 20% of the time

Leaders Followers

17% of Leaders report that their Category Management projects deliver their

target savings more than 80% of the time, compared with 15% of Followers. 76% of Leaders report that their Category Management projects deliver their target savings more than 60% of the time, compared with 45% of Followers.

When averaged, Leaders deliver target savings 64% of the time compared with 53% of the time for Followers.

Overall, only 18% of category projects are completed on time. The average delay is four weeks for Leaders and seven weeks for Followers. Delays in implementation reduce in-year savings by an average 8% for Leaders and 13% for Followers. These numbers have been calculated on a conservative basis for Followers as % of their projects were reported to take more than eight

weeks on top of target time.

0% 10% 20% 30% 40% 50% 60%

Target time achieved

Target time + 2 weeks



Target time + >8 weeks

Leaders Followers

Figure 37

Target Savings

4.3 To what extent do Category Management projects deliver their target savings and to their target timelines?

Leaders deliver target savings 64% of the time on average compared with 53% for Followers

Q

Target Timelines




0% 10% 20% 30% 40% 50% 60% 70%

Strongly Agree

Agree


Disagree

Strongly Disagree


Keeping track of all category initiatives and projects can be a difficult task without some central process or system to monitor them. Spreadsheets can help to document, manage and track projects especially with regards to savings delivery. However, they become less effective when you want to track the progress of

projects through the various Category Management process steps.

It helps to have some way of tracking actual progress of tasks against pre-defined milestones set up for the project. Being able to visualise how well each project has progressed across an organisation is a valuable tool. It also creates an in-built element of competition to make sure your project is not the one that is

lagging behind.

Recommendations

A centralised project tracking system should be created to allow tracking and reporting across all category and supplier projects. The size and scale of this

system will depend on the size of the team, number of projects underway and geographic/business unit complexity. Key features that should be embedded in the system are:

1. One Central Register: One source of the truth for all projects whether large or small and used to manage the function by the leadership team.

2. Real Time Progress: Accurate up to date status for each project, showing target timelines, savings and current forecasts.

3. Transparency: Management team has transparency of all category and supplier projects and can use to manage team members and assure delivery.

4. Reporting: Create standard reports that can be used to manage the project

pipeline and overall value delivery as well as used in category project reviews.

5. Team Engagement: Use the data in the platform to create a team spirit and demonstrate progress and successful delivery.

6. Stakeholder Engagement: Create a stakeholder summary view so that they can see relevant project progress and feel part of the cross-functional team.

Apply

Having a high level overview of projects helps to rectify problems before they

become more serious and ensures that projects are not falling behind schedule or failing to deliver their objectives.

There is a strong correlation between Category Management performance and central tracking of category projects. Those organisations that strongly agreed with this statement reported performance that was 220% greater than those

that strongly disagreed.

87% of Leaders strongly agreed that they had central visibility across all category projects. This compares with 40% of Followers.

5% of the Leaders disagreed with the statement that they had central visibility, whereas 37% of Followers reported that this was the case - indicating that this

is a key differentiator between Leaders and Followers.

Figure 38

4.4 We have central visibility of progress and performance across all category projectsQ

87% of Leaders as opposed to only 40% of Followers have a central view of all category projects




0% 10% 20% 30% 40% 50% 60% 70%

Strongly Disagree

Disagree


Agree

Strongly Agree


There is a big difference between Leaders and Followers when it comes to the application of the Category Management process. It suggests that Leaders have either successfully developed the Category Management capability of their team, or recruited category managers that already understand the process. Either way,

their competency in Category Management is high.

Followers may have a Category Management toolkit, but with only 22% of them believing their category managers are excellent at applying it, there is clearly a major competency gap for most organisations. There is a need to improve Category Management skills of current team members and ensure Category

Management competencies are included in recruitment interviews.

Recommendations

To be excellent at applying the Category Management process, category managers need to have the technical skills to apply the range of tools included in

the Category Management process. They also need to have the leadership skills that allow them to engage business stakeholders and suppliers and influence them to contribute fully. This can be achieved through three key levers:

1. Identify Category Management Competencies: Use the Category Management process steps and tools to identify the key technical competencies required. Also, use the process to identify key “moments of truth” with stakeholders and the leadership competencies required. Get team

members to self assess against the competencies, with manager input also.

2. Improve Category Management Skills: Use the outputs from the

competency assessment to identify individual and team skills strengths and gaps. Build and implement a blended learning programme to address the identified gaps – covering both technical and leadership competencies.

3. Include Category Management Competencies in Recruitment: Use the technical and leadership competencies identified along with the target skill levels for each role to develop a competency based interview framework. Use

the framework to obtain evidence from candidates where they have applied the required Category Management competencies.

Apply

Unsurprisingly, there is a strong correlation between Category Management

performance and category manager being excellent at applying Category Management. Those organisations that strongly agreed with this statement reported performance that was 161% greater than those that strongly disagreed.

80% of Leaders agree or strongly agree that their category managers are

excellent at applying the Category Management process, compared with 22% of Followers.

None of the Leaders disagreed or strongly disagreed with the statement that their category managers are excellent, whereas 22% of Followers felt that this was the case.

Figure 39

4.5 Our category managers are excellent at applying the Category Management processQ

Only 22% of Followers believe that they are excellent at applying the Category Management process compared with 80% of Leaders




Conclusions

The average time required to create and implement a category strategy is fairly similar across Leaders and Followers. Perhaps the biggest issue is the total elapsed time to create and implement a category strategy – 35 weeks on average.

With many organisations targeting in-year savings as well as annualised numbers,

this means that the average project only delivers 33% of its annualised total as an in-year saving. This means that for the average project, reducing the elapsed time by one week increases the in-year savings contribution by nearly 6%. Measuring and reducing the time to create and implement category strategies is therefore a key way of assuring in-year savings delivery.

Recommendations

Time to develop and implement category strategies has rarely been granted the same focus as savings values and percentages. However, as in-year savings become more important this topic’s importance is increasing. Best practices are:

1. Set Realistic Targets: Track historical trends and use these to identify the actual time taken to develop and implement strategies – by category, business unit and geography. Use these numbers to challenge any undue optimism bias or “sandbagging” from category managers.

2. Measure & Report Milestone Performance: Track milestone performance

centrally and hold regular reviews to anticipate issues at an early stage so that interventions can be made quickly and projects brought back on track before major value leakage occurs.

3. Communicate and Incentivise: Confirm with category managers and stakeholders the targeted in-year savings from each project. Emphasise the

weekly cost of missing planned deadlines on in-year savings. Include hitting target milestones in personal objectives and incentivise over-performance.

4. Systematise Best Practice: Interview category managers and identify the barriers they have overcome and any specific techniques that they have used to accelerate strategy development and implementation. Identify the generic

best practices used and communicate these across the team.

Apply

0% 10% 20% 30% 40% 50% 60% 70%

0 - 6 weeks

7 - 12 weeks

13 - 18 weeks

19 weeks or more

Leaders Followers

47% of Leaders report that their Category Management strategies are created

within 12 weeks, compared with 60% of Followers. 53% of Leaders report that their Category Management strategies take more than 12 weeks, compared with 40% of Followers.

22% of Leaders report that their Category Management strategies are implemented within 12 weeks, compared with 28% of Followers. 78% of

Leaders report that their Category Management strategies take more than 12 weeks, compared with 72% of Followers.

The overall average time across Leaders and Followers time to create a category strategy is 14, with 21 week required for implementation.

0% 10% 20% 30% 40% 50% 60% 70%

0 - 6 weeks

7 - 12 weeks

13 - 18 weeks

19 weeks or more

Leaders Followers

Figure 40

4.6 What is the typical time required to create and implement a Category Strategy in your organisation?

Average time to create a category strategy is 14 weeks with an average 21 weeks to implement – 35 weeks in total

Q

Time to Create Strategy

Time to Implement Strategy




0% 10% 20% 30% 40% 50%

Strongly Disagree

Disagree


Agree

Strongly Agree


As we have identified in question 4.1, overall only 33% felt that category managers had sufficient time for Category Management activities. This issue is compounded when the available resources are not balanced across categories. Both Leaders and Followers have a resource balancing issue, with 44% of overall

respondents disagreeing with the statement.

In many organisations, annual Category Planning is not a formally structured and

reviewed process. As a consequence, resource allocation across categories is infrequently scrutinised and no consistent methodology is deployed to drive a level of standardisation. This results in resource allocation being inconsistent and lacking balance – impacting the value that is ultimately delivered.

Recommendations

There is no a single “correct” answer on how to allocate resources across categories, however sense-checking during annual Category Planning activities will ensure it is given formal consideration and allow cross-category comparisons to be made. Criteria that should be used are:

1. Spend Profile: What are the major categories of spend, how are they segmented and how consolidated is the supply base?

2. Supply Markets Complexity: How dynamic are each of the supply markets and how frequent and intensive are Sourcing exercises?

3. Business Units and Geographies: How is the organisation structured, where are key budget holders located and what geographies are in scope?

4. Sourcing and Supplier Management Governance: Who is responsible for category strategy development, Sourcing and managing suppliers currently?

5. Category Importance: How critical to organisation success is each category and the related suppliers and what are stakeholders expectations of support?

6. Category Maturity: How much work has been done in the past in each category and what level of future change is expected?

7. Value Opportunity: How much additional value is available from the category and related suppliers in terms of cost-down, risk-down and revenue-up?

Apply

Overall, only 3% of total respondents strongly agreed that Procurement

resources are well balanced across the categories managed.

44% of Leaders have agree to some extent that it is their resources are well balanced across the categories, compared with 30% of Followers.

33% of Leaders disagree to some extent that it is their resources are well balanced across the categories, with 50% of Followers disagreeing with the

statement.

Figure 41

4.7 Procurement resources are well balanced across the categories we manageQ

44% of Leaders, versus 30% of Followers believe that resources are well balanced across categories



…

Deliver

Key takeaways

Creating “excellent high quality” category strategies is a real

skill that only 3% of respondents confirmed they had mastered.

The average savings reported was 5.9% for Followers and

8.3% for Leaders, which is a 40% performance gap.

Investment in Category Management leadership has the

potential to provide a 95% increase in savings.

Category Management performance can improve by 197%

when non-price benefits are recognised as equally valued.

Why is DELIVER important?

What is DELIVER?

DELIVER is the end results produced by the Category Management

activities and programme. It is assessed through a range of metrics such as

level of spend penetration, cost reduction and cost avoidance, supplier

performance, reduced level of risk, better service and occasionally increased

sales. This is how Category Management will ultimately be measured by the

business.

Category Management is a means to an end and it is critical that there is

clarity on the expected deliverables. Leading organisations encourage the

sharing of Category Management objectives between Procurement and

business stakeholders. They embed these objectives in their functional

strategy and performance scorecard. This gives them:

• Direction to guide their activities and drive desired behaviours and

levels of performance.

• An ability to link Category Management activity to business objectives

and measure levels of contribution and alignment.

• An ability to assess relative performance over time and identify areas

of strength, weakness and opportunity.

• An ability to assess relative performance by category, geography or

functional area.

weakness

Deliver



Category Management Survey 2014 - 15 | Deliver

0% 10% 20% 30% 40% 50%

Strongly Agree

Agree


Disagree

Strongly Disagree


Category strategies are critical deliverables from the process. They should list and

prioritise all the opportunities identified by the category team and they also provide a powerful marketing opportunity to demonstrate the value and professionalism of the Procurement function.

The survey finding shows a very clear distinction between Leaders (57%) and Followers (13%) stating the quality of their category strategies were excellent. However, for such a critical document there is clearly much room for improvement in this critical area for both groups.

Recommendations

Some of the key features of high quality category strategies and their implementation are:

1. Compelling Business Case for Change With Key Recommendations• Summarise all key information developed during the strategy process and

confirm how the strategy meets stakeholder expectations.• State precisely how the category and related suppliers will be managed,

typically on a 1-3 year time horizon. • Identify quantified improvement opportunities at the line item level and

demonstrate the use of a range of value levers – not just price down.

2. Review and Approval• Actively involve sponsors and key stakeholders in the review, challenge and

approval of the Sourcing strategy. It needs to be owned by all.• Anticipate implementation resource requirements and test their ability to

support prior to strategy approval – secure resources at strategy approval.

3. Implementation • Use the outline implementation plan from the category strategy to create a

detailed plan and allocate tasks across the cross-functional team.• Apply the same governance and programme management rigour to

implementation work streams as strategy creation.• Track expected benefit value and timing throughout the implementation

phase, provide regular updates and always flag reasons for deviations.

Deliver


quality of category strategies. Those organisations that strongly agreed with this statement reported performance that was 225% greater than those that strongly disagreed.

Category strategies are the most important documents that Procurement teams create. When well structured, full of new information and compelling

arguments to capture innovative value opportunities and backed-up with rigorous implementation plans, they summarise a compelling business case for change at the category level.

The survey results show that 57% of Leaders strongly agree or agree that the quality of their category strategies are excellent, compared with only 13% of

Followers.

40% of Followers (who represent 74% of the total survey participants) strongly disagree or disagree that their category strategies were excellent, compared with 10% of Leaders.

Figure 42

5.1 The quality of current category strategies in our organisation is excellentQ

Only 3% of all respondents strongly agree that their category strategies are excellent




0% 10% 20% 30% 40%

More than 10%

8 - 10%

7 - 8%

5 - 6%

3 - 4%

1 - 2%

No savings measured


The survey results demonstrate that Category Management Leaders deliver

substantially more savings than Followers. Investment in Category Management leadership has the potential to provide a 40% increase in savings for Followers and an indisputable ROI.

Whilst savings are a one dimensional measure of contribution from Procurement they are still the most common form of evaluating Procurement’s contribution to

business success. So it is essential to have a robust and clear process for recording savings that is validated by the Finance team so there is little room for confusion or disagreement when the savings are being calculated.

Recommendations

Key ways to increase savings delivery from Category Management are:

1. Executive Mandate: Consider implementing top-down savings targets that are allocated to business functions who are then more likely to work with the

Procurement team to achieve their targets.

2. Opportunity Analysis: Take a fresh look at all categories, undertake an opportunity analysis and create a pipeline of sub-category and supplier projects that will deliver the targeted savings.

3. Project Management: Introduce more rigorous project tracking tools so that

the overall savings pipeline has more visibility and can be more accurately predicted and controlled.

4. Cost Down Value Levers: Rigorously apply all cost down value levers such as cost analysis, demand management, specification re-design as well as more traditional levers like volume consolidation and negotiation.

5. Risk and Revenue Value Levers: Ensure that category teams are also familiar with and actively using risk down and revenue up value levers to ensure the full range of Procurement contribution is achieved.

6. Benefit Measurement: Strengthen existing measurement systems and processes with support of the Finance community. Focus on delivering the

savings within much tighter deadlines.

Deliver

The average savings reported by Leaders was 8.3%, compared with 5.9% by

Followers. This demonstrates that Leaders deliver 40% more savings than Followers.

Based on this savings differential the Followers (74% of all respondents) could increase their savings by an extra €50m (+2.4%) if they achieved the savings rate of the Leaders. This is based on the overall average reported spend of

€2,100m.

44% of Followers delivered less than 4% savings, compared with only 13% of Leaders.

15% of Leaders and 9% of Followers delivered average Category Management savings of more than 10%.

Although savings are a priority focus for most Procurement teams, 11% of Followers did not measure them.

In the 2012-13 survey, the average savings reported by Leaders was 9.5%, compared with 6.5% by Followers. This shows that over the past two years the savings levels reported have decreased by 13% for Leaders and 9% for

Followers.

Figure 43

5.2 What overall savings rate did your organisation achieve from Category Management in 2013? Q

40% more savings are delivered by Category Management Leaders compared with Followers




0% 10% 20% 30% 40%

2013 savings plus 6% or more

2013 savings plus 5%






Both Followers and Leaders confirm that Category Management could deliver

significantly more benefit. Optimised Category Management will also generate substantial improvement in other value areas such as risk reduction, revenue growth, internal and supplier relationship quality and Procurement productivity.

With this scale of potential improvement available, it is understandable that most organisations have Category Management as a top three objective. However, few

organisations possess a detailed framework to assess their Category Management capability and plan how it should be optimised in order to deliver additional benefits.

Recommendations

Creating a detailed Category Management optimisation and adoption framework should be priority for all organisations seeking improvement. Future Purchasing has developed a 100 factor behaviourally anchored framework – the structure and content is provided below at a summary level.

1. Build: Vision and strategy, business case and ROI, business alignment, organisation structure, process ownership, process coverage, process flexibility, compelling design, materials access, data structures.

2. Learn: Procurement team, non-Procurement team, executive briefings,

stakeholder involvement, line manager coaching, team facilitation, action learning, knowledge clubs, HR alignment, assessment and certification.

3. Lead: Top executives, process champions, category sponsors, senior stakeholders, line managers, category leaders, operating model, reward and MBOs, objectives and targets, change management.

4. Apply: Programme management, category prioritisation, phased mobilisation, process modulation, on-line collaboration, progress tracking, review meetings, decision gate reviews, project management, resource commitment.

5. Deliver: Spend penetration, off-limits spend, cost down, savings validation, value-up and risk, benefit tracking, growth goals, margin goals, shareholder

value, sustainable Sourcing.

Deliver

Both Leaders and Followers believe that optimising their current approaches to

Category Management will deliver additional savings beyond current levels. Leaders expect a 4.1% increase to current levels – increasing the total savings rate to 12.4% and boosting current performance by 49%.

If the Followers were to achieve the 12.4% potential savings rate identified by the Leaders, this would boost their current performance by 111%.

For Leaders, securing this increase would deliver an additional €86m based on the average respondent spend of €2,100m. For Followers, securing this increase would deliver an additional €137m using the same average spend.

Figure 44

5.3 What additional savings delivery could be achieved by your organisation if Category Management was optimised? Q

Leaders could increase savings by 49% by optimising Category Management, compared with a 111% increase for Followers




0% 10% 20% 30% 40% 50% 60% 70% 80%

Strongly Agree

Agree


Disagree

Strongly Disagree


Leaders are clearly working in a business environment where the non-price

benefits from Category Management are valued. Whether they are valued to the same extent as savings will vary by organisation, nevertheless it is a positive position with 85% of Leaders sharing this view.

Followers have a much more challenging situation and appear to be driven far more tactically and focus on price only. This is a case of organisations “getting the Procurement function they deserve”, with a stereotypical focus on the cheapest price rather than looking at the broader cost/quality equation.

Recommendations

Improving recognition for non-price value delivery can be achieved by:

1. Aligning Benefits with Business Goals: Ensure all Procurement value measures used are aligned with business goals and measures, so that the contribution from Procurement activity to overall business success can be readily identified and reported – potentially externally.

2. Including Savings Benefits: Broaden the measures beyond savings to include other important factors such as cash flow, improved quality, reduced risk and improved revenue. Standardise these measures and provide methods of consistently calculating and reporting.

3. Including Stories: Include qualitative stories in formal reports to describe the initial situation, action taken and improvements achieved. These often capture executive attention more than a list of numbers and it is essential to provide full credit to internal stakeholders for their contribution.

4. Validating Measures with Finance: Agree all measures up-front with the Finance function and define their role and that of business stakeholders in terms of on-going savings validation. Asking Finance to become custodians of the measurement process can also drive significant credibility.

5. Communicating all Measurable Benefits: Ensure the business is aware of the full range of value delivered, not just the savings. This helps to reinforce the positioning of Procurement as a “Trusted Advisor” and aligns it with the business, generating more demand for support.

Deliver


recognition by an organisation of the non-price benefits delivered by Category Management. Those organisations that strongly agreed with this statement reported performance that was 197% greater than those that strongly disagreed.

Category Management Leaders clearly value the non-price benefits delivered,

with 85% of respondents agreeing with the statement. Only 37% of Followers stated that non-price benefits were valued by their organisation.

None of the Leaders disagreed with the statement that non-price benefits were valued, whereas 30% of Followers felt that this was the case.

There is a big difference between Leaders and Followers when it comes to

valuing the non-financial benefits from Category Management. It shows that Leading organisations look further than price and consider other factors such as quality, assurance of supply, service, reduced risk and so on.

Figure 45

5.4 Benefits from Category Management beyond achieving lower prices are highly valued by our organisationQ

85% of Leaders, versus 37% of Followers believe that benefits beyond lower prices are highly valued by their organisation




Conclusions

Nine value levers were described in the survey. Four of these were tactical price

down levers that require lower levels of professional capability and stakeholder collaboration. The second five were more strategic cost-down/cost-out levers that require a more capable Procurement team and increased levels of collaboration.

1. Price-Down Value Levers: Competitive Leverage, Volume Consolidation, Price Benchmarking and Price Attack.

2. Cost-Down/Out Value Levers: Supplier Integration, Demand Management, Specification Optimisation, Cost & Remuneration Models and Outsourcing.

Followers predominantly drive savings from the tactical price down value levers. Leaders rely more on the cost down/out value levers, although they also use the tactical price down value levers.

Recommendations

In organisations where value levers have been introduced there is a recognition that they provide a systematic approach to driving change and extracting value at the category level. A set of pre-defined value levers creates a common language

and needs to be at the centre of all Category Management activity. Best practices for maximising the impact of value levers includes:

1. Agree a Broad Range of Detailed Value Levers: Identify a set of levers that cover the full range of value that Procurement can impact. This should cover risk-down and revenue-up as well as price and cost-down. Define the levers in straightforward language and provide practical examples to aid understanding.

2. Make Value Levers Central to the Category Strategy: Incorporate a value lever summary template into the category strategy document and ensure that

all opportunities are logged, quantified and prioritised. Review the value lever template at all line manager and decision gate meetings.

3. Train Stakeholders in Value Levers: Communicate the wide range of value levers available to all cross-functional team members. Use the risk-down and revenue-up levers to reinforce the message that Category Management is a business process that can have a broad impact on organisation performance.

Deliver5.5 What were the top three drivers of savings for your organisation in 2014?Q

85% of Leaders, versus 37% of Followers, believe that benefits beyond lower prices are highly valued by their organisation

0% 10% 20% 30% 40% 50% 60%

Outsourcing & Offshoring

Price Attack

Demand Management

Cost & Remuneration Model Analysis


Price Benchmarking & Levelling

Specification Optimisation

Supplier Integration & Collaboration


Leaders Followers

For Leaders, the top five value levers that drove most savings were:

1. Competitive Leverage

2. Supplier Integration & Collaboration

3. Specification Optimisation

4. Price Benchmarking & Levelling

5. Volume Consolidation

For Followers, the top five value levers that drove most savings were:

1. Competitive Leverage

2. Volume Consolidation

3. Price Attack

4. Price Benchmarking and & Levelling

5. Demand Management

Overall, the value levers that contributed least to savings delivery were

outsourcing & offshoring and cost & remuneration model analysis.

#1

#2

#3

#4

#5

#1

#2

#3

#4

#3

Leaders make more use of strategic cost-down value levers whereas Followers favour tactical price-down value levers

#5

Figure 46




0% 10% 20% 30% 40%

Strongly Disagree

Disagree


Agree

Strongly Agree

Leaders Followers

Conclusions

Leaders are working more closely than Followers with internal stakeholders in

terms of agreeing category targets. However, overall only 41% of participants agree targets jointly – indicating that this remains a key opportunity for improvement.

Also, accountability for category target delivery clearly sits with Procurement alone rather than jointly with stakeholders – with only 34% of all respondents agreeing that there was joint accountability.

Recommendations

Joint accountability for setting and delivering category targets gives real ‘skin-in the-game’ for stakeholders and drives increased stakeholder input into the development and implementation of category strategies. This increased level of collaboration raises the number and range of value lever opportunities identified, leading to more savings, lower risk and potentially increased revenue.

Achieving joint targets and delivery accountability requires a two-pronged strategy:

1. Budget Holder Category Target Allocation: Work with executive stakeholders to test the organisational appetite for deploying category savings targets to budget holders. Often the CFO is the starting point for this discussion and the willingness to pursue this approach will be dependent on the financial performance of the organisation and the need for savings. Ensure

categories are correctly aligned with executive stakeholders and that the targets are cascaded down into their teams.

2. Implement Annual Category Planning: This is a discrete element of an overall Category Management way of working. It is a joint planning activity that takes place at the category or category family level and sits above the development and implementation of category, sub-category or supplier strategies. It prioritises the categories, sub-categories and suppliers that will

tackled in the next financial cycle. It builds stakeholder commitment to Category Management by giving them the casting vote on project selection and ensures that they commit the cross-functional resources required.

Deliver

49% Leaders agree or strongly agree that category targets are jointly set with

stakeholders – compared with 38% of Followers. 41% of Followers actually disagreed or strongly disagreed that they jointly set category targets with stakeholders, compared with 28% of Leaders.

When it comes to delivering those targets there is a drop in collaboration levels. 36% of Leaders stated that there was joint accountability with

stakeholders for delivery, compared with 33% of Followers.

31% of Leaders and 43% of Followers disagreed or strongly disagree that category targets are jointly set with stakeholders and that there is joint accountability for delivery of these targets.

0% 10% 20% 30% 40%

Strongly Disagree

Disagree


Agree

Strongly Agree

Leaders Followers

Figure 47

5.6 Category targets are jointly set with stakeholders and there is joint accountability for deliveryQ

Only 36% of Leaders and 33% of Followers have joint accountability for delivering category targets

Joint Target Setting

Joint Delivery Accountability




Conclusions

Leaders are equally split across the three different time periods. This may reflect

the different dynamics of the range of business sectors that they work in. It may also reflect the different cultures of their businesses e.g. short-termism in some versus a longer-term orientation in others, which in itself could be impacted by their relative performance and success.

Followers are clearly more orientated towards the short term. This may again be

due to their business environment, but the survey sample size suggests it is more likely to be with their culture and relative performance and success.

Recommendations

For most organisations Category Management benefits should be focused on the

short, medium and longer term. The balance will vary from organisation to organisation dependent on business sector dynamics, category dynamics, relative business performance and organisation culture.

Getting the balance right is critical to building support for Category Management. An organisation operating in a rapidly moving business sector, with faster moving

category dynamics, performing poorly and with a short term culture will tend to focus more on the next 12 months. In a slower moving business sector, with relatively static category dynamics there will be a longer term focus. Misaligning the Category Management approach with the organisation will limit it’s adoption and negatively impact the perception of the Procurement team. The benefits of

focusing on each time period are:

1. Next 12 Months: This will create a pipeline of rapidly implemented opportunities that deliver in-year benefits. This creates a fast-paced attitude to driving change and builds confidence in Category Management.

2. 13-24 Month Period: This provides an opportunity to work on changes that take more time to identify, agree, design and implement. The changes are more fundamental and result in step-change improvements.

3. Beyond 25 Month Period: This timespan allows category managers to increase levels of collaboration internally e.g. new product development involvement and externally e.g. supplier innovation capture.

Deliver

We initiated this question, as a result of client feedback that they felt Category

Management was predominantly focused on creating ‘in-year ‘savings, rather than longer term value delivery.

32% of Leaders focus Category Management on delivering benefits more than 24 months out. This compares with 18% of Followers.

36% of Leaders focus Category Management on delivering benefits between

13-24 months out. This compares with 35% of Followers.

32% of Leaders focus Category Management on delivering benefits in the next 12 months. This compares with 47% of Followers.

5.7 The time period we are focused on for benefit delivery from Category Management is Q

0% 10% 20% 30% 40% 50% 60%

Up to 12 months

13 to 24 months

25 months and beyond

Leaders Followers

47% of Followers focus Category Management delivery on the next 12 months only

Figure 48


4:Apply


…

Summary of the Category Management Survey

The survey has confirmed that Category Management is the core

approach used by Procurement teams to extract value from supplier

spend, yet it remains challenging to implement successfully and sustain

beyond a few waves of activity. This summary includes:

• Top 10 summary recommendations for Category Management success

– further suggestions are provided throughout the report.

• Profiles of the organisations and individuals that participated in the

online survey in Spring and Summer 2014.

• How FP’s specialist focus can help clients to BUILD, LEARN, APPLY,

LEAD and DELIVER in Category Management.

• Five simple next steps that might be appropriate to help improve

Category Management in your organisation.

• Background information on Future Purchasing and clients that we have

helped to achieve Category Management leadership.

Summary

Key takeaways

Make sure there is “one way of doing Category Management”

that is aligned to organisational strategic objectives.

Extend training and coaching beyond category managers to

procurement line managers and stakeholders.

Secure active support from category team sponsors and

executive and middle management stakeholders.

Establish joint accountability with stakeholders for setting and

delivering targets for Category Management projects.

Develop excellent category strategies that rigorously use a

wide range of value levers and identify all opportunities.

BUILDING BLOCKS TO

Category Management SUCCESS

DELIVERAPPLYLEADLEARNBUILD


Top 10 Recommendations

BUILD

LEARN

LEAD

APPLY

DELIVER

Build and embed Category Management as the “one-way-of-working” aligned to organisational strategic objectives.

Systematically identify opportunities to reduce cost, reduce risk and increase revenue using a wide range of value levers.

Extend training and coaching beyond category managers to procurement line managers and stakeholders.

Use a continuous blended learning approach that aligns classroom training with coaching and real life projects.

Clarify roles and responsibilities between Procurement and stakeholders.

Secure active support from category team sponsors and executive and middle management stakeholders.

Ensure category managers and cross-functional team members have sufficient time for Category Management.

Establish joint accountability with stakeholders for setting and delivering targets for Category Management projects.

Develop excellent category strategies that rigorously explore a wide range of value levers and identify all opportunities.

Extend the coverage of Category Management so that more than 75% of spend has an excellent strategy and plan.

From the FP Category Management Survey 2014-15 we have identified the top 10

recommendations for successfully embedding Category Management in an organisation.

1

2

3

4

5

6

7

8

9

10

Ten Summary Recommendations From the Category Management Survey

BUILDING BLOCKS TO




Respondent Profiles

0% 10% 20% 30%

Public sector

Less than €100 million

€100m - €500m

€500m - €1b

€1bn - €5bn

Over €5bn

Organisation Turnover

0% 10% 20% 30% 40%

Less than €50m

€50m-€250m

€250m - €500m

€500m - €1b

Over €1bn

Don’t Know

Organisation Spend

0% 10% 20% 30%

0-10

11-25

26-50

51-100

101-250

More Than 250

Don’t Know

Procurement Team Size

0% 10% 20% 30% 40%

Centralised

Centralised Hybrid

Hybrid

Decentralised Hybrid

Decentralised

Operating Model

0% 2% 4% 6% 8% 10% 12% 14%

Public Sector

Manufacturing & Industrials

Pharmaceutical & Healthcare

Retail & Consumer Goods

Banking & Finance

Technology & Telecoms

Oil, Gas, Chemicals & Mining

Other

Utilities

Transport

Support Services

Construction & Property

Hotels & Leisure

Media & Marketing

Professional Institute

Industry Sector

0% 10% 20% 30%

Procurement Leadership Team Member

Chief Procurement Officer

Category Manager

Other

Category Director

Buyer

Analyst

Respondent Role

352 participants with an average spend of €2,100m, team size of 81 and 18,500 suppliers

BUILDING BLOCKS TO




Specific ways that FP can help you to achieve Category Management leadership

1

2

4

3

5

Major improvements in Category Management performance can be achieved within 12 months

Personal briefing on the Category Management Leadership surveyContact us for a discussion on the detailed findings and recommendations in this report and

our experience of working on more than 50 Category Management projects. This could be on a 1-1 basis or for a team responsible for Category Management development. The flexible

format will generate ideas for designing or enhancing your Category Management approach.

Benchmark your Category Management performance against Leaders Compare yourself against “Leaders” and confirm the specific changes you require to improve

Category Management and advance to the next level of performance. FP can benchmark your Category Management approach across the key criteria that really make a difference

using a unique dataset of 300+ global organisations and produce targeted recommendations.

Training & Skills DevelopmentFP provides inspiring & transformational category management training which enables our

clients to achieve up to 20% annual improvements in capability. We blend interactive and

high energy workshops, coaching and real project activities into a continuous cycle that builds mastery. Our programmes combine Procurement with prioritised Leadership skills.

Competency assessment - CompassCompetency assessment is often the first step in capability transformation. We help clients to

identify & prioritise the key Procurement and Leadership skills that they need for the future. Our on-line Compass tool is used to assess individuals against a customised set of

competencies and create reports that identify strengths, weaknesses and recommendations.

Category Management Toolkit – Track8®Track8® is our Category Management toolkit that covers the three core processes of

Category Planning, Strategic Sourcing and Supplier Management. Our guides and templates are consistently written, modern, powerful, user friendly and can be readily customised to

meet client needs. Track8 Online includes programme management and workflow.

The Comprehensive Competency Assessment Tool©

Well-DefinedIntegration Betweenthe Three Approaches

Learning Through

Experience

LearningThrough

Others

Learning Through Structured Courses

20% 10%

70%

BUILDING BLOCKS TO




An integrated approach

incorporating Category Planning, Strategic

Sourcing and Supplier

Management.

A toolkit with 66 best

practice value levers which systematically

secure value through

Category Management.

A suite of 100 guides & 172 templates to help category managers and teams to work effectively and consistently.

is a centre of excellence and expertise in Category Management

Future Purchasing’s focus on Category Management leadership

Our Category Management approach includes:

1. Initiate Project

2. Research & Analyse

3. Develop Strategy

4. Implement Strategy

5. Implement Contract

3

2 4

51

123

5

4

3

2

1

1. Review Benefits

2. Engage Business

3. Prioritise Projects

1. Initiate Supplier Mgmt.

2. Analyse Supply

3. Develop Supplier Strategy

4. Engage Supplier

5. Review Supplier Relationship

A practical governance structure providing formal reviews of project status.

Category Management workflow toolkit to help your team manage their work more effectively using these processes.

Dynamic Category Management trainingprogrammes to educate your teams in how to apply the Category Management process & toolkit by focusing on both Procurement & change management skills.

FP experience of 50+ Category Management implementations makes it clear that efficiency in use and appealing look and feel are the key

toolkit design requirements of category managers. These have been achieved through 5000+ hours spent on materials development and a design team that includes specialists in lean processes, creative design and semiotics.

CATEGORY

PLANNING

SUPPLIER

MANAGEMENT

STRATEGIC

SOURCING

We have real expertise to help validate and improve your Category Management

performance

BUILDING BLOCKS TO




...and 25

countries…

We are

experts in:

• Procurement Transformation

• Category &SupplierManagement

• Learning & Development

• Cost Reduction

150+

Projects…

in

19 sectors…

11 year

track recordof designing and

implementing procurement change through…

Based in the UK, with partners in:

• US• Scandinavia

• France• Germany

With 40+

specialists

“Building, educating and applying Procurement excellence is the sole

focus of what we do. Our clients secure breakthrough levels of cost

reduction and supplier performance by strengthening Procurement

and Category Management as a core business competence”.

Some of our clients

About Future Purchasing

Our Mission To find out more:

visit FP’s website at:

www.futurepurchasing.com

Or contact

Simon Brown

m: + 44 (0)7961 110529

e: [email protected]

http://www.futurepurchasing.com/

mailto:[email protected]

3000 Cathedral Hill,Guildford, Surrey.GU2 7YB, UK

[email protected]+44 (0)1483 243520


The ‘FP’ Roundel, ‘Future Purchasing’,‘Ambition> Shape> Deliver’ and ‘Track8’ are all trademarks of Future Purchasing Consulting Limited.

Future PurchasingBuilding, educating and applying Procurement excellence is the sole focus of what we do. Our clients secure breakthrough levels of cost reduction and

supplier performance by strengthening Procurement and Category Management as a core business competence.

Category Management LeadershipIn our view, the label “Category Leadership” more accurately communicates the power that optimised Category Management delivers. FP can

benchmark your organisation’s Category Management performance against a unique dataset of more than 300 global organisations across 100 criteria

and routemap your path to Category Management Leadership..

Read more about Procurement excellence and how FP can help you:www.futurepurchasing.com

Contact us today

Mark Webb

Managing Director+44 (0)7974 [email protected]

Simon BrownDirector

Category Management Leadership+44 (0)7961 [email protected]

Anna del Mar

DirectorTraining & Development+44 (0)7786 078417

[email protected]

Allison Ford-Langstaff

DirectorProcurement Transformation

+44 (0)7968 [email protected]

Documents

Spotlight on Procurement: How does Category Management ......1. Internal Relationship Quality: Procurement team has very close and collaborative working relationships with the business,