How to build a great Category Management Process

Category Management is a core process in Procurement.  It is often the primary way of working.  Building it in the right way requires a combination of clarity of vision, business alignment and proper coverage of the key category planning, sourcing and supplier management phases together with a full range of modern tools, techniques and templates.

For most organisations, a structured category management approach is the engine for delivering superior Procurement performance. However, few procurement leaders feel they have captured more than 33% of available supplier value.  The conclusion must therefore be that category management is failing to deliver the potential value available – worth tens of millions of euros to most organisations.

The best Category Management processes actively promote stakeholder engagement and the identification of opportunities, whilst making the strategy document completion easy and value-adding.  Leading organisations invest time and resources to build a “fit-for-purpose” process that is aligned to the ways of working, language and culture of the organisation. Some of the key factors include:

• Align with broader business goals and key initiatives, along with defined category responsibilities within the Procurement team.
• Build it with clarity of vision and proper coverage of the key processes of strategic sourcing, supplier management and category planning.
• Use a representative design team from across the Procurement function to create a process that is “fit for purpose” and “user friendly”.
• Develop a full range of tools and templates that are visually appealing, easy to use and can be applied flexibly according to specific category requirements.
• Make it easily accessible – ideally through an on-line system that promotes collaborative cross-functional activity with business stakeholders.
• Set up a suitable governance structure to review project progress – with approval points and decision gates encourage active engagement of sponsors and decision-makers.
• Must be value-creating – the tools and process steps are focused on value creation and opportunity identification, not box-ticking and bureaucracy building.

Developing a best-practice process and toolkit requires considerations at three levels:

1. Process steps: It is essential that there are clearly defined activities for the category teams to follow that are logical and provide a route map and consistent project plan for the Category Management activities.
2. Guides: The process must be supported by insightful, focused and easy to digest “how-to guides” that provide category teams with information on every step, activity, tool and template in the process.
3. Templates: It is vitally important to have clear, attractive and easy to complete template documents that directly relate to defined process steps and guides. Completion of an agreed sourcing strategy template helps to provide:

• Consistency across projects.
• Certainty in what needs to be produced as an output from a category project.
• Prompts to identify conclusions and “so what” findings for stakeholders.
• Guidance on which templates might need to be presented at decision gates.
• A compelling case for change with findings, opportunities and plans.

To talk to Future Purchasing about building a category management process in your organisation please give us a call on +44 (0)1483 243520 or click the “Let’s Talk” button below.

Further reading:

Blog post: Category Management Process: I say tomato you say tomato