Centrica prioritises leadership to achieve successful category management through procurement Business partnering.
Bilal Shaykh was Group Chief Procurement Officer at Centrica, a multinational energy services and solutions company, headquartered in Windsor, England.
Bilal took over a team of regionally dispersed procurement practitioners, who were working in the most part on the more tactical sourcing-related tasks.
His primary challenge at the outset was to create an ethos of consistency in not only working practices, but in mind-set, to develop a cross-functional team with aligned business outcomes, and to implement a way of working that combines the technical abilities and business knowledge of stakeholders with the commercial acumen of the procurement team. An embedded category management approach was the way to achieve this, but he was mindful that:
“Different CPOs will have different ways of defining category management, but the business isn’t concerned with what you call it, what they are concerned with is the result. Key to our success was having a clear purpose statement, and communicating it through procurement business partnering. We were clear about how we would align our category management strategy with overall business goals, how we would become more than a trusted advisor, and how our purpose would hinge on ‘business success through market solutions.”
Stakeholder alignment and engagement – develop a business-partnering role
At the outset of any business process implementation project, for any firm, achieving stakeholder alignment and getting stakeholder engagement is a core tenet of success, and that applies equally to category management. Category managers must take the time to deeply understand the businesses they are working with, their needs, their goals, their processes and the functions they are supporting, and must communicate objectives fully and transparently at multiple stakeholder levels.
“It’s paramount to get business partnering in procurement behind their stakeholders, in a structured way,” continued Bilal. “Category managers must undertake a business-partnering role. To do that you need one channel of communication that speaks to any one business unit; a single point of contact that understands the business and ensures they get what they need. This is the approach I found worked best for us.”
Leadership and resource allocation – continually manage
If successful category management has one central pillar, it is that of leadership. The procurement leadership team and dedicated line managers are the people who will obtain the investment to deliver to expectations, set relevant and up-to-date objectives, structure and fully resource the team, and prioritise category management as a single way of working over traditional sourcing activities. Theirs is a significant change-management role, and they need to have commitment that goes way beyond rolling-out a new process.
“We definitely found that expecting people to be strategic and make time for category management, under the burden of transactional workflow and tactical activities, without allocating them the time, meant they could not conduct category management well, or properly. This was one of the main challenges we encountered. So we decided to outsource much of the tactical procurement and automate administrative P2P activities. This freed up the time and space they needed, so that they could focus on more high-level strategic work.
The key for leaders is to make sure resource, internal stakeholders, contracts, and external markets are continually managed.”
Capability and mind-set – joining the dots
It is not just technical capabilities that are required for a well-rounded and balanced category management team, behavioural skills and mindset are equally important. So a main challenge for Bilal was to drive change in how the team acts and thinks consistently. “Everyone must understand how to apply the process to be successful. And this must not be a tick-box exercise, but something that becomes embedded in the culture,” he said.
“Getting people on board who are good at joining the dots, people who are entrepreneurial and not just ticking boxes is really important. You want to encourage people to be curious and not to be afraid of making mistakes, but you must be behind them and support them to achieve this, because fear of mistakes stymies innovation. We also found that recruiting people in from other organisations that had already adopted category management was a useful way of setting expectations and introducing a positive influence, this helped instil a cultural change and drive out old habits. (Of course you need help from HR to do this.)”
Process and technology – eat what you cook
A ‘fit-for-purpose’ process and toolkit, which is frequently reviewed, is essential, but it must be company-aligned. It should show the key activities, include how-to guides, and contain templates to document thinking and create output. Consistency and standardisation are the keywords.
Bilal used a third party to create the toolkit, and got the team to both use and develop it. In his model, he separates strategic development from implementation. And that worked – “It created an ongoing learning ethos,” he said.
“I believe in ‘eating what you cook’ so our category managers have combined responsibility for strategy development alongside implementation and results. This minimises handovers and accountability issues. Their exact activities and scope varies by category as the level of expertise varies in the business from category to category,” which makes sense.
“In terms of process and tools, we were very disciplined in our use of templates, this ensured teams delivered consistent strategy creation with stakeholders. More than that, they learnt how those processes turned into delivering business success.”
When consistency is embedded in the category management process, it ultimately translates into reduced risk, better supplier management and therefore service levels, and increased revenues; the very indicators on which success is measured.
Former Group Chief Procurement Officer at Centrica