The article below is written by Tjerk Blik on December 10, 2012
In my previous blog (Category Management and the challenges for Public and Private Sectors) I introduced the Category Management House and discussed three challenges that companies face during implementation of the ”Category Profiling” section of the Category Management House. In this blog I will discuss the challenges that occur during implementation of the top floors of the Category Management House, “Category Strategy”.
Category Strategy focuses on identifying opportunities within demand, supply and Total Cost Management (such as TCO) areas. For this step, it is essential to have a good relationship with the stakeholders, as the input should come from workshops between the business and procurement. The identified opportunities need to be evaluated for value size and ease of implementation. The opportunities with the highest value and which are easy to implement are the ones which should be executed first. These prioritized opportunities will be documented in the roof of the house, the “Category Plan”.
The Category Plan requires a completely different way of working then in the rest of the house. During Category Profiling, the buyer is a researcher, someone who gathers data and turns it into actionable information. During Category Strategy, the buyer acts as an advisor and project manager, giving advice to the business and managing the opportunities that are owned by the Procurement department. In Capgemini Consulting’s experience, this requires a whole different skill set and comes with several challenges:
- Allocating Time to Intensive Stakeholder Management
- Collaborating with versus Dictating to the Business Owner
- Translating Opportunities into a Project Plan
- For Public Companies: No Decision-Making Based on Value
Allocating Time to Intensive Stakeholder Management
In my previous blog, I mentioned the importance of stakeholder management. During this phase of Category Management this needs to be further intensified. The goal is to identify opportunities for the category together with the business owners during a workshop. This will only work when the buyer has a stable relationship with the business owners and the time to fully engage.
Collaborating with Versus Dictating to the Business Owner
This is often a great pitfall for buyers. Buyers want to tell the business owner what is the best way to go. Often this is counterproductive and creates tension between the buyer and the business owner. The buyer needs to become an advisor to the business, instead of acting like the buyer is the business owner.
Translating Opportunities into a Project Plan
The output of the workshop is an overview of opportunities, and if everything has gone well you will even have a prioritized list. The next step is to translate these opportunities into a solid project plan. This step is often neglected but is important to drive the project team to quickly realize results.
For Public Companies: No Decision-Making Based on Value
A big challenge for companies in the public sector is that they often do not make choices based on value. Money often is not a big problem for companies in the public sector and business case building skills absent. Choices are made based on the ‘does it make my life any easier’-factor. Public procurement needs to take that into account while implementing Category Management.
In these two blogs, I have discussed several challenges for Procurement in the public and private sector while implementing Category Management. Although I have only listed challenges for Procurement, the business owner also has its responsibility. Category Management should always be a joint effort from Procurement and the business owner to make sure that Category Management becomes a success.