Category Management starts and ends with the business priorities

Case study Nordea

Category Management starts and ends with the business priorities for Nordea

By Future Purchasing |

Morton Hedegaard - Head of Group Procurement, Nordea
Nordea Logo

Morten Hedegaard
Head of Group Procurement, Nordea

Nordea is a global bank with a 200-year history of supporting and growing the Nordic economies. Their values are deeply rooted in these open, progressive and collaborative societies. They are the largest bank in the Nordics and have a strong market position within their four business areas: Personal Banking, Business Banking, Large Corporates & Institutions and Asset & Wealth Management.

Mindful of their responsibility towards current and future generations, they have made sustainability an integrated part of our business strategy. They enable sustainable choices for their customers, engage in active ownership and drive change through their lending and investment decisions.

Many key components must fall into place to make category management a business success factor. But an overriding tenet that has frequently shown to be at its core is a solid understanding of the business priorities to be an effectful business partner.

In a successful operation, the procurement team, but especially its sourcing and category managers, must understand the strategies, goals and processes of the business functions with which they work and tailor their own strategies and processes to support their projects. This requires frequent stakeholder communication at all levels, resulting in a combination of both technical and commercial skills to access the business’s potential value levers.

This is a principle long held by the Head of Group Procurement at Nordea Bank Abp, Morten Hedegaard. With 13 years’ experience at the prominent Nordic financial services group, Morten has successfully run a cross-functionally operating procurement department since 2018, and previously held roles in operations, category management, project management and consultancy.

Morten shares his experiences and learnings from what he describes as the department’s “ongoing category management journey.”

Category Management starts and ends with the business priorities

An embedded approach is a partnership approach

Having begun its category management journey some years back, the procurement team at Nordea has arrived at a stage where they have ceased to refer to category management as a separate discipline, such is the extent of its embedment. Rather, the conversation today leans towards Partnership.

“A business partner,” Morten says, “is someone who can lead and drive business outcomes for the stakeholder. This goes deeper than just supporting them, and for us it is borne out of time invested in engaging, listening, understanding and applying relevant expertise that allows us to challenge – something that adds value to agreements rather than simply executing them.”

To arrive at this point, they went from a text-book style model of separate category management teams (for indirect or banking-specific categories for example) to a single team which now embraces a partnership approach. “We found that time spent on routine category management exercises like a certain schedule of category plans, market analysis, spend analysis, contract landscape analysis and industry trends, while important for us, yielded technical input from the stakeholders, but not the strategic input to projects we wanted.”

A structural change was needed. While the current tactical approach facilitated an entry point to a pipeline of projects, a new partnership approach would help them obtain their financial KPIs. That would rely on a build-up of credibility. And to gain that credibility they needed to get to know the business functions’ priorities, the question was …

How to engage with the business and its budget holders?

Getting to understand the agenda and the mechanics of a business area comes from working in projects rather than holding status meetings.

“Once you are able to be part of large projects, it follows that you build relationships. And once you are able to demonstrate your expertise and knowledge (which is where your traditional category management analyses come into play) then you will gain the trust to work side-by-side with the stakeholders. The ‘big ticket’ contracts need sourcing and negotiating skills to be completed, and close advisors to help execute them. That’s where our value is added.”

“This doesn’t mean that we are not following a category management approach, on the contrary, we are taking the relevant components of Category Management and applying them where it makes most sense and not least when it makes sense to do so in a financial services environment. When a window of opportunity arises, which might be anything from business process outsourcing to the use of a new technology, we are ready to have all hands-on deck. Then we will take a SWAT team approach to ensure success for the business area.”

A classic approach to category management might be more relevant to the production industry for example, where raw materials or components are being sourced and whose prices are market-dependent and where there’s a supply chain to manage. But the financial services sector doesn’t always fit into a tangible mould. “We are buying services that are integrated into business processes. So, you have to be able to adapt the category management concepts to suit your business or service.”

“You get the stakeholder buy-in by proving that you can add value. When you have proved yourself you don’t need a mandate. To earn a seat at the table, for us, is to be involved in the large, complex sourcing projects where we can use our negotiation and advisory skills and thus gain stakeholder respect. The key stakeholder is more likely to want to interact with the sourcing manager who has been involved in the whole negotiation and understands the specified requirements. So in our model, sourcing and category management must go hand in hand to add value.”

So the procurement team has developed a very agile approach which enables them to respond to any window of opportunity. Says Morten: “Sometimes a category strategy is what is required to advance a specific area, but it then requires full attention from me and my management team to create the buy-in from senior leadership in the business areas. And sometimes there is little appetite in the business areas to make changes to the supplier base, because their focus is elsewhere.”

“In our environment it is not a necessity to have deep expertise in every possible category at all times. But having this agile approach, with pockets of expertise and a team that deep dives into the businesses, works for us and helps us achieve credibility with stakeholders.”

What do the stakeholders perceive as value?

Value can mean different things to different people and departments, but according to Morten:

Value can mean different things to different people and departments, but according to Morten:

“Firstly there’s a big value add in bringing a mature sourcing approach to the table, which will yield a better commercial output. This means the structure and methods to do the relevant analysis, sourcing strategies, and not least negotiation. This is where we have the ability to lead because it’s a professionalism not usually in abundance in the business areas.”

“Secondly, the regulatory landscape has become top of mind for everyone in the industry, so there’s a bigger need for the business to involve us in the jungle that is risk and compliance. When we have been involved, stakeholders can rely on the fact that all relevant risk and compliance requirements have been met. Risk management is a special skill set, and we have to internalise and have a deep understanding of the risk that we have to manage to be able to navigate all requirements smoothly.”

“Thirdly, long-term strategic planning for opportunity identification and capacity optimisation is valued. The cadence for these discussions is typically quarterly and we run a 12- to 18-month rolling pipeline. This means we have all strategic discussions within one team, which learns the business’s priorities and is separate from the operational side. This way we keep on top of things like expiring agreements or renegotiations so that we can plan for them in advance.”

At the end of the day …

The core of procurement is to enable the best business outcomes by matching the business requirements with the best the supplier market can offer. “But, at the end of the day,” concludes Morten, “what really matters is that we communicate regularly with the business to understand their requirements and add the value that they cannot.”

As this survey reveals, procurement teams that have embedded a cross-functional way of working with budget holders and technical stakeholders (the ‘Leaders’) are those whose relationships have evolved to consider business objectives and category targets a joint responsibility.

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Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

negotiating for procurement

Our approach to procurement negotiation helps teams to improve performance, track their progress, measure success and secure rapid payback to programme costs. It is based on four principles…

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Talent and strategy make for successful category management at ExxonMobil

Case study ExxonMobil

Talent and strategy make for successful category management at ExxonMobil

By Future Purchasing |

Pamela Kearney Skaufel
ExxonMobil Logo

Pamela Kearney Skaufel
VP Global Procurement, ExxonMobil

ExxonMobil, one of the largest oil, gas, integrated fuels, lubricants, chemicals and lower-emissions technologies companies in the world, has been undergoing a significant business transformation over the past two to three years and that has included the adoption and refinement of a critical area for procurement teams: category management.

The elements that make up a good category management approach that will yield opportunities to unlock savings and deliver wider value to the business include strategy, structure, collaboration and talent, all of which the Commercial organisation has embraced to the full.

For a global and complex organisation like ExxonMobil, category management, done well, can help steer the business towards its future ambitions. What makes this organisation complex and unique in its implementation of category excellence is the sheer size of spend, teams and structure. Of about 2000 people, 700 work in the category space — a high number, but not surprising considering the organisation’s $49 billion in spend on both directs and indirects. How they structure that is key.

Pamela Kearney Skaufel, VP Global Procurement, explains that “the spend is divided into seven major category families, small enough that you can get your arms around them, but big enough that you can use scale to your advantage. We are highly centralised in terms of how we execute our procurements, but we are complex because of our global footprint. For instance, we cover oil and gas, refining and chemicals operations around the world, including the production of lubricant products, like our Mobil1 flagship brand. We also support development of large facilities, like hydrogen processing plants for our Low Carbon Solutions Business and the biggest advanced recycling plant in the US. So, the size and variety of businesses for which we procure makes us a very powerful buyer.”

Strategic category management is a way of thinking

Category management is a primary channel to leverage that buying power. “For us,” Pamela explains, “it encompasses more than sourcing; we see sourcing as a series of events that come from category management. Category management is the larger, more strategic approach to how we think about the entire range of goods and services in a category. It’s ultimately about how we think across the whole organisation in terms of supplier relationships, payment terms, how many suppliers we need, etc. So, we see the category structure through various lenses, led by category managers who report into category families. While it is the contract leads globally who are executing on behalf of the categories, it is the category managers who are responsible for strategy, approach and how we go to market.”

“What’s important in our approach,” adds George McGlamery, Commercial Chief, “is that we consider these category manager positions as leadership roles, so they have global responsibilities and input on various go-to-market strategies, like IT or wells services, which helps us quickly implement a more complete set of commercial levers no matter the operating site. Thus the category managers can be working across all geographies, with operations in about 60 or 70 countries.”

Talent and strategy make for successful category management at ExxonMobil

Visibility breeds credibility

One of the deliverables of the transformation programme was to provide absolute clarity on the requirements of the category families versus the contract leads. “This is important,” says Pamela, “because without clearly defined roles and accountabilities upfront, you can end up with country-level activities that aren’t aligned with the overall business strategy, leading to less control.

“A strategy is not something that lives in your head or on your C drive, it’s something very comprehensive, with minimum requirements. So this ‘clarity’ includes understanding where strategies need to be created, how often they are refreshed, how they map to business requirements, and so on. Then we have a set of subject matter experts in place, like senior technical professionals, who peer review the category strategies and score them to make sure they meet the absolute minimum criteria for what good looks like. And this level of professionalism is hugely impactful.”

What good looks like was directed by the category management system they put in place. Using CAPS (Center for Advanced Procurement Studies in North America) they went “back to basics” and used their learnings to identify a systematic process which defines what they expect from end-to-end Category Management.

“People found it a really useful tool since it helped them better understand what our expectations were, like what makes a good category strategy and what are the outputs expected from it,” Pamela explains. “It meant the higher expectations placed on them, in terms of cost-reduction or cost-avoidance targets, were made clear from the Category Management System. Applying that to execute supplier and contract analysis, market analysis or should-cost modelling, gives them insights for better outcomes. So when you give someone lofty goals, but you also give them guidance upstream on how to achieve them, then that galvanises support.”

“And through formalisation,” explains George, “we get deeper visibility of everything we leverage. At the end of the day we are a solutions business, so credibility is hugely important to us. The more transparent we are, the more our stakeholders can see how we work, the more credibility we have, and the more they trust us to operate independently. Further, formalising what we do, not only helps them understand our business, but enables them to contribute to it, giving us a full solution.”

Talent is an important element of the strategy
Leadership and role model concept, 3d rendering

Talent is an important element of the strategy

“In a commodity business like ours,” says Pamela, “we have to make sure we get the best prices so we can be successful in a very competitive marketplace. And I think people see our category approach as a way to unlock that, but it requires talent.”

The skills required of a Category Manager are very different from those of a Contract Lead. Pamela believes that if you give people the tools needed to self-assess and tell them where they are in their journey, and provide them with the training they need, you can discover who is best suited to strategy and who is best suited to lead roles. “But whichever that is,” she emphasises, “the more tactical roles are just as valuable as the strategic ones. Our aim is to help people understand the importance of having the right mix of talent and that skills can be transferred from one category to another.”

Segmenting the biggest deals and then pairing developing staff with more experienced mentors to carry out these major negotiations helps instil commercial principles, build commercial skills and improve confidence, better enabling the movement of talent from one deal to another, regardless of category. “And we can build that collective competency across the entire category board,” says Pamela. “The process of moving talent to your biggest and highest priorities is a really good output of our strategy; it means we are ready to mobilise resource from across the categories to where they are most needed.”

Cross-organisational alignment

Of course, it’s important that any transformation aligns with what the organisation wants to do, and you have to be able to show the business that category management is delivering value.

Being an Enterprise Process Owner during the business’ own transformation has given Pamela an opportunity to communicate outcomes and to be part of decisions on go-to-market strategies and projects. But with authority comes the responsibility to implement those decisions. Again, you need the right people and talent for that.

To improve the talent pool, Pamela introduced skills self-assessment and has senior leaders validate those skills and create a training roadmap. They also provide procurement-specific training (on negotiations, on setting up contract terms, on influencing, etc.) to upskill everyone.

“We are quickly heading in a direction where we can share resources with other commercial functions as people’s depth of understanding grows, so we can carry out commercial work all over the corporation. In Sales, for example, the experience and skills needed for business development activities are very similar to ours. Likewise, a lot of the experience acquired in the sales environment is very transferrable to purchasing. Deep knowledge gained by marketing and selling chemical products for example is very transferrable to the category side.

What it takes to make category management successful

What it takes to make category management successful According to Pamela, to make category management successful you have to really believe in what you are trying to do. “You can’t achieve what’s possible by limiting yourself,” Pamela says. “You have to believe in setting big targets, like working across the organisation. We originally thought would be too hard, because ExxonMobil was traditionally very siloed with lots of different companies. But now that we know we can deliver good things for the company, we are able to believe in our capabilities.”

On the more tactical side, Pamela is passionate about data and systems. “You need good data for everything,” she says. “For example, we have nine different instances of our ERP system and pulling data from multiple different systems is always hard. So the data transformation project that we have under way right now, replacing our business systems and ultimately modernising our processes, is going to be a huge enabler for our future.”

Digitalisation will only increase the impact of category management

Digitalisation will only increase the impact of category management

While the spend management technology providers are developing their product suites of the future with category management workflow in mind, teams like Pamela’s can help frame their offerings by advising on the needs of the industry. “What we want is to be able to connect everything from spend tools, category insights, contracting levers and all kinds of KPIs into a full end-to-end category management approach that you can only do well if you have a system in place that formalises it, gives you insights you can pull directly out of the system and eliminates all the manual labour we use today.

“If you’re going to start using the power of technology, it’s got to come through a platform using machine learning to quickly get to what you want, and then using AI to get to market even faster. But there’s no point going to market without the right insights or data in the first place. And one of the big use cases I see for AI in category management is the ability to ask the chatbot, or whichever form the LLM takes, to give you details on your goods and services spend over a certain amount of time, including out of contract, and prepare a set of commercial levers based on those insights. If you ask the machine all the right questions, you can map the answers with your category strategy, and that will make the buyer of the future incredibly powerful.”

Register for the Future Purchasing 2024 Global Category Management Report

This case study is taken from

“Influence the Future” – The 2024 Global Category Management Report

Equip yourself with the knowledge and tools needed for tomorrow’s challenges.

  • Strategic Focus: Gain insights into top practices that drive improvements.
  • Value Delivery: See how leaders maximise value beyond expectations.
  • Team Efficiency: Deliver twice the value, with half the resources.
  • Industry Benchmarking: Assess how you measure up to industry standards.
  • Expert Knowledge: Extract actionable advice from leading global case studies.

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

negotiating for procurement

Our approach to procurement negotiation helps teams to improve performance, track their progress, measure success and secure rapid payback to programme costs. It is based on four principles…

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

Home Office – Using category management to position Commercial as a strategic leader

Case study Home Office

Home Office – Using category management to position Commercial as a strategic leader

By Future Purchasing |

Sam-Ulyatt, Home Office
Home-Office-logo

Sam Ulyatt
Chief Commercial Officer, UK Home Office

With an annual UK public sector spend of £6.4 billion, The Home Office has a responsibility to manage public money and resources using best business practices. The standards expected are demanding.

Sam Ulyatt, its Chief Commercial Officer, explains why she believes a category management approach is essential to deliver to those standards.

“At present,” Sam says, “each Director General has responsibility for a budget or part thereof, which means spending can be carried out in isolation, and that means that various budget holders could be going to market for the same product or service at very similar times, but with very different prices. So, my vision for the Department is twofold:

  • Firstly, I’d like to join up how we use that spend, how we present ourselves to market, how we all understand our categories and the impact they have on the marketplace, and on ourselves.
  • Secondly, I’d like to instil a culture, mindset and way of working that complements and supports the government’s commercial drivers and outcomes.”

“And my ultimate desire would be to do this across all of government.”

Where category management fits in

Sam is aware of what needs to change in order for Commercial to be positioned as a directorate of strategic leaders – a transition is required to effect the vision. “With this amount of annual spend,” she says, “we need to, and should, have a much louder voice around the table. We aim to achieve that by looking strategically at how our operations are carried out, including those by contractors, and working more closely and strategically with our suppliers and the businesses to help shape their strategies. Category management is a big part of that agenda.”

At the very heart of this, for Sam, is both the capacity and the capability of the people doing their jobs, and of the procurement profession generally. “My observations over the years are that many people spend their time operating the mechanics of procurement, being transactional, and my aim is to get that time and resource back by operating more efficiently – by employing category management. I believe a category management approach will massively drive benefits for the business and for the people within it.”

While a commercial team by nature has lots of expertise in procurement regulation and legislation, it’s essential for them to understand their markets just as well. And a conjoined approach alongside technology, Sam believes, can help them to be more streamlined, quicker, and to think more strategically.

“I think the implementation of category management is really a natural progression towards this vision – it’s not new, it’s something that’s been around for a very long time.”

As a leader, Sam can see ahead to what ‘good looks like.’ She’s seen the movie before. She successfully implemented category management at Crown Commercial Service, and is now busy getting her team on board to do the same.

Getting over the fear-of-the-unknown hurdle

“Naturally, there’s a lot of frightened people,” Sam explains, “because being strategic means leaving the comfort zone of how we’ve always done things. So we need to lead a cultural change in the way we engage with our markets, and we will be automating a significant amount of what we do. But that doesn’t mean less people – a myth that must be dispelled – it means people with augmented skill sets.

“Yet this is where we encounter some resistance, not just in the commercial teams, but in the business teams as well, because it means change. The change is not just about the principles of category management, it’s about people too.

“How we conquer the fear element is a million-dollar question. And it revolves around time and readiness. We need to support and enable people on this journey and work alongside them, as with all change, this can bring positive and negative thoughts.”

How do you achieve readiness?

“A leader needs to have earned respect and trust,” Sam says. “You cannot come into a change management role with a list of to-do’s and demands. That results in chaos.

“You must be aware that people fear change, even if they won’t articulate it – they show it in their resistance. But they will follow you if they believe it is the right thing to do – the right direction. And it’s the leader’s job to communicate that, to help them understand that in fact strategic thinking about how you are going to deliver something, and avoid any problems along the way, is more productive than the transactional box checking and button pressing. A non-strategic approach is massively costly and doesn’t reap the benefits we could be getting from our suppliers.

“On that point – also educating some of the supplies on the benefits of strategic working is another hurdle … but that’s another story.
“The other challenge is getting all of the leaders in that space. How you gain their trust is through stability and consistency in your messaging. You need to stay firm that this is not a passing change but a need to continually improve. The key is, you take everyone along with you. It’s important to listen to concerns, but also to deal with them, move on and get to a stage where you are ready for your CatMan journey.” So you need resilient leaders among your ambassadors, and a strong collective leadership message.

And this is where training comes in …

“It does take a lot of coaching,” says Sam. “We are ‘on the change curve’ at the moment, so it’s not going to be easy. Changing the hearts and minds of people is hard, so stakeholder management is important. If change management is a degree-level skill in the private sector, it’s a Ph.D. in the public sector. It takes perseverance, it takes resilience, and it takes training. And I think where other attempts at CatMan have failed, it’s because they haven’t put enough focus on those points.”

And this is where training comes in

The CatMan structure and organisation

How Sam intends to organise the CatMan approach is another big part of the ‘readiness’ equation. “We have a portfolio of big projects,” Sam explains. “Some impact external spend, so you could categorise them horizontally across all programmes.

“The way we are structured at the moment is with a DDaT, commercial and operations director, and I will soon be hiring a strategic category director too. That shows the seriousness of our intentions. It’s a really important leadership role because that person will be the change catalyst. And because, for example, about 45% of spend is on DDaT, I’m going to have a business partner in our strategic category team who will deal with that business and own it end to end, including the customer part. And it’s my job to make sure that person is a true business partner who will own business problems and keep them until they are solved.”

Sam aims to turn the Target Operating Model completely on its head, and actually change that role. “So we’ll have people with strategic categories, the specialists, for example in professional services. And operationally there will be the business partner team as the front door. But the engine behind all of that will be strategic category management.

“I see the strategic team being focused on strategy and the operational team underneath connecting well in the delivery of non-category spend alongside contract management. And we are working on a strategic category view. Lessons learned from doing this previously tell me that you have to keep a strong grip on the category and drive it – it doesn’t just happen. You have to turn it into best practice then mirror that across categories. But the two must stay linked.

“My big question at the moment is: do we have dedicated people or do we have a pool of specialists that work horizontally? Whichever, you need a workforce management process to allow that, to move away from only controlling what’s in your direct line – another shift that must be managed.

“What our structure will look like is still in the making, but it will happen, and across categories there will be holistic buying with category management touching every part of it.”

Ultimately, what does good look like?

For Sam, category management will bring not just a commercial, but a multi-disciplinary skill set. “My vision is that we can all sit around a virtual table, discussing and understanding market movements and delivering to a common goal. So that is what good typically looks like to me.

“It will require project management to bring everyone on board, and fortunately within The Home Office we do have that skill, and we have the right people to help drive this, where category strategies can align with delivering wider goals. For example, we have a two-year rolling plan that leads to a 2030 vision for Commercial and how category management fits within that.

“Above all, we must have a plan for whatever our government is going to be facing – no one knows what the future holds. But we do know that if we concentrate on the right strategy, tools and skillsets we can build the stability that will gear us up for whatever ministerial priorities the future brings.”

Register for the Future Purchasing 2024 Global Category Management Report

This case study is taken from

“Influence the Future” – The 2024 Global Category Management Report

Equip yourself with the knowledge and tools needed for tomorrow’s challenges.

  • Strategic Focus: Gain insights into top practices that drive improvements.
  • Value Delivery: See how leaders maximise value beyond expectations.
  • Team Efficiency: Deliver twice the value, with half the resources.
  • Industry Benchmarking: Assess how you measure up to industry standards.
  • Expert Knowledge: Extract actionable advice from leading global case studies.

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

negotiating for procurement

Our approach to procurement negotiation helps teams to improve performance, track their progress, measure success and secure rapid payback to programme costs. It is based on four principles…

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

Category Management: The golden thread running through NHS spend collaboration

Case study NHS

Category Management: The golden thread running through NHS spend collaboration

By Future Purchasing |

Jaqui Rock, NHS England
NHS logo

Jacqui Rock
Chief Commercial Officer at NHS England

Our global category management study recurringly identifies a cross-functional approach to managing similar areas of spend as a catalyst for raising opportunities for business value and consolidation, and, increasingly, collaboration. This outcome is unquestionably evident within NHS England.

Jacqui Rock, Chief Commercial Officer at NHS England has been directing a collaborative approach to public spend since she introduced the NHS Central Commercial Function (CCF) in 2022, and the outcomes to date touch all parts of the NHS.

Building collaboration and consolidating spend is a mammoth task for NHS England given the size and complexity of the NHS’s federated business model. The scale of its commercial activity is huge, with 228 acute trusts, formed into 42 integrated care systems, multiple arm’s length bodies, social care, and so on. Healthcare is the largest area of government procurement spending, and is larger than any other area including Defence, amounting to some £30 billion to £40 billion a year. With 4000 people buying products and services from more than 80,000 suppliers, overseeing procurement best practice is a huge task.

“The NHS is a vast and complex business,” says Jacqui. “The procurement process at NHS England is set up to encourage competition and market innovation, while clearly focusing on improving health outcomes. But obviously, with that size of spend comes a responsibility not just to deliver efficiency savings, but to make sure the NHS uses resources effectively to maximise value for money for the taxpayer. And all of that must support patient outcomes. That’s what makes NHS procurement unique.”

And it calls for a particular formation of teamwork and skill.

Category management is structured to deliver across the organisation

Category management is very much part of a wider, more holistic transformation programme within the NHS rather than being viewed through a single lens.

“This is deliberate,” says Jacqui, “we see everything we do within buying at the NHS ultimately impacting and delivering effective category management. This is important, because to succeed in transforming to an efficient and effective function, you need to look at the entire procurement process and you need to look at delivery. From that perspective comes world-class expertise in category management.”

With 4,000 people buying in a very federated model, The Central Commercial Function, run out of NHS England, brings them all together. It has a number of key service-operated offerings: Commercial Best Practice, Technology and Data, Architecture, Strategy, Governance, Assurance and Process, People and Community, Commercial Strategies, Sustainability and Innovation, Sourcing, Supplier, Category and Contract Management, with a category management approach common throughout.

The recently published Strategic Framework for NHS Commercial covers commercial ambitions and objectives for the next five years. Looking realistically at the NHS and the health spend, it marks a real step change in the way NHS Commercial is moving forward. The vision of that Strategic Framework is to be globally renowned as a commercial function in healthcare, supporting the NHS to deliver world-class patient care and outcomes.

“It’s about driving collaboration across commercial teams so that together we can deliver on NHS priorities, on what we’ve committed to as a profession, while keeping the patient at the heart of everything we do, on leveraging the NHS collective buying power to ensure the best value for money and on providing clear, consistent guidance on how suppliers contract with the NHS. Through this model we’ll raise overall productivity and efficiency above the historical average, and seek delivery on commitments outlined in the NHS long-term plan.”
This strategic framework will be used as a centrally-driven blueprint for supply chain transformation around four key themes:

People: Attracting the best and most diverse commercial talents and connecting commercial professionals to one another.

Digital: Using data as a strategic asset and using its insights to create the greatest value and public trust through greater transparency.

How we work: Simplifying and speeding up the procurement process, removing the unnecessary red tape and bureaucracy and embedding commercial standards and best practice into day-to-day working. Leveraging buying power at scale to strengthen relationships with the supply chain for better patient outcomes.

Influence and scale: Leveraging influence and scale to foster healthy supply markets, develop and shape the market, unlock benefits from innovation, and deliver wider social value and economic benefits through procurement.

“And effective category management is the golden thread that runs throughout the entire strategic framework,” she explains.
The central resources are connected to leverage categories in different ways. Expanding that to local deployment is all about implementation.

Top capabilities for implementation

“Our teams consist of brilliant commercial people with category expertise. The categories we tackle are wide, anything from drugs and clinical consumables through to transport and estates, the list is long as there is almost nothing the NHS doesn’t buy. So we are launching playbooks, offering training and putting the right governance in place for effective category management. And we’re identifying where the particular category skills lie within our in our commercial teams.”

In terms of category management, top capabilities include data and supply market analysis, and influencing and trust-building skills. “What’s really fabulous about our industry is the breadth of skillsets we have, as negotiator, salesperson, influencer or other — as well as knowing the law and understanding process.”

The Strategic Framework brings together the whole commercial community and all those skillsets and gives them a seat and voice at the table. The interventions contained within will be delivered across the NHS by areas that have exemplary skills in buying certain categories.

“In this way, we share our skills and experience and maybe even buy on each other’s behalf,” she explains. “This is important as we consider how we are going to deliver category management and category interventions. We look at where the best practice is and make sure they have a seat at the table with us, like Crown Commercial Service, which delivers common goods and services across the NHS, and NHS Supply Chain, which delivers medical devices and consumables as a centralised core function.

“The strategy isn’t about creating centralised, nationalised buying, it’s about collaboration and finding the most effective and most innovative ways to buy through a commercial procurement community.”

Category Management: The golden thread running through NHS spend collaboration

Innovations that complement category management

Other innovations complement the framework initiatives and show how category management is seen within the context of a variety of commercial activities, rather than a standalone operation.

Part of the commercial efficiency initiatives include the Framework Accreditation programme. When reviewing the buying frameworks used by the NHS, Jacqui uncovered more than 1,200 frameworks with variations in product cost and quality. This made it difficult for the NHS to decipher which frameworks offered the best value for money, was a poor use of time and resource for the commercial teams, and left suppliers unsure about which framework they should be on.

Being passionate about innovation, especially within the SME marketplace, she wanted to simplify how their frameworks run across the NHS to make it easier for smaller firms. “While it can be easy for the big strategic players to be on multiple frameworks, that’s not the case for SMEs,” she says.

The ambition of a Framework Accreditation program would reduce those inefficiencies and enable the NHS to further leverage scale and national pricing. “We spent a lot of time looking at the data to identify framework hosts,” she explained. “NHS commercial teams will now buy only from accredited framework hosts. This removes duplication and makes the landscape more level to navigate, leading to better value. We will then look at those frameworks by category, develop a framework category taxonomy and generate the standards needed to undertake that category-level framework. The estimated savings, as a result of having better standardised frameworks is projected at £100 million over the project period.

“The point is,” she says, “you can make significant savings just by getting a grip on the categories in your frameworks.”
But, as with all initiatives, you have to get buy-in …

It’s all about data

Jacqui explains: “We have been implementing an end-to-end procurement solution across all commercial teams. For the first time in NHS history, we have a full view of what we spend, where we spend it and with whom. Now, this is really exciting, because as a result of that data I’m able to look at variations in cost and in what’s being delivered by the same supplier. Our size means we have suppliers that might have hundreds of different contracts with each Trust or primary care provider. So we’ve been able to look at that holistically.

“When you are able to articulate that data to the CFO and stakeholder landscape, when you can explain how we spend the money, and where the inefficiencies are, and what we need to do about it, that’s how you get the buy in,” she says.

The same applies to category interventions.

One example is the work Jacqui and team carried out on stents. The quantities and types being bought varied greatly. Being able to show that data to the clinicians, and get their clinical lens on it, meant they could bake their informed perspectives into the category strategy.

All stakeholder parties that NHS Commercial interacts with, including category teams, are involved to get that wider business requirement perspective, from the multiple trade bodies of the Cabinet Office, through to the doctors and consultants themselves. “By consulting and involving everyone is how we form our category strategies for each of our products,” she says.

Engagement is also key

“When we launched the Strategic Framework, we asked the community to adopt this blueprint as their direction of travel for commercial, which is important when you’re looking at that entire stakeholder landscape. But we had to structure an engagement program, which included running regular national procurement forums. Now, each integrated care system (ICS) has a dedicated procurement lead which may have multiple Trusts under them. Getting those ICS procurement leads into a room with representatives from right across central government means we can collectively and collaboratively look at that whole stakeholder engagement. They discuss face-to-face the priorities, challenges, categories, innovations, and so on with their peers and their teams.

“So I really see it as my job to widen the stakeholder net and engagement with the NHS. This whole programme of engagement keeps NHS Commercial up the agenda, because it’s a huge volume of spend, and people should be aware of how we are managing it.”

Of course how and where money is being spent has long been a topic of interest for the business. But Jacqui has seen a shift in how it’s represented. “We are now actually talking about the NHS as a whole: how we can leverage that spend, how we can shape innovation, how we can create new markets, how we use NHS commercial power to deliver better patient outcomes and for the greater good – and category management is a key part of those ambitions.”

It all needs change management

Change management is essential for all transformation, but there needs also to be a change in the mindset of the people developing the categories, since having clinical representatives on the team is a leap forward in what and how they buy.

How they drive this change is by validating a plan, then delivering these nationally-led category interventions for the prioritised spend.

One example lies in the energy category.

“Price hikes have been painful for everyone,” says Jacqui, “and they hit the NHS hard. So it was logical to look into how we actually buy energy. Again, we got all stakeholders in a room and explained the position. We had over 200 energy contracts in place across the country, all under different agreements, all with varying value and purchasing strategies. When we started looking at the numbers, and the opportunities, we collectively agreed that the way that we bought energy was not efficient. This became one of our first category interventions.”

Jacqui announced the intention to transition to a centralised energy purchasing basket to find efficiencies across the NHS. NHS England worked with Crown Commercial Service to shape an energy purchasing agreement, with everyone’s buy-in, specifically for the NHS.
“The savings on this initiative are going to be between £60 million and £100 million a year, she explained. Benefits also include, greater price stability, resilience to external events, increased budget, predictability, bulk discounts based on the consumption, volume, etc. It’s a significant amount of money saved just by bringing everyone together, simplifying the process and buying through the consolidated initiative. It’s a real example of how we can use NHS purchasing power.”

Looking forward

Arriving at standardisation across a very siloed operation is always going to be a challenge. But with a robust engagement program that encapsulates all key stakeholders, best practice and reducing the barrier of size and scale, the team is succeeding, and Jacqui puts a lot of it down to data.

“Ultimately it’s about telling the story and delivering the message that we’re better together. Data has helped us do that, but you have to ensure you have the right access to data and know what to do with it,” she says. “When we work as one NHS with a category approach, we will realise savings efficiencies, we will open the door to creating dynamic markets and leverage every spend in existing markets. And this is really exciting in a very exciting year for public procurement.”

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Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

negotiating for procurement

Our approach to procurement negotiation helps teams to improve performance, track their progress, measure success and secure rapid payback to programme costs. It is based on four principles…

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

Learning and Development

Blog

Learning and Development – Evaluating Training Course Effectiveness

By Mark Hubbard |

Achieving Practical Outcomes Through Training

  • Objective Setting: It helps to think about what we’re trying to achieve, particularly in work skills focused training, such as Category Management.
  • Beyond Theoretical Understanding: It’s not enough to understand some of the theory behind the subject. We need to get participants to the place where they are effectively applying the learning in such a way that they are delivering measurable improved results consequently.

The Importance of Measuring Outcomes

This has some pretty significant implications, not least that we need to be able to measure outcomes (by which we mean business outcomes) at some time after the delivery of the training and seek indicators of increased effectiveness.

Challenges in Procurement Training

In a procurement environment, we often have a range of measures in place, although they are usually too focused on simple price down measures. This is a good place to start, but it also implies that should be working out the measures to use within an annual round of objective setting within the overall design of a change program – we want the measures to be set up both to achieve the right procurement outcomes, but also link via personal objectives into training.

Learning and Development’s Role in Training Success

  • Clear Expectations: This also implies that the participants in the training need to have a very clear understanding that they are expected to use the training outcomes to deliver results.
  • Necessity of Management Review: Management review and guidance is necessary to make sure that is happening. There is nothing worse than setting up a measurement approach and then not giving people the time and support to make sure that they are able to deliver the required outcomes.
Learning and Development

Designing Effective Learning and Development Activities

This further implies that the training needs to be set up in a way to deliver sufficient understanding of the activities to be adopted that people can use them in their daily lives. The design of the learning and development activities needs to focus on both the theoretical background of the tools encountered, but also the real-world application, suggesting a lot of breakouts to explore use.

Supporting Teams Post-Training

For line managers, this suggests that they need to be ready to support their teams in both the use of the tools learned, and test and challenge them to expand that usage.

Systemic Approach to Training

This speaks to a systemic approach to delivering the required outcome, which is improved performance. The evaluation of the training does need to bridge all these areas to ensure that the right elements are in place.

Addressing Procurement Training Design and Participant Alignment

There are other areas to consider here as well. One often observed challenge in training is that the individuals who are receiving the training have only a slight connection to the reason for the training, often because of poor course descriptors or participant selection processes. When the training is designed for a specific set of outcomes, and the outcomes are linked to individuals’ job roles, then there is an up-front requirement to make sure that the people attending are suitable for the course that is being delivered.

It is better to adjust the course to suit actual needs than it is to deliver an unsuitable course for particular people. This tight alignment provides excellent results when it is correct, but poor outcomes when there is a mismatch.

Pre-Course Briefing Importance

Much of this points to the need for carefully considered briefing before a course happens. We need to ensure that the attendees are given the correct information to ensure that they can prepare properly, and to make sure they bring the right mindset, linked to their desire to deliver excellent outcomes.

Conclusion: Evaluating and Improving Procurement Training Courses

So, we started with the concept of how we can evaluate training courses, but this has led to a review of a wide range of interlinked elements, all of which combine to deliver the best possible outcome. When commissioning training, we need to be very clear about the outcomes we are trying to achieve, to make sure we are clearly building in that direction.

Contact Us

We’re passionate about how a well-integrated approach to learning and development can profoundly impact your company’s procurement strategies and overall business outcomes. For more insights or to discuss how we can help you design impactful training programs, contact us today!

About Mark Hubbard

Director

30+ years experience in procurement and supplier management, in line and consulting roles
Previous employment: Positive Purchasing Ltd, SITA,
QP Group, BMW, SWWS, Rover
Education: BSc in Engineering Metallurgy, MBA University of Plymouth
CIPS: Current Member

Category Management enabled procurement transformation: designed and implemented for Pharmaceutical Sector

Case study

Category Management enabled procurement transformation for Pharmaceutical Sector

By Future Purchasing |

Sector

PHARMACEUTICALS
& HEALTHCARE

Areas of Expertise

CATEGORY MANAGEMENT
SUPPLIER MANAGEMENT
NEGOTIATION

Service

CONSULTING
TRAINING
COACHING

Business situation

Facing challenges such as a dwindling product pipeline and escalating costs, a leading global pharmaceutical company with a focus on neuroscience brain disorders recognised the need for a radical transformation in its procurement operations. The absence of a uniform sourcing process and the limited involvement and control of the procurement team across various spend areas had relegated them to mere “order raisers” or contract administrators, rather than strategic partners in the organisation.

In response, the company appointed a visionary new Chief Procurement Officer (CPO) tasked with a clear mission to elevate Procurement from a transactional function to a strategic pillar within the company. This ambitious transformation was to be fuelled by the initiation of a ‘quick-wins’ savings program, aiming not only to generate immediate financial benefits but also to lay the groundwork for long-term operational excellence..

Solution implemented

In collaboration with the newly appointed CPO, Future Purchasing embarked on crafting a comprehensive procurement strategy aimed at revolutionising the company’s approach to procurement. The strategy set ambitious objectives, including expanding the scope of spend to be covered by category strategies, achieving annual savings targets of over 10%, and significantly enhancing the skill set of the procurement team to meet these challenges head-on. To kickstart this transformation, a detailed 100-day plan was developed that redefined procurement’s role within the organisation as a strategic and value-driven function.

1. Quick wins savings programme

A quick-wins savings programme was set up to generate funds to invest in the procurement transformation journey. A joint Future Purchasing/customer team was set up to identify a pipeline of potential cost opportunities with a 12% cost down target to be completed in 8 weeks. The scope was limited to targeted supplier negotiations and there were four steps:

2. New category management process & toolkit designed.

Programme design

Programme plan created with agreed deliverables around the new category management process. Procurement Leadership Team (PLT) diagnostic questionnaire issued to establish current views on how best to implement category management. Results shared with the PLT to facilitate successful implementation.

Process design

A client design team was set up with Future Purchasing to co-develop a new “fit-for-purpose” category management process focused on value levers, strategy creation and a sensible modulation of activity as a “one size fit all” approach would not work. Focus was on selecting which tools and templates to use for different size and complexity of project. Final approved process & toolkit were made available to the category teams.

3. Category management training and coaching.

Education & training

Future Purchasing designed a customised workshop training plan with a balance between soft and hard skills training. The category management training workshops were interactively run for approximately 40 people with an outstanding feedback rating of 97%.

Coaching support

Coaching support: Category management coaching was provided for individual sub-category projects where each session was 1.5 hours every 2 weeks. CM coaching clinics were also set up for small groups of 3-4 focusing on specific tools e.g. business requirements, negotiation, creativity & options generation. This created a learning environment for category managers to discuss and share their experiences and improve their understanding of how to make the process work better.

Category Management training and coaching process

Category Management enabled procurement transformation: designed and implemented for Pharmaceutical Sector

Transformation Outcomes

The transformative category management program spearheaded by the new CPO and Future Purchasing culminated in delivering remarkable savings of 11% reduction over a 12-month period. This initiative not only introduced category management as a fundamental practice within the business but also profoundly embedded it into the organisational ethos. As a direct result, the procurement team underwent significant upskilling in category management, which in turn fostered enhanced relationships with stakeholders across the business. Procurement transformed itself from a functional necessity to a strategic partner, now perceived as a positive force for change and innovation within the company.

Significant category savings projects included:

savings on telecoms category via a competitive tendering process.

savings in lab consumables by 50% reduction in suppliers with a much-improved level of service provided to the end users.

savings by consolidating lab service contracts through three main suppliers instead of 120 suppliers previously.

cost savings by changing the Canteen provider together with improved service guarantees.

cost saving in recruitment services with improved frame agreements with preferred suppliers.

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

negotiating for procurement

Our approach to procurement negotiation helps teams to improve performance, track their progress, measure success and secure rapid payback to programme costs. It is based on four principles…

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

HS2 sized scaled

Case study

Andrew Cubitt interview – Category management is a top procurement priority for wider spend efficiency at HS2

By Future Purchasing |

Sector

PUBLIC SECTOR

Areas of Expertise

CATEGORY MANAGEMENT
BUSINESS PARTNERING

Service

CONSULTANCY

Andrew Cubitt - Procurement & Supply Chain Director at HS2

As Andrew Cubitt is Procurement & Supply Chain Director at HS2 Ltd, the company responsible for developing and delivering a second high-speed rail network across the UK.

HS2 is a mammoth engineering and infrastructure project that will provide fast and frequent connections for over 100 cities and towns, opening up local and regional markets, attracting investment and improving job opportunities for thousands of people. Accordingly, the anticipated spend is sizeable, in the region of £100 billion.

Cubitt, with 20 years of experience in the transport and consultancy sectors, oversees a team of about 315 people from procurement and commercial (not counting the many subcontractor teams) who are involved in making sure this spend is efficiently deployed. To do this he takes a total cost of ownership approach to the purchasing decisions over the lifetime of this project, and to support this he endorses category management as one of his top-three procurement priorities.

Why category management is a top 3 priority

While category management as a term is not widely adopted in infrastructure programmes, being borne out of the automotive and fmcg industries, it does apply as a sourcing strategy to key commodities, like steel and concrete.

“We use basic category management principles to ensure we are buying efficiently, sustainably and at the right price and right quantity at the right time,” he explains. “To this end, category management can be applied to any industry, and for us, even though we do not source directly, it is one of our top three priorities because we need to know how what we buy, directly or indirectly, affects both the economy and wellbeing of the planet. So as a strategy for the supply chain team, it is on a par with risk management, because at HS2 we are always considering our wider political, commercial and environmental impact on the market. Category management therefore is a facilitator to make sure risks are managed effectively and messages supported.”

How well is this understood and adopted by other stakeholders?

“It’s important to remember that as with all major infrastructure programmes, you tend to be working with large tier-one contractors. So it’s more of a consolidation contract. But underneath that tier one, it’s vital to us that the sub-contractors also take a category management-centred approach seriously. For this reason we are interested in getting the right partners for all of our contracts. Fortunately in the supply chain we are seeing a lot more focus placed on ‘buying better’ and ‘buying right.’ So what we do have control over is influencing our supply chain to make sure they get the best value from the materials they are buying while not impacting the ready supply in the market.

“It’s therefore imperative we take a good look at how the construction firms in our supply chain undertake category management. In recent years we’ve started to place greater emphasis on getting involved in that, and the next phase of the programme will see that focus increase with our T2 and T3 suppliers as we encourage them to give feedback and follow that route for project success.

“Having world-class category management strategies is not something suppliers deeper in the supply chain are known for, so this is a way to influence practices directly to help them raise their game. And as I am responsible for overseeing supply chain partnerships, it’s my team’s duty to make sure that the lots we are buying are bought in the best way that delivers most value. It’s seriously important today to act responsibly and not starve the world market of its commodities, be that steel, concrete or labour.”

HS2 category management2

Co-creation of strategies for outcomes

Findings from the global category management survey show that involving stakeholders and co-crating strategies leads to better value and outcomes. And at HS2 this is also recognised.

“Value is always a lever for us,” says Cubitt. “It is at the core of our role in procurement to bring tax-payer value, so we are always looking for opportunities to improve it. And that’s where a good strategic sourcing approach comes into play. To achieve that we have created a collaboration hub across our T1, T2 and T3 suppliers where value is the primary driver. They share knowledge about various categories, and, for example, this resulted in leveraging electricity and other utility bills to drive direct savings for our suppliers. Of course there are other advantages too to a joint catman approach, like understanding the economic effect of buying in bulk.”

So co-creation of category strategies with other stakeholders, both internal and external, is important and shows how value can be derived when strategies are aligned.

Category management is also a strategy for sustainability

Category management deployment can support other important business performance levers, a topical and vital one of which is the firm’s sustainability agenda.

“It’s important that the procurement team secure the full range of value from a category management strategy, including risk reduction, supplier innovation, speed to market and not solely cost reduction,” he says. “But it’s interesting how it can help towards sustainability goals. At HS2 we are pushing hard for procurement and the supply chain to be the leading force on driving carbon net zero. As an organisation we want to achieve this by 2025, which is a big ask on a construction programme, because clearly there’s a lot of carbon that goes into a project like this. The way we see this happening is through design and having sensible conversations with the supply chain.

For example, that might include altering the way you construct to reduce how much steel is used, and this is where category approaches come into play and have a big impact.” Cubitt endorses that category management is not just about deriving financial value, the true value lies in understanding all the different dynamics of suppliers, risk avoidance and sourcing socially and how you bring them all together.

Procurement’s value proposition is enhanced

What category management also helps to drive is procurement’s own value proposition, to be more than the cost reducer.

“I want my team of procurement people to be more than traditional procurement people!” he says. “Category management does that for them because as individuals they get to be experts in their own field. For example, take our people buying rail. They are the true specialists in that category, so for them it not only helps with their personal development but because the business comes to them for specialist advice in their area, they in turn become strategic advisors —not just gate keepers and box tickers. They apply their knowledge to help put partnerships and strategies in place, and this is very important for the whole project.”

Given the priority Cubitt gives this in his own organisation, the question is, is this structure something he can mirror in his T1 subcontractors?

“This is something that we perceive as a key focus,” he says. “And it’s something we are starting to invest more effort into. Clearly we don’t buy everything ourselves, unless it’s railway crossings and switches, it’s a partnership of many teams. So real value comes from supply chain discussions and matching category expertise across them.”

Gaining visibility

The big difference for a project like this, is that many subcontractors are coming together with a single goal. It’s not one procurement team, it’s a “team of teams,” as Cubitt calls it. So a challenge for the category manager is to secure visibility when they are not buying directly.

“It’s an evolution for them,” he says. “The collaboration hub is a good way to achieve this, but the value comes from influencing where we need to apply pressure in the market and where we need to understand the wider effects of what we’re doing. So we all have a responsibility at HS2 to really think about how we are spending and make sure our partners do the same — that’s the key to success going forward.”

Clearly, instilling this thinking to achieve the full range of value is challenging because it’s such a mammoth project. Cubitt recognises that procurement people in his T1s and T2s have their own relationships with their supply chain and are doing things in their own way. His answer is to encourage them to think about the wider picture, and not to focus just on their part in the project or their own jobs. He emphasises that it’s one project and everyone is part of it.

“There’s a whole range, even thousands, of suppliers, often buying the same materials,” he explains, “and it’s a powerful concept to leverage that full capability. So it’s my job to bring it up to a level where we all understand the full picture, work together and empower them with the knowledge to do so.”

“In our team of teams we clearly have other heads of procurement, and it’s natural that not everyone will agree. So employing a more category-centric thought process to the things that are strategically important to HS2, like ‘building back together’ is the way to bring engineering and delivery together. We are focusing on the category and getting the right people involved.”

The right people …

Of course, on a big project like this, it’s important to keep capabilities up to speed. “To be good at category management you need to be good at understanding and manipulating data,” says Cubitt. “So a key area I’m trying to get our procurement and supply chain people up to speed with is data crunching, because I think data literacy is a key area for our profession that will make us more rounded.”

“I’ve come to the conclusion over my years at TfL and PwC that you have people that are really good at doing procurement and running a process — and we need them. But it’s not always the same people who can run your category strategies. These are the people who really understand category spend and can push our agenda in the supply chain where the categories really matter.

“At HS2 we have a golden opportunity to change the way procurement and the supply chain is perceived, because we’re a big team with big responsibilities, and it’s politically charged. So it has all the potential to be a perfect storm of things that could go wrong — so we need the best procurement and category managers to make sure they don’t. Success for me will be when all the T1 contracts are in place and recognised by the industry as having really good structures to engage the supply chain and to understand how we are affecting economics and markets in niche categories.”

… and speaking of structure

At a time when we are seeing a splitting of roles, that is category creation versus the go-to-market phase, we wondered whether the capability structure is a mixture of people doing both, or whether some are focusing on strategy while others focus on sourcing.

Category management Is a top procurement priority for wider spend efficiency at HS2

“At HS2 it works slightly differently. If you set the strategy with one part of the team and the delivery with the sourcing team, the sourcing team might not agree with the way the strategy has been written. So that’s a challenge when roles are split.

“What we do try to do is co-create strategies with the T1 providers. We’ve already pulled together some high-level strategies and we’ve started to share them with the supply chain, but this can get very involved. As an approach this is definitely leading edge, because mapping the whole spend under control versus the spend that goes on elsewhere, means you can see where leveraging can best take place. If you don’t get your arms around the whole of the spend then you can only influence part of it.

Getting organisations to embrace category management

“In my experience, from the organisations I’ve worked in with no repeatable spend, category management as a concept is quite difficult for executives and engineering to understand, which is a barrier. So to break that barrier down you have to make the value real and tangible against levels of spend for private sector companies. So the way to make category management work for the public sector is to devote focus on the value creation in private sector contracts and suppliers — and that’s what HS2 is going to do.”

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

Interview with Mark Smith - A lean category management model is at the heart of procurement at bp

Case study

Mark Smith interview – A lean category management model is at the heart of procurement at bp

By Future Purchasing |

Sector

OIL, GAS,
CHEMICALS & MINING

Areas of Expertise

CATEGORY MANAGEMENT
BUSINESS PARTNERING

Service

CONSULTANCY

A core tenet of the 2021 Global Category Management study is to provide organisations with the business case for securing, and the practical guidance needed to embed, good category management practices.

Category management, done well, provides purchasers in any industry with a strategy and business process to help achieve long-term business goals and contribute to overall business performance.

There are many reasons why procurement leads are making category management a strategic priority, and in order to understand the many facets that inform their decision we have been talking with various heads of procurement who are successfully employing a category management approach.

Mark Smith - Procurement Vice President, Digital & Talent Supply at bp plc

Mark Smith is Procurement Vice President, Digital & Talent Supply at bp plc., a multinational oil and gas company headquartered in London and one of the world’s seven oil and gas “supermajors,” now on a mission to drive the transition to lower carbon sources. Mark has also been responsible for strategy and transformation for all corporate-wide procurement activities across BP, and as such has discovered extensively how category management can play a large role in helping an organisation reach its performance goals.

Contextualising category management

At bp Mark places a high emphasis on category management. “Though it isn’t always known by that name, it’s what sits at the heart of what we do,” he says.

Why category management holds such a high status at BP Procurement is tied up with the company’s ambition for #bpNetZero and its target of 50GW of renewable energy production before 2030, which undoubtedly will include off-shore wind, solar energy, hydrogen projects and initiatives for sustainable transport systems.

“We absolutely consider category management as a key priority,” he says, “because in response to market dynamics today, the agenda of our function is shifting, and it’s imperative that we support that by paying close attention to how we are managing our relationships with suppliers and the supply base, and we do that through category management.”

“Traditionally procurement has placed most emphasis on the process compliance and volume leverage aspects of its mandate for go-to-market activity,” he believes. “Negotiation and price savings have dominated. But I do believe we’ve all been on a journey to change that perception of the function, and we all feel a greater responsibility to use the demands we make on the supply chain to further the goals of our organisations — and more and more these go broader than just bottom-line profit.”

bp is concentrating on four main initiatives that go way beyond procurement’s historical remit where category management will have a critical role.

Profitability

“Basically, you’ve got to have the underlying execution infrastructure working for you, whether that be through your catalogues or your channels. Cost is driven by a factor of price, but more materially, the volume of units demanded, their spec and so on all influence the price you pay and the cost you spend. You need to look at the dynamics around constrained markets, inflation, opportunities to respecify, how you get the best value for your spend from total cost as opposed to unit price — these are some of the levers category management allows you to pull if you have the right channels set up to execute and provide you with the appropriate data upon which to act.”

Relationships/collaboration

“We are engaged in more conversations than ever about business change. Our supply network is now multimodal as opposed to bipolar; the linear relationship between customers and suppliers is changing; our suppliers are becoming our customers, our competitors, our partners, and so on. How you look at that holistically in a business that is doubling its customer touch points, and how you use your existing relationships to understand where those partnerships can go deeper to create new business opportunities and revenue streams, is another avenue that category management opens up. It helps us understand what the future will look like.”

ESG

“ESG is growing in significance, not just for people and the planet, but in the investment climate too where it will be as important from an investor performance perspective as your traditional bottom line. The supply chain plays a huge role in that through your carbon emissions and the impact you have on the planet and through the opportunities you have to influence these with your supply decisions. You have to think strategically about how you engage your supply base, and again that’s a lever of category management.”

Innovation

“Innovation is critical in this rapidly changing world. No one company has the monopoly on ideas, so how you go about getting those ideas that will give you a competitive differentiator, whether through tech, customer experience or the many opportunities in the innovation space, is another reason to harness category management to your advantage.”

“For me, category management is how you bring these four organisational impacts together. It drives how you think about the needs of the organisation and the market as it exists. It helps you purposefully place that spend under your control to generate those outcomes in equal measure, rather than just addressing it reactively.”

Category structure for the holistic picture

bp has created a dedicated sustainable procurement organisation that works specifically with the categories on some of the things that will generate equity, grow spend with diverse suppliers and bring diverse talent into the supply chain. Mark’s role is in the indirect portfolio, so anything related to digital spend, and labour-based services, plus anything that makes that productive, is under his control.

“We’ve moved to a much leaner category model,” he says, “and although it sounds counter-intuitive, we have put category management at the heart of what we do by shrinking the categories themselves and growing our agile teams who look at how we commercially transform the supply base, how we create value for the organisation and how we create the big-ticket transformational change agendas.”

“One of the blockers to genuine category management,” he finds, “is putting people in category silos who only have the resource to look at their own four walls — that can constrain capability and thinking as often categories of different values, maturities and opportunities are given proportionally the same level of resource and attention.” So Mark tries to resource accordingly, and baseload in groups of alike category. He then has a separate team which he uses in an agile way to support their strategies. “Because we are all working to the same organisational goals,” he says.

“We have three teams. One focuses on transformation, in effect they are the ‘elite squad’ for category management and category strategy. They are well practiced in using the various category management techniques to create really compelling transformational strategies and execute them, because they are doing this with everyday frequency rather than once every 3-5 years.”

“We then have a team we call ‘procurement innovation’ and their role is rapid collaboration – we’ve created a methodology to bring together stakeholders and suppliers to solve specific business problems that generally ends in a supply decision.”

“And we have third team called ‘supply innovation.’ I think category teams are too easily consumed by the day-to-day – the stakeholder who shouts loudest or the strategy they are trying to implement — to spend time purposefully and somewhat speculatively in the market, for example to understand what a good technology roadmap looks like. I think theoretically this has always been a key component of category management, but in my experience it’s the thing that drops to the bottom of the list when time and resource is limited.”

“So what we are trying to do is create specific teams that are talking to the big existing suppliers, about what they offer or the parts of their portfolios that we don’t currently use but should do, and newer suppliers or sources of tech that we should be brining into the organisation.”

“What these teams are doing is part of the standard category management toolkit, but we are trying to give it its own real dedicated focus to make sure that happens on a regular basis.”

This is innovative in itself, separating out the strategy from the implementation, rather than bundling it together, which is often the result of resource constraints. Basically what Mark has done is put the bigger proportion of resource in the three agile teams. It was a conscious decision to emphasise the strategic category focus by placing it in these fluid teams separate from the category families, so it doesn’t compete for time with all the BAU distractions — testimony to the importance they place on that.

As part of their day job category managers perform the core elements of category management for major category families, working with the agile teams to build multi-year pipelines of transformation activity.

Having a three-team approach does require a governance model. Mark created a collegiate team across those areas and removed what he calls “the systematic disincentives of playing for the house.” No-one stands alone, and everyone has a stake in each other’s success, because “you can’t hit your own numbers to the exclusion of everyone else,” he says. “All targets are at leadership team level and we’re all accountable for them.”

To achieve this, he says, “you are effectively disrupting what the organisation has grown up comfortably doing. In reality you are asking people to be the architects of supply solutions and move out of the space of their own category, the negotiations and the savings, towards the go-to market activity.”

Three success factors for innovative category management

In Mark’s experience, category management has lots of potential, but it has traditionally been executed largely as a strategic sourcing process. “There is nothing to stop anyone adopting it,” he says, “but to be successful you need to do three things:

Working with stakeholders for better outcomes

Mark’s long-term and deeply held belief in how they are operating is being met with approval from stakeholders, and he is delighted that they are starting to see procurement no longer as the ‘blocker’ that slows down the buying process for the sake of a saving that might make up just a small slice of the stakeholder’s value proposition.

“They see us more as the people who can actually work with them on what really matters to them,” he says. “Savings of course are important to people under budget pressures, and that must be serviced, but seeing the bigger picture and offering the kind of strategic thinking they want from someone in a commercial role is definitely more valuable. It has helped us get good business outcomes with suppliers too.”

A new procurement world

This way of working is not for everyone, especially for those who like to be in complete control of a rigidly defined portfolio. But Mark confirms that category management will always have a place for everyone. “In the long run, we are building a new procurement function on the basis of the digital tools available and new sources of supply, but that doesn’t mean there isn’t space for anyone who wants to continue building their career in the more traditional sense. But the future will look very different and procurement will be attracting more diverse talent.”

bp Interview

And in that new procurement world, performance measurement will have to look very different too. “You have to be more holistic about how you do that,” he says, “as well as measuring the likes of cost value and revenue generation, you must think about measures for ESG goals, aims, timeframes, provenance, net zero, etc., because that time has come. The business will want to see the whole value chain and where cost was added and at which part. So that’s another very different mindset from what we are used to in procurement. So we run a six-weekly showcase of achievement which deliberately does not highlight savings — that way doing transformative work gets rewarded and recognised.”

“However, we must be mindful that we are making some fundamental changes to our business. It’s a big shift from what was a stable business model, with linear supply chains. But that time has changed, and we have to change with it. There’s now a need for different suppliers, a need to operate in different markets and geographies and businesses. Everything has become much more customer-focused, and in that, both organisational change and procurement change are symbiotic.”

Basically, this change has been coming for years. If your organisation wants to keep up with the modern challenges and changes, then it needs a supply organisation that can help it do that. “We’ve had a big reset moment,” says Mark. “We had built an engine that takes what the business wants, stops it, and gives back something a bit cheaper – now we are listening and providing options the business can use. So a category management approach, that is agile, thinks holistically, has clear business aims and is structured to deliver wider organisational value, is the right path to deliver that.”

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

Said Al Alawi interview - Collaboration with the business is a category management strategic priority at PDO

Case study

Said Al Alawi interview – Collaboration with the business is a category management strategic priority at PDO

By Future Purchasing |

Sector

OIL, GAS, CHEMICALS
& MINING

Areas of Expertise

CATEGORY MANAGEMENT
BUSINESS PARTNERING

Service

CONSULTANCY

Category management has been a top priority over the past four years for exploration and production company, Petroleum Development Oman (PDO).

While the value of a category management approach was well recognised, it was collaboration with the business that was found to be a challenge, since the Contracting and Procurement (C&P) team had tended to work in a silo.

What triggered a change in perception and operation was when PDO senior management recognised C&P’s ability to contribute to short-term profitability during the dual shock of Covid-19 and the oil price collapse in 2020.

Said Al Alawi, Former Head of CP, Petroleum Development Oman

The C&P leadership team began measures to rectify this. The now former Head of C&P, Said Al Alawi, had been responsible for driving and managing contracting and procurement strategy, planning, and operational excellence to meet the overall business objectives of PDO. In that, he supported directors and other stakeholders involved in the company’s C&P environment to develop well-managed, well-targeted and sustainable C&P strategies that deliver cost optimisation, innovative solutions and strategic guidance to create ongoing value, efficiency and compliance for the department.

Near-term sustainability and an integrated supply chain transformed the business

“At the onset of the pandemic,” Alawi explained, “the C&P team developed two programmes to support the business:

Programme one was focused on near-term sustainability using price, demand and specification value levers. Significant cost reductions were achieved, providing momentum for further change and improvement.

Programme two concentrated on developing an integrated supply chain by looking at the end-to-end way in which 700 to 800 individual contracts were being managed. These deals were optimised to deliver specific services, but there was an opportunity to aggregate and leverage demand, both across suppliers and within related services.” The C&P team proposed the two programmes to the executive team, with the proviso that success would be dependent on securing their visible support. “A note was quickly issued from top executives outlining the programmes. A critical aspect was that they assigned category portfolios and categories to specific business directors. This created a matrix of responsibilities, with each category owned by a business director and C&P leader,” he said.

“The organisation was facing big challenges and was ready to do whatever it took to overcome them. Rules and boundaries were developed so that the joint teams became empowered, and this became a ‘game changer’ for C&P.”

Communications were issued to business stakeholders at different levels within the organisation. These challenged them with the questions: ‘what can you do?’ and ‘how can you help?’

All spend was reviewed and improvement opportunities were identified. A programme review was held weekly to prioritise which opportunities to pursue, and this approach delivered a high volume of savings.

Collaboration with the business is a category management strategic priority at PDO

Building on the new perception of C&P

An Integrated Supply Chain approach was developed to leverage and extend the benefits secured during the crunch period. This has six levers, one of which is category management.
“Category management is now hardwired into the organisational way of working,” continued Alawi. “C&P leadership team is involved in the five-year strategic planning cycles which are updated on an annual basis across the category portfolio. With early and regular involvement, C&P now has greater influence and ability to maximise value from supplier spend.” Previously, they were only involved when requirements had already been defined by the business.

“The C&P team are being upskilled to build category management competencies so they are ‘at par’ with the technical team. The target outcome is to migrate the 60-strong team from a contract management focus to a category management focus. The change has energised the team who are now much more comfortable to lead category teams and provide constructive challenge to the technical team. The perception has changed so that C&P is now perceived as focusing on overall value, not just cost.

“The joint efforts of the C&P and leadership teams have meant new controls have been introduced to channel demand, prevent fragmentation of spend and encourage the business to become much better planners,” he said. “And a number of strategic metrics have been introduced, including spend covered by a category strategy, and value delivery from each category being managed. We have targeted savings of 7% and this is owned as an objective by the business stakeholder responsible for that category portfolio, rather than C&P. Category results are now reported to the Managing Director of the business.”

C&P leadership has found it very rewarding to see how the team has adapted and delivered a step-change in value from supplier spend. There is now complete buy-in to category management not only from the C&P function but essentially from the business.

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.

Interview with Simon Mays - At Britvic, category management Is not a choice

Case study

Simon Mays interview – At Britvic, category management Is not a choice

By Future Purchasing |

Sector

HOSPITALITY

Areas of Expertise

CATEGORY MANAGEMENT
BUSINESS PARTNERING

Service

CONSULTANCY

As the Future Purchasing category management report consistently testifies, more and more procurement leaders are putting category management at the heart of a modern, transformational business strategy.

Interview with Simon Mays - Transformation Director at Britvic Soft Drinks Limited

Simon Mays is Transformation Director at Britvic Soft Drinks Limited. He explains how category management came to be the top priority for procurement at Britvic.

“You could say we came from a zero base,” he said, “because we had limited category management in place until a couple of years ago — and now it’s a number-one priority for procurement.

“We ran a series of training programmes several years ago to sew the seed of category management, and this put us in good stead for adoption, but category management wasn’t top of the agenda at the time. It wasn’t until we did the initial scoping for the business case for our procurement transformation programme that we established category management as a key process that was missing.

“In our opinion a good category management approach is pretty fundamental to achieving a function and a team that’s fit for the future — so we knew this was a priority for us. The team was at mixed levels of maturity in terms of training, and the direct and indirect teams were largely operating independently. So investing in that became a priority in order to shift the balance between buyers working on more strategic projects and working on lots of smaller, more tactical, ones.”

Category management has led to good governance

The team had traditionally worked on a 12-month budget cycle, but an annual cycle of discussions meant that by the time they implemented them, it was almost time to start again.

“This meant,” explained Simon, “that each year you are diminishing your ability to change the thinking of the business and make some breakthrough benefits. Using a category management approach was an ideal way to get buyers to develop a three-year plan while implementing a structured technique. This also filled other procurement process gaps such as governance and led to the creation of category and project boards. In essence we turned digital.

“We developed a five-step process with built-in ‘gates’ that formed our governance process. The newly created ‘category board’ and the procurement exec team sign off category strategies in a controlled and structured way. The new process of involving other stakeholders means the efforts of those developing the strategies are recognised and provides opportunities for others who might not fully understand the category to critique the strategy. It’s always beneficial to have outside-in influence — hence the creation of our category board.

From category creation flows the downstream projects.

“Prior to our category management implementation these projects would have had no check against the suppliers being onboarded, nor any challenge to the negotiation strategy being used. So we introduced another step in our strategy by creating a ‘project board.’ This board questions, for example, the auction technique to be used and the category manager considers the options and outcomes from that recommendation. In doing this we have inserted governance from upstream right down to where we make the supplier award.

“Essentially we’ve honed three very important processes: category sign off, negotiation strategy sign off and supplier award sign off — none of which existed before.”

How technology helps

The team introduced an end-to-end spend management solution to help streamline and structure their processes, generate workflows and involve the right people at the right time during the upstream and downstream process. To accompany that they use a strategy-creation tool that sits atop that system to give them full-rounded support, including functionality that allows functions outside of procurement to be involved in developing category strategies. So there’s early involvement in strategies that are not just procurement-led.

“On top of this, a guided-strategy approach helped us energise the team,” said Simon. “Implementing a category management approach required standardising processes as much as possible, but with different skill sets throughout the team we realised we had to retrain, refresh and get 30-plus people to the same skill level.

At Britvic, category management Is not a choice

Bringing technology on board made it more interesting and helped us focus on the key parts of category management that were really going to drive the most benefit. A guided-strategy approach helped us understand the business requirements before going into a project, which was missing before, bringing structure and guiding us to the priorities rather than the whole range of catman tools. We now have a fully auditable and complete workflow cycle that’s brought real visibility: we’ve ditched PowerPoint and Excel and have no varying formats sitting on different laptops, which gives us a higher degree of governance.”

Category management has brought procurement into the conversation

It’s very important for category management strategy to have cross-functional support and engagement from the people working outside of procurement, and in Britvic’s case this led to the procurement voice being heard at senior-level discussions.

“Being a business whose budget discussions focus on materials such as glass, resin, aluminium etc., it wasn’t unusual for procurement’s voice to be absent from that table — it worked rather in isolation,” explained Simon.

“But that’s changing with category management,” he said, “more recognition and a lot more engagement with procurement …through our transformation efforts are making procurement a bit harder to ignore. It helps that we are much more proactive with our communications now and are driving category managers to engage with the business much earlier on.

“We have a cross-functional steering team and have created a procurement council with senior members from supply chain, finance, HR and category management teams. This means updates, progress, procurement strategies, direction and market trends can all be shared and discussed. We have a high-level stakeholder interface to help drive change and an interface with people from the business to do the same there.”

So it’s good to have strong support from the business stakeholders, but in order to get that you must learn to speak the businesses’ language.

“There’s a danger,” he said, “that when we talk about category management we, as procurement professionals, expect everyone else to know what it means. So for example, when building the business case for our spend management platform, part of my role was to engage IT and communicate the benefits it could bring, like project pipelines and hard cash savings, and to understand why we need tech to achieve that. Now that’s hard enough to do, but when you are also selling a guided strategy-creation tool, that’s even harder. The trick is to speak in ‘business plan’ language and not in ‘procurement’ language. And as we’ve started to share category strategies with individuals across the board, it has helped gain a better appreciation that there is a structure and science behind the projects and pipelines we need to produce.”

Measuring category management success

Like many large corporations, the Britvic business strategy 2025 has three top-line objectives: people, planet and performance.

“Using these company guidelines,” said Simon, “we have created our own ‘House of Objectives.’ Among them is the huge area of sustainability, and the progress we are making in that area is fantastic, in fact we have a category management team dedicated to it.

“Our high-level measure for the upstream sourcing process centres on six KPIs. Considering we introduced category management only 8 months ago from a zero base, our progress has been excellent, and the digital approach has undoubtedly helped speed the process We now have around 25% of spend covered by category strategy with an end goal of 85% next year.

“We also have KPIs for the downstream process for the likes of POs and no-touch invoicing. All KPIs are linked to our objectives and we have a Centre of Excellence responsible for measuring them.

“So all in all we have a successful category management approach that is progressing and maturing all the time. But the key is: you need good leadership to make it work and sell it to the wider business. Anyone can develop a process and make people follow it, but you have to generate appetite and motivation around it, and it’s down to the leadership team to get this into people’s objectives. So for us, category management is not a choice, it’s something you know is beneficial to do.”

Matt Swindall, Chief Procurement Officer commented “We are transforming Procurement through our people, better process and technology. By embedding Category Management we are delivering value across a broad range of metrics and building credibility as we lead in contributing to Britvic’s goals and objectives. By investing in our team we help them grow, become more effective and build engagement and recognition.”

Related Expertise

Supplier management

Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.

Category management

Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.

Future Purchasing

If you want to get more value out of your procurement spend, or you just want to know more about us, request a callback above or send us an email and we will come straight back to you.