How to ensure Category Management is successfully embedded across an organization
“What benefits will Category Management deliver to my organization?” This is a question I am regularly asked. It is expected that I will produce a magic savings number, backed up by hard evidence to justify the claim, and form the basis for a business case. My answer is simple, “It depends!”
It depends upon many factors but at the heart of these is the organization’s ability to effect a quality implementation. There is no doubt that Category Management can deliver dramatic benefits to an organization. It has proven well its ability to deliver double-digit savings as well as reduce risk and unlock other sources of value and innovation from the supply base.
Yet, realizing a worthwhile return on the significant investment that Category Management can bring requires much more than tasking the procurement function to adopt the approach. In fact it must become embedded as an organization-wide philosophy, embraced and supported, and with active participation by all. There are five key success factors here:
A philosophy not a process
Category Management is often represented as a process—a series of steps and activities that lead to a result. Whilst the process diagram provides the route map, the journey will be problematic unless the organization has fully embraced and supports the concept, making it ‘the way we buy’.
At the heart of Category Management lies a strategic approach to sourcing: moving beyond traditional tactical contracting and tender purchasing to one of maximizing the value from the supply base in order to achieve corporate goals and aspirations. This cannot be done from the confines of a procurement function, but rather is a business-wide concern.
If organizations wish to realize the dramatic benefits that Category Management is proven to deliver, then they must attend to putting in place the business-wide arrangements to enable it.