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