In category management developing a pipeline of category projects should be a collaborative and creative process
Too often Procurement works in isolation when deciding what category projects to work on. We all know that without the right level of stakeholder support many of these projects simply will not be implemented. This potential misalignment between the procurement team and its internal customers can often result in significant effort being wasted securing stakeholder support for projects, inadequate business sponsorship, lack of procurement involvement in key projects, limited team resource provided by stakeholders and reduced benefit delivery.
Hence, Procurement need to promote the value and benefits of planning and agreeing which projects are going to be worked on over the next 12-month period with their respective business stakeholders.
The importance of strategic alignment
In our recently published FP Category Management Leadership Report 2021-22, 51% of respondents agreed an annual plan of category management projects with their relevant business stakeholders, compared to 39% in 2019-20. Procurement teams clearly appreciate why strategic alignment planning activity is such an important activity. It has similarities with category diagnostics and opportunity analyses which are undertaken to identify the scale of savings available. The real value is spending some quality time with your stakeholders to discuss potential categories to focus on and identify resources required to make the cross-functional working more effective.
Strategic alignment is best completed by senior members of the procurement team along with senior stakeholders. By jointly planning and agreeing the pipeline of activity on an annual basis, procurement is more likely to be made aware of future business plans and be involved at an early stage. Also, business approval of the pipeline makes it more likely that technical resources are made available for category teams. Formalising the strategic alignment approach and linking it to the corporate business planning cycle to create an agreed pipeline of projects helps to facilitate a much more cross-functional approach to category management. There are a number of critical elements to consider.
- Context: Understand the landscape and dynamics of the industry sector that the business operates in and its impact on key categories.
- Business Planning: Align the process with existing corporate business planning cycles and develop a deep understanding of key functional and business unit strategies.
- Learnings: Review learnings from previous years’ category management activities with stakeholders and use them to drive improvement.
- Spend: Profile historic and future spend profiles for all major categories, segmenting by business units and major suppliers as a minimum.
- Supply Market Analysis: Segment the supply market and understand how current and potential suppliers serve current categories and emerging requirements.
- Workshops: Run joint prioritisation sessions with stakeholders to identify the key category and supplier projects to run over the next 12 months, along with benefits.
- Pipeline Tool: Document the prioritised category and supplier projects into a pipeline tool that captures savings ranges, project leaders, timings etc.
The output from the strategic alignment activity is a category group plan that should provide project & savings visibility and ensure the workload is distributed evenly and projects are scheduled appropriately. Moving from an unplanned engagement and prioritisation process can be a fundamental change for many procurement teams. It encourages more collaborative working with business stakeholders rather than Procurement continuing to “sell” their pre-selected projects to the business.
About Simon Brown
30 years procurement experience in line management and
Previous employment: British Aerospace, British Airways, QP Group
Education: MBA, London Business School. BA (Hons) Business Studies.