Blog
Building Sustainability into Category Management
By Mark Hubbard |
In the 2024 edition of the Global Category Management Report, we asked whether sustainability has become a specific category management objective alongside financial and risk objectives.
Theory and practice diverge on sustainability in Category Management
The response was both encouraging and surprising, as 68% of respondents either agreed or strongly agreed with this finding. Our own in-client experience indicates that incorporating strong sustainability targets into category strategies is still in its early stages.
Typically, the owner of the sustainability targets is a key stakeholder. A category manager needs to articulate these requirements in their category strategy. This activity is part of building the business requirements with stakeholders, which is still challenging for most category teams.
Government-led sustainability targets can pose a pressing challenge for category strategies due to the time required to develop and implement them. If the scale of change is substantial for a category, the owner may need to take immediate action to meet the sustainability targets.
Embedding sustainability across the Category Management Operating Model
The category management operating model provides a framework for embedding sustainability in category management. Sustainability must be embedded in each of the six dimensions to ensure it can deliver the desired outcomes.
Catman Strategy
Consider the overall approach to sustainability by clarifying the speed of change required and how to reflect it in the strategy toolkit, prioritising which categories to address first, and understanding the links to other objectives.
Stakeholder Engagement
Build on existing sustainability practices and expectations within the company and translate them into the category strategy toolkit. Stakeholder objectives need to be broken down into elements that can be affected by procurement.
Organisation Structure
Think about who owns sustainability objectives and measures across the organisation to define the best way to reflect them in procurement category strategies. Contracts formalize expectations and measure improvements in sustainability over time.
Capability and Mindset
Design specific training materials to help category managers understand the topic, requirements, and objectives. This will enable them to confidently discuss the subject matter and explain how they are expected to incorporate sustainability into their strategies.
Process and Technology
Deliver a systems-led approach for measurement in key areas, particularly as the approach becomes more embedded. This is likely to be cross-category.
Value Impact
The reporting approach needs to be compatible with and feed into the broader organisational sustainability reporting as easily as possible. Creating dedicated Procurement KPIs that are part of the Procurement Performance Scorecard will ensure continuous leadership attention and visibility.
Embedding sustainability across the Category Management Operating Model
Despite recent retractions, Environmental Sustainability and Governmental (ESG) practices, along with Diversity, Equity, and Inclusion (DEI), will increasingly become core topics within Procurement. Category Management can drive embedding and accelerating a company’s ambitions by integrating objectives and requirements into category strategies.
As with other areas, embedding sustainability across all six dimensions of the Operating Model Framework is key to a successful implementation. Contact us to discuss how we help procurement teams design operating models that successfully balance the interdependencies between each dimension.
Further reading
Blog post: Driving incremental sustainability
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