A Meeting of Minds Webinar

Transcript

0:10
Hello, everybody and welcome to this webinar.

0:14
We’re going to run today about the influence the future report that we’ve created over the last few months.

0:21
And today we’ve got Marc Day, the professor at Henley Business School that works with us on the on the report and also Mark Hubbard, another fellow director at Future Purchasing.

0:33
So we’re going to make it as interactive as we possibly can do.

0:36
We’ve got some of the results that we want to share and get Marc also to talk about the way that some of the analysis was done so that we can open up the floor to questions about, you know, the principles that we use behind it as well as some of those interesting results.

0:52
So I’ll hand over to Marc in a second.

0:54
But just as a bit of background, what we did with the report, the purpose of it was threefold really.

1:00
Firstly, as ever since we’ve first done this, we’ve been looking to identify what are the practises that leaders use to put in place for category management success and what drives success?

1:14
How much of extra value do leaders who do these activities, how much extra value do they achieve?

1:21
And then thirdly, how can we turn all of these learnings into some sort of overall playbook that other people can use and pick up from?

1:28
Because we’ve noticed over the years that, you know, to be honest, category management sometimes is very successful in organisations and sometimes is less so.

1:38
So we try to codify with this approach, you know, what are the good practises that people should at least consider?

1:43
So that’s the background to the research I’d like to introduce.

1:48
Marc, if you’d like to just give a quick overview of yourself.

1:51
Yeah, good afternoon, everybody.

1:55
I’m Professor Strategy and Operations Management at Henley Business School in the UK.

2:01
But I’ve got a heritage of working in procurement for a long time.

2:05
And in fact, Mark and I’ve been working together for about 20 years.

2:08
So we’ve brought together a, a particular approach to this, which is built on a capability space viewer strategy.

2:16
And we’ve started to look at in detail at this, this capability called category management.

2:21
And we’ve done 5 iterations of the study now.

2:23
I’ve done 2012, 2016, 20/18/2021 and 2024.

2:27
So we’ve got this latest set of results for you about 2024.

2:30
But we can also talk about the, the, the history of the results as well and how things have changed, how things aren’t changed.

2:37
So that’s the, the objective for today is to talk about these latest set of results Back to you are.

2:44
Thank you.

2:45
And Henley Business School, would you like to give a quick overview of where you’re based?

2:50
Yeah, sure.

2:51
We’re based globally.

2:52
We have campuses in different parts of the world.

2:57
We also have very large campus network in the UK based around the southeast of England.

3:02
We’ve got two sites principally that we deliver from.

3:05
We’ve got a full-service Business School, and we’re triple accredited and there’s about 150 epidemics.

3:13
I’m part of the strategy and international business group.

3:16
That’s where my research team reside, and we’ve got a good reputation in that area as well.

3:21
So we’ve got a variety of different programme offerings right from undergraduates and most of the work that we try to do is very applied and you’ll see how we apply a research-based way of thinking through the results of the of the work that we’ve done here.

3:40
And I think it’s great.

3:40
Now this is an opportunity for people as we go through this to ask questions.

3:45
Also some you know more perhaps not just about the survey, but about how category management might link more to business strategy as we have Marc here and that’s his specialism.

3:55
So by the way, questions as they come through Mark H here will moderate and we will, we will decide whether or not we should pick up questions as we go through or leave them to the end depending on the complexity of those questions.

4:12
So our sales future purchasing, our background is very much around category management and transforming capability across an organisation, changes to the operating model.

4:22
We’ve worked with lots of major organisations globally over the years and you know, we continue to do other things that relate to strategic procurement like supply and management and business partnering.

4:33
So along heritage now 21 years, unbelievably over that time period working in this area specifically, it’s given us a lot of focus and we’ve got the experience from doing it as well and implementation.

4:46
That means that, you know, some of our experiences bleed through into the into the questions and the survey.

4:53
So what are we going to do today?

4:54
We’re going to look at some of the key findings.

4:56
We’re going to look at the background to the research and, you know, ask Marc various questions about how he’s gone about doing the analysis.

5:04
And we’ll look at some of the sectoral performance and the top practises as this is an area that Marc’s particularly interested in.

5:10
And also, we’ll look at the value delivery that we can see from the from the survey results.

5:19
So the structure, I mean, we’ve, we’ve evolved this over the years to be honest.

5:23
And then in about 2020, we started looking at the Galbraith star model and found that we were pretty close to the sort of headings that are used within that.

5:33
And we’ll look at how we group the questions under those sorts of areas.

5:38
But from our own experience, Marc, how have you seen the structure that we’ve used iterate over time?

5:45
Well, we started off with this, a slightly adapted words to this 5 + 1 structure.

5:53
And essentially what we’ve got in here are two big groups of capabilities things which are about designing and specifying what you do, which is what we call extensive capabilities.

6:03
And the other side is performative capabilities and they’re about the doing bit of it.

6:07
So you’ll see inside the wording of the questions, we’re not only talking about the design of a capability in, in this case, category management, but also about how we go about seeing how it’s done.

6:18
Because that gives us an insight really into why organisations differ in terms of performance.

6:23
Some are better adopting and ingraining the capabilities.

6:26
Others are not so good at that.

6:28
And there’s a performance difference there between those two groups of organisations.

6:32
And we, we’ll, we’ll group the organisations for you in terms of people who are really outperforming, people who are performing effectively and people who are just starting.

6:41
But the, the origin of how we can see that difference is through these five round the edge and the one in the middle.

6:46
The one in the middle is about performance assessment.

6:48
So it’s value impact.

6:51
Thanks.

6:52
So yeah, as we say, all of the questions are structured in that.

6:55
And you know, when we first started this before Marc became involved, I think our questioning approach was a bit more haphazard.

7:01
But over the years we’ve become a bit more structured with how we do it.

7:05
And they’re, you know, much more valid the way that we’ve approached it, less variation in the questioning approach.

7:11
So, so some of the key takeaways from the research that helps these, these are a sort of headline type figures here.

7:18
So starting on the top right there, 86% of stakeholders don’t understand their role in Catman.

7:25
So this is about the aspect of how we go about educating, communicating with stakeholders and what their role is, what’s in it for them and what the benefits are going to be.

7:36
So clearly there’s a very big gap there.

7:37
And this is the perception of the community that responded, which are all procurement people.

7:43
So they’re saying actually in our case, you know, stakeholders aren’t fully getting what they should be doing with this.

7:49
And we think consequently, you know, you look at that very low number next, 11% of stakeholders have sufficient time, work time for Catman.

7:58
And that’s one of the big giveaways.

8:00
I think in terms of why there’s lots of value available, it is because essentially, you’re not getting that collaboration that we will talk about in category management but is not seen often as much as you’d like it to be.

8:12
So without that collaboration, there’s a big gap on the value delivery that potential.

8:18
Thirdly, 28% of category managers have sufficient work time for Catman.

8:22
Again, we’d never probably get AA0 figure for this or rather 100% saying that there is actually, you know, no more we can do in category management.

8:32
We can see that, you know, many people feel that if they had more time to, to put into this activity rather than perhaps sourcing or, or supplier management, then they would get more value out.

8:44
36% of category managers apply category management with excellence.

8:48
And this is a bit of a giveaway that the respondents are saying our teams are actually not that great at doing what we think they should be doing.

8:56
You know, it’s the skills around this as we we’ll see later, some of the key areas.

9:01
So a big, big gap there.

9:03
Also 20% of respondents have excellent category strategy.

9:06
So this is a key output as we all know, you know having a good strategy which can then get implemented.

9:12
But only 20% of people say that their strategies are excellent.

9:15
And we did use that word excellent because if as if this is a key deliverable from the process, we really want it to be of a good standard, but lots of gaps there.

9:25
And then 30% of respondents have sufficient financial investment in Catman.

9:31
It’s one of those perennial things, you know, how much of an ROI are we expecting from category management and often that case up we don’t think is made perhaps as strongly as it could be.

9:41
So overall, and we’ll touch on this coming up, the value component, we see three types of value within category management being delivered and there is lots of value still available.

9:51
Only 32% we’re told of the available gets delivered.

9:56
So that’s the sort of headlines.

10:00
And this is the really the start of the analysis.

10:04
Marc, do you want to take over from here in terms of how you did the maturity grouping?

10:08
Yeah.

10:09
So we first of all looked at maturity in terms of looking at standard deviations from a mean.

10:13
So looking at 3 distinctly different groups in terms of their segmentation.

10:18
And that, that led us to roughly three groups where we can start to categorise significant differences by, by performance type.

10:33
The, the, we were talking about myself and Marco reflecting on why we ended up with three different maturity groups and what we, what our readers of the, of the, the survey about six years ago said to us, it’s OK to, to have real out performance, but what are people doing in the middle and what people are doing at the lower end?

10:54
Can you, can you divide them into more meaningful groups?

10:59
So I can feel like I’m part of a group.

11:00
I understand what to do to get into the next group.

11:03
So we ended up with a group of your starters who are about 3/4 of our respondents, the improvements about 20% and the leaders are 7%.

11:11
And if we look at each, each time we’ve done this, so it’s five Times Now that we’ve done the research, we end up with these three groups roughly about 80208020807520 and five.

11:30
So the leadership group is fairly consistent in terms of it being about 5% of the overall group.

11:36
Improvers are about 20% and starters are a book group of people, and they are statistically significantly different in terms of membership.

11:46
So in other words, performance is different in each of these three groups, and you’ll see that coming through the data shortly.

11:51
And when we originally did it, before you became involved in the first iteration lot, we actually asked people the question, where do you see yourself based on some sort of broad criteria?

12:02
And then you you’ve moved us away from that over the year.

12:06
Well, immediately actually and said, no, actually you can analyse the results and group people more meaningfully than they can group themselves or categorise themselves.

12:15
Yeah.

12:15
So we used to have one question.

12:16
We still actually do have the one question; how do you rate your performance?

12:20
And if you just ask you one, one question on, on how you perform in terms of your cash management capability, it’s not an accurate measure because we need to ask more questions about what you actually do day-to-day.

12:33
And that gives us a much more accurate measure of how you perform.

12:36
So the one question versus the banking questions you ask are very kind participants.

12:42
The, the, the larger bank is much more insightful in terms of looking at performance differences.

12:50
I should have said actually Mark H that is we should be using the Q&A part of the tool, isn’t it to get some questions in there.

13:01
So excellent, you put that in there.

13:03
Are there any questions at this stage that have come through?

13:07
No, no, OK, fine.

13:08
We’ll move on then.

13:09
So the, the next aspect we want to look at is the overall scores.

13:16
As you see here, we group people as Marc said, starters improve as leaders.

13:20
We’ve got the six dimensions that we use in the survey.

13:23
And you can see as you’d expect the starters lower scores.

13:27
And actually this year you notice the scores.

13:29
What we noticed the, the gap between the improvers and the leaders is, is less than it was previously.

13:36
But overall scores, which we’ll then drill down into and they’re in the report itself, which I’ll put the way to the mechanism to get hold of it, the QR code later on, you’ll see that.

13:47
But actually within each section, there is probably about 10 questions in each area, and you can get a drill down on each of those particular areas.

13:56
So not much to say other than at this level we see a big difference between improvers and leaders and starters.

14:04
So let’s move on because then what we did or you did Marc to be more accurate you did an assessment of the industry performance as you’ve done this every time as well, haven’t you?

14:16
Yeah, that’s right.

14:16
And we were reflecting also back on the to these groupings change.

14:21
In other words, our overall highest mean performer.

14:25
If you look at the charts it is oil, gas, chemicals, and mining with the yellow bar indicating that their medium performance is the highest at about 3.8.

14:35
These industries don’t change huge amount.

14:38
Sometimes we have more industry represented because we have a sample from that industry, and we can include them.

14:45
But in overall terms it’s been remarkably consistent that industries do vary by performance and there’s obviously reasons for that.

14:52
We could speculate what they are in terms of maybe in opportunity from investment and procurement team or whatever it would be, or the particular cyclical impact of certain economic factors on an industry, for example.

15:05
But in overall terms, the, this this has remained fairly stable by industry type.

15:12
And what does the graph actually show?

15:13
Because most, some people may, most people may be aware, but the, the plotting is, is a whisker diagram or something.

15:21
Yeah, it’s, it’s that, that’s the that’s the right technical phrase for it.

15:27
And it’s called the box plot and it’s got whiskers on it.

15:30
So the whiskers go into the top and bottom, they go to the 95th percentile if you like.

15:37
So top, top 95 down to five, the main box is the 75th percentile.

15:43
So if you’re at the lower end of the box, you’re a lower, lower performer than the median, which is the middle.

15:50
And if you’re towards the top, past the box and into the whiskers at the upper end, you’re an outperformer.

15:56
If you go into the whiskers at the bottom and you’re an underperformer.

15:58
And if you go outside the whiskers, you are either a complete outperformer at the top or a complete underperformer at the bottom.

16:06
Yeah.

16:07
And as you say, we could get what we think about doing next is doing a bit of a comparison over the years to see how this has moved around a bit.

16:14
Because one of the things that we reflect on is sometimes that, you know, with, with working on client projects, sectors that you may not be totally thinking would be a, an area that would be leading because the persons come from perhaps automotive or not to, not to stereotype those guys, but you know, they, it’s an, it’s more in their DNAI would say, but they go to a banking sector, for example.

16:39
In that particular organisation, they can drive the performance uplift very quickly.

16:46
I notice a question from Harry there in the Q&A about performance over in industry-by-industry type over a number of years.

16:53
And I totally, I can tell you that oil, gas, chemicals, and mining seem to outperform consistently over, over the five iterations.

17:02
And also do retail and consumer goods as well, manufacturing and industrials, we have a clear performance differentiation as well.

17:10
But what I’m planning to do is look at all 5 iterations.

17:13
And in the future, we’ll, we’ll distribute a small summary of that for you to start to see in graph over time how these industrials change, how these industry sectors change in terms of performance.

17:27
The one thing I must say though that just to indicate that you know the thickness of that in the box there also indicates the variance in performance inside an industry as well.

17:38
So the thick of the box and more variance in performance.

17:40
So for example with technology and telecoms, not as much variance in the performance of the of the participants in that case.

17:50
Are there any other questions, Mark, just to yeah, I’ve just got one through which is looking at slide, the previous slide, which is asking if, if you’re a starter and want to improve, which pillar of the six should we start out with?

18:08
Well, that is a good, good prompt because that’s where we’re going to go to next actually.

18:13
So and that wasn’t from one of our own team either.

18:18
So over to you, Marc, as you’ve got the top 20 practises here, the analysis.

18:23
So, yeah, so this is the direct response to that question, I guess at a more detailed level.

18:30
So I wanted to do this analysis because if I’m a procurement professional and I’m leading the team, I want to know exactly what I need to do in a very specific way to improve my performance.

18:42
And you can see we have the top 20 practices that create the most impact.

18:46
So for example, with rank order number one – embedded range of technical capabilities across your team.

18:52
These behavioural features come out consistently year on year between the surveys that we’ve done.

18:58
So these are about the, the, the, the, the deeper ingraining inside of the procurement team of the capabilities necessary to perform category management, but also, they’re also, they are reflective as well of the performative capabilities required.

19:16
So the things that we do day-to-day to ingrain category management as the day factor way of operating in terms of procurement, not just inside the team, but also inside of the work that stakeholders do on our behalf.

19:29
Because there’s sometimes it’s not necessary to have a central, central procurement team looking after all of the categories.

19:37
Sometimes that’s done by stakeholders themselves.

19:40
And as you can see, we have some very strong behavioural features that are coming through, expert knowledge, behavioural capabilities, a clear demonstration of capturing management expertise and, and these consistently will appear at the top.

19:58
So that the salmon-coloured ones are fairly consistent year on, year on year.

20:02
They slightly change in the ordering, but they’re always at the top.

20:07
And from that further down, we then start to look at issues to do with connection to the business.

20:13
And they’re a very strong future as well.

20:15
So two important things to take away from this.

20:18
The capabilities that you have inside the team in terms of behavioural and skills are the 1st place to start.

20:25
And if you can start again do 2-2 at the same time, deeper connection to stakeholders and that will get you a performance uplift immediately.

20:35
And what we can see on the on the right-hand side is that the scores from the report showing how many people agreed or disagreed as a percentage.

20:43
So you can see there on the first of the pink ones and that’s because it’s in the stakeholder engagement dimension.

20:51
Communicate with your business stakeholders to ensure they have an excellent understanding.

20:55
As we, we looked at earlier as one of the headlines low scores and yeah it is definitely a gap of 14 on 14% on average.

21:06
OK, there is another page of the, so we did, we said we’d do the top 20 and some of the process ones follow up mark in blue in the next grouping.

21:17
And they all came out into specific groups, which was an interesting change from previous years where we’ve seen the capabilities more scattered around in terms of which dimension they came from.

21:28
So with the colours essentially of those ID numbers were in a in a bit of a random order, whereas now they they’re for interesting reasons.

21:36
I guess they’ve come out in a specific way.

21:40
Yeah, I, I guess you can start to see that potentially on this second page, we start to see the foundational issues for Catman coming through such as toolkits.

21:52
Toolkits allow people, the toolkit is, is a means to an end.

21:55
If you like proper quality standards, the proper use of a toolkit in a flexible way so that you don’t use one toolkit for, for a small category versus using the same toolkit for a large category.

22:09
It’s flexible enough so you can do things quickly or more slowly if necessary.

22:14
If you’ve got a bigger spend going through it.

22:16
As we can see then that there might be capabilities here which are process related, but on top of the process we have the behavioural components.

22:24
So we that may be what we’re seeing through these results.

22:29
Yeah, and for a specific organisation, obviously you know, if there are specific gaps, some of them that are further down in the rankings that are not here, but a part of the overall survey could still be totally relevant and add lots of value for a specific organisation.

22:43
But in general, these are the ones that you saw having more impact on the performance outcomes.

22:50
Yeah.

22:50
And there is consistency between our surveys over the last five iterations, we constantly get the same top 20 minor variations.

23:02
Yeah.

23:04
Couple of questions, if we, if we can just throw them in, is there a time, is there an indication of how long it takes to get from a starter to an improver?

23:17
I guess we would say that it normally takes a reasonably well-structured programme to be able to make that sort of movement, which is well thought through.

23:32
And we’d normally say a couple of years is it’s not an immediate thing.

23:37
There’s no quick fixes.

23:39
You’re doing a lot of changes over a number of areas, but you see steady progress and improvement in value over a couple of years.

23:46
So that sound right.

23:47
Yeah, two to three years I would say at least for some, you know, depending on the complexity of the organisation and the geographical footprint, business unit structures, etcetera can be harder to drive things.

23:59
But yeah, two to three years seems like a, a based-on experience that would be what we’d be wanting to put in front of people getting to leader.

24:07
It really does depend on you know, how much appetite you’ve got for it because I think that that takes a, you know, you’ve got to have a real business requirement to do it and it’s going to take probably more time and each incremental piece like any curve like that is going to be going to take you longer and probably cost more.

24:24
Another quick question, have we got more detailed breakdown in the public sector about how different agencies or bodies are performing?

24:34
No, I mean we’d love to do it.

24:37
I mean, central government in the UK or, or elsewhere would be interested in to doing, when we’ve talked about this with them before, you could actually get all of the departments in a, in a particular government to or a particular country to, to respond and you could see then a relative rating between them.

24:55
And I think that would be a really powerful thing to do because it isn’t looked at in the public sector as closely.

25:02
People say they’re doing it, our experiences, there’s pockets of great work, but there’s plenty of things to go for and getting people out of silo programmes into cross cutting categories is one of the key components there.

25:15
But you know there aren’t, there is progress being made, but it would be good to do that comparison for sure.

25:19
We should be speaking to some people in the centre to try and get that going in the UK.

25:27
One last question, which relates to this particular page, how did we select the top 20 Catman best practises?

25:37
That’s a question for me, I think.

25:38
Yeah, OK, yeah.

25:40
So we go through a process of looking at the relationships between each cat, each question.

25:49
So each rank order category, each practise, and its relationship to performance.

25:55
So the stronger the relationship to performance and how it goes with the rank.

25:58
And we use a method called partial least squares to do that.

26:01
So that’s sort of technical background to this.

26:04
The first step is to make sure that the item, the items are robust to me, use factor analysis to do that first of all.

26:11
Following that, we’ll put it into a partial least squared model, so structural equation modelling.

26:18
And then we run a series of tests.

26:20
We also have a series of features inside the model which we have to count for as well.

26:24
So does for example, your geography count for anything?

26:28
Does your phone size count for anything?

26:30
Does the number of people that you employ count for anything?

26:33
Does the number of people in the procurement team count for anything?

26:35
So we have to see if these have an impact.

26:37
And if they do, we disclose that.

26:39
If they don’t, we, we, we take it into account then that the category, the performance effect is universal regardless of what these moderate, but we call those moderators.

26:49
And then the, the rank order and then will come out of the, the, the partial least squares model and, and the ranking is between issues, the models that we’ve done over the five iterations.

27:04
As I say again, it’s, it’s remarkably consistent.

27:06
And I think that’s down to the, the time and attention that we took at the beginning of this to really, really think about the questions and to and to and to look really in real detail of what elements of category management were the most important.

27:17
I think that’s paid off for us actually.

27:19
It’s been a worthwhile investment of our time at the start, and we have iterated it and we over the time we’ve added new questions in as things have become more apparent to us that they’re more important.

27:33
OK, sorry not let’s go.

27:37
So now looking at the value perspective, what we did was ask questions in sort of three value groups.

27:45
Firstly at the top, revenue, and stakeholder value.

27:48
That’s things like operational performance, time to market, control of key assets, ESG commitments, all those sorts of things.

27:56
So we, we, we prompt people with these questions and in that area we prompted them with the question of well of the available value, revenue, and stakeholder value, which looks like this as we just said.

28:08
How much have you achieved and secured?

28:11
And the numbers come back and, and really quite shocking for the starters, you know down at 27%.

28:18
So they’re saying, you know, they can capture another 73% of value improvers and leaders, you know, double that performance 44 and 45% very close together.

28:29
And similarly, then we asked the same question around risk reduction, and we prompted them about things like assurance of supply, commercial risk, reputational risk, and sort of saying how much of that in terms of removing those risks have you secured.

28:45
And again, very similar numbers, 2746 and 48.

28:51
So we’re very consistent in those two dimensions, which tells us, you know, there’s lots of more opportunity for us to secure here.

28:58
What we do see on the savings side, the performance of the leaders and the improvers is actually stronger and they’re getting 68 and 57%, but the starters are actually worse, it’s 22%.

29:13
So overall, this is where the 68% of available value comes from.

29:17
And it’s because we did ask those questions in that particular way for revenue and stakeholder value and risk reduction, but we did something slightly different for cost savings.

29:28
So we’ll show you that in a moment or two.

29:31
Any reflections from you, Marc, about the value that’s available because it’s been pretty consistent over the years, this one?

29:40
Yeah, I guess you can see on the pattern here that cost savings is an important feature, a bedrock if you like, of the three groups, the starters and improvers and the leaders.

29:50
But I think as people become more sophisticated and the ingrained category management and they get better results as a result of doing that, we seem to then see a pattern of exploring other ways in which become and can make an impact.

30:05
So revenue and stakeholder value and risk reduction.

30:08
So I suppose it’s A2 edged sword.

30:11
You could say on the one hand you’re doing was expected to be a good procurement team to make cost savings.

30:19
But the same time you’re creating more of a demand for your services if you like by looking to see how you can deliver on other forms of metric.

30:29
So obviously that that has an impact on how you go about doing your category strategies as well.

30:34
So on the one hand you’re doing well, but you get then more demand your time and your services if you like.

30:42
Yeah.

30:43
Any questions about this Mark from the audience?

30:47
What’s the definition of stakeholder value?

30:50
Yeah, that comes back to these things.

30:52
We put a mixture of things under it because it is the non-financial benefits that people often talk about.

30:58
But we, we prompted people with things like operational performance, time to market control of key assets that drive revenue for you, innovation.

31:08
So there was a checklist of things.

31:10
And we actually within the report, there’s actually a breakdown of how people perform against that.

31:14
I think it’s seven particular areas of revenue and stakeholder value, which again will probably do a bit of a drill down on that subsequently because it’s an area of interest to people.

31:25
But yeah, we need to do a bit more, you know, circulate that a bit more broadly.

31:29
I think it’s in the report.

31:30
But yeah, we can, we can do a further analysis.

31:37
OK.

31:37
So on the savings side, then what we did here, we, we grouped 2 questions together.

31:43
What’s the savings rate from category strategy projects that you deliver?

31:48
And you can see there, it’s just over 6% for starters, getting on for 9 1/2% for improvers and leaders at 10 1/2 percent.

31:57
So they’re getting bigger savings from category projects, whether you know, it does say actually annual savings and there may be a ramp up I would imagine because we ask also questions about in your benefit and, and we know that that’s slightly different, but you can see a ramp up in value delivery in terms of savings from category strategy projects.

32:19
And also then on the on the left-hand side, what we’re looking at is how much of the spend is actually penetrated by category management.

32:25
What’s what sort of category strategy coverage have you got?

32:28
And again, it’s about 40% down there with starters improvers nearer to 70% or just over 70%.

32:36
And leaders this time around it was 78, I think it was 7778, something like that in terms of coverage.

32:43
And the fourth piece that we’ve shown is the potential because we also asked, well, what percentage could you cover of the, the spend with strategies?

32:53
And we’ve gone back also to, to, to look at historically what the, the leaders have said.

32:58
So 80% feels as a, pretty much a, a good target to aim for at a leader level.

33:04
And again, you know the improvers are getting towards that area as well.

33:08
We also asked people what is the additional financial or the savings that you could achieve if you optimised category management.

33:17
And even the leaders who were reporting 10 1/2 percent, they added another 4.3%, I think it was to that.

33:23
So people again, at every level saying, you know, there’s more value that we can go after from a savings perspective.

33:29
And again, we think it comes back to, yes, it’s, it’s all dimensions of that Galbraith model.

33:35
And that’s the great thing about it.

33:36
It’s not just people’s capability.

33:38
It is stakeholder engagement.

33:39
It is having, you know, a manageable process that doesn’t take too long to do and does point you towards creating value and finding value.

33:48
So that’s what the savings perspective looks like.

33:51
And that’s where we derive the numbers from on the previous graph because we use the potential number as the as the sort of baseline of where you could get to.

34:01
You can see a question coming in there more.

34:04
Yeah, it’s an observation that says not all organisations are saying some may have a lot of low hanging fruit or transactional and leverage quadrants, but making a dent in bottleneck and strategic categories, the more complex areas can be more challenging.

34:23
Absolutely.

34:23
But I think it’s absolutely right.

34:26
Yeah.

34:28
Yeah.

34:28
Well, there’s something in here about how the as organisations progress through the development areas, then the low hanging stuff does tend to get addressed in many cases, which means that you actually have to use more sophisticated techniques to add more value.

34:47
So you’ve got to be better at category management anyway to continue that value growth.

34:53
Yeah, absolutely.

34:54
And one of the things we saw when we in the in the report, there’s a number of interviews and we interviewed Pamela, who’s the until recently was the CPO at Exxon Mobil.

35:04
She’d move to another role in the organisation, but she very much was around having stretched targets for people and category strategies.

35:11
So we’re not just going after what really could be delivered through a sourcing exercise or renegotiations in particular areas.

35:18
So it was really pushing the ban and we think that’s absolutely part of making category management succeed.

35:24
The other question is what’s preventing leaders reaching 14.6% today. Because even they don’t get the stakeholder buy in.

35:32
When you look at the stakeholder engagement particular graph around the questions there, they don’t score as highly as their lowest scoring area.

35:43
So if you haven’t got stakeholders on board with you, you can’t pull all the value levers because none of them all, all commercial and even the very best struggle sometimes to get engagement on category projects to make it a proper cross functional team with proper, you know, time and engagement and commitment to drive change from the business.

36:05
Another question dropped in which is how can you deliver on category strategies with locked in contracts?

36:13
I guess part of the answer is whether or not all of the value is associated with the contract itself in that’s one element of it.

36:22
But was sure there’s a range of other ideas.

36:25
It’s not your ideal starting point, that’s for sure for most people.

36:28
Most people do try and time strategy creation before the end of a contract.

36:33
So you’ve got enough time, enough of a window to really look at what the radical things that you can do and then start to do to things that maybe enable us.

36:42
So there is a bit of trying to time it correctly, but there are things you can do.

36:47
You know within that we’ve seen people taking more of a supplier management approach.

36:51
And again some of the category opportunities, the way we look at strategies and we segment the opportunities is to say which ones are delivered through business change.

37:01
So that could be demand management, shaping specifications, etcetera, which ones are done through supplier management and then which ones are done through sourcing.

37:12
So there are those and it’s just looking at that you’re having really wide set of value levers that means you’re not just dependent on doing sourcing and driving competitive attention.

37:22
Those are important in some areas.

37:25
And probably you know, we know historically that’s been what most people have used.

37:29
So I think it’s looking at the broader range of value levers and see what you can do.

37:34
I mean, we’ve got a list of about 95 I think it is up to now grouped into the three savings dimension, the 3 value new dimensions that we’ve got earlier because sometimes you know, stakeholders aren’t interested in savings, they’re interested in performance improvement that’s going to end, you know, with our service end service rising perhaps if we’re selling our services on in AB to B or B to C environment.

37:57
So definitely things to be done, just need more, more, more, more a wider range of value levers being addressed.

38:04
That same 7 minutes.

38:09
So something we’ve done this time around with the report that we pulled out with more emphasis is the efficiency gains that we see as people mature in their capability of category management.

38:21
So moving from starters to leaders here, what we looked at and, and we’ve had this data, but as I said, we’ve not emphasised it.

38:27
Spend to start with spend per procurement team with total headcount.

38:32
So if you divide your total spend by the total headcount, what are you going to get?

38:35
And for starters, that’s 34 million for leaders it’s 76,000,000.

38:40
So what we’re seeing there is an efficiency gain.

38:43
Effectively leaders are managing their headcount.

38:47
So they’ve got 55% fewer heads managing the similar spend or the same spend versus a starter.

38:53
So do category management.

38:55
And as a consequence of that, what we’re seeing is fewer resources required to manage to spend.

39:02
And if you look, you know, went in, in the report, there’s also a comment about the supplier.

39:07
It’s actually down there.

39:09
Spend per supplier, the third one down is much higher, five times greater for leaders than it is for starters.

39:18
So €1,000,000 on the way we did the survey managed by leaders versus 200,000 per supplier for starters.

39:27
So again, 80% improvement.

39:29
One of the other things down there at the bottom, I just wanted to highlight as well is the time to both create and implement a category strategy here.

39:37
For starters, that’s 43 weeks.

39:39
I mean that is hopefully there’s some value delivered before that point because that’s not going to really engage people.

39:46
But in massive contrast there with leaders doing this, the creation and implementation within 21 weeks.

39:52
So and again an efficiency piece 50% or thereabouts for leaders.

39:57
So we’re going to get other benefits from doing category management.

40:00
Well, not just the savings from the supplier spend, it’s about how we operate internally as well.

40:08
Anything there more?

40:10
Yeah.

40:10
Question, which is how do we continually deliver savings for the category, anything contractually or mechanisms?

40:19
To consider using and I’m guessing that’s, one of the things that occurs to be there is the ability to create a longer pipeline of opportunity delivery from really good category strategies.

40:32
Yeah, multiple years sort of view of: How am I going to make change happen in this particular category with the full support from the business because some of the things will not be deliverable within a year.

40:43
And it’s just knowing that like you said before, you’re pushing people to be a little bit more stretching in terms of what the radical should we say in terms of what they they’re looking to achieve.

40:55
Just a reflection Mark on this slide.

40:57
If you’re to just look behind it and say what’s going on here, you’d probably say that it’s classic learning curve effect.

41:03
So if you look at the bottom line there 43 weeks, it takes first starters to create and implement so to think and do, whereas for leaders it’s 21 weeks.

41:12
And why is that the case?

41:13
Probably because catching management becomes more ingrained as a set of capabilities that people just know what to do.

41:20
And also they’ve probably got their arms around the spend as well.

41:24
So they don’t, they’re not still trying to fight to work out where the spend is, who controls it, what’s the power base involved and all of that.

41:30
And you know, what’s the keep out signs and they’ve taken probably the keep out signs down and they’re starting to get better.

41:38
You would imagine better results from volume consolidation and aggregation and then start to move on to more sophisticated things.

41:45
And they can actually cycle through those categories in a more efficient way, which means you don’t need as many people in the become a team, but they end up managing more spend.

41:55
Absolutely.

41:55
It’s a nice way of positioning the story.

41:57
I think it’s absolutely true.

41:59
You know, people are refreshing and adapting strategies, hopefully at the leader level and not doing it for the first time.

42:05
So it is that sort of inertia that you’ve got to overcome and often we find people, you know, can get stuck in that inertia situation where it takes too long, therefore it becomes discredited as a way of working.

42:17
So yeah, something to avoid for sure if you can do just one question.

42:26
Is there a category management organisation that has a better structure for creating higher value?

42:36
Yeah, I mean, that’s one of the, I didn’t put it in that, that table, but the more centralised, not fully centralised as in we do everything from, you know, our headquarters, but you know, some form of centralised.

42:50
You, you came up with the definitions, Marc, I remember.

42:53
But it’s some sort of centralised hybrid structure.

42:56
But it’s definitely, you can see that they’re more, you know, completely decentralised, some of the worst results and completely centralised.

43:05
You know, not many people are like that, to be fair, it’s mainly some form of hybrid structure, but they generate the best results.

43:12
Two minutes.

43:14
OK, Finally, here is a view of what is available within the report and it’s a breakdown of one of the areas.

43:21
We did it here around category strategy summary.

43:24
And you can see that the scores here are for leaders in green and the average scores across the organisation, across the participants in white and very much, you know, a big gap between leaders and the average across all areas.

43:38
So that’s the sort of thing that’s in, you know, each start of each dimension.

43:43
When we look at that in each part of the report, the six dimensions, there’s a view like this.

43:48
So it gives a view and what the what the leaders are actually doing.

43:51
So you can quickly see where you might want to focus.

43:55
And then finally, so then we’re out of time.

43:59
We’ll skip this piece about the operating model for now, but we’ll also just put up the link.

44:08
So we, we see by the way, just to clarify people, we see a link between doing an operating model that’s based on this question structure really helps to, to make a link between the procurement strategy and then the category strategy activity that’s underway to give a definition of how you might how you’re doing it in your organisation.

44:27
And this is the report.

44:28
So that’s the QR link for that.

44:32
Will the slides and recording be shared?

44:36
Yes, and if anybody wants to hang around for 10 minutes and ask us some more questions, I’m happy to do that and saying goodbye to people who have to go to their next session.

44:53
So thanks for attending.

45:05
Any questions coming through more?

45:10
Not at the moment.

45:11
Got Thank you.

45:14
Who’s the Thank you.

45:15
Well then the Q&A, would you be able to share one firm’s name of a leader?

45:33
I would suggest that we actually come we can circle back around that perhaps as a discussion with the person asking the question.

45:41
Yeah, or you know, have a look in some of the previous reports because I think some of the leaders may well be in there as some of the interviews that we that we’ve done so well.

45:52
There’s definitely some highlighting of good practise.

45:56
Yeah, there’s case studies that are throughout the report, so you can pick them up there.

46:04
Recently read an article in LinkedIn stating that category management is dead too slow and clunky.

46:11
Have we got any thoughts about that?

46:14
Yeah, I think you know, if you do it with a long-winded way of working without any real programme management behind it, it probably is fit that sort of.

46:24
But you know, if you boil it down, this is about commercial or procurement and technical people working together to create more value.

46:33
You can see from the results in the survey that you know, there’s still more value available on the table.

46:38
So you know what else?

46:40
What are the mechanism have we got to get after that in a structured way?

46:44
You know, there is no plan BI think when it comes to this.

46:47
So making it work at making it acceptable, don’t make it long winded 100 pages.

46:53
We’ve heard all of those sorts of things many times.

46:56
Can you keep it relatively light, flexible and be realistic about the time it takes?

47:01
And maybe just do a, you know, a time, time bound approach to category management to start with to try and get their result in within 12-16 weeks.

47:11
And then, you know, do a next iteration a bit, but don’t drag it out for 43 weeks.

47:17
It’s, it’s far too long or we’ve had longer time as well.

47:20
So, you know, it’s fine to say it’s dead.

47:23
What is it getting replaced by?

47:25
I think the question is more: How do we make it work? which is what we’re trying to do with this, this report really.

47:30
Yeah, unfortunately just one comment on that.

47:33
Unfortunately for people that think it’s dead, it’s actually annoyingly alive because it creates a performance effect.

47:39
So if you do catch the management effectively there’s a clear performance effect and it’s to be to be achieved.

47:46
But if you’re using one category management process which has got all of the tools and templates to go through in a very regimented way and you’re working in a fairly flexible environment, you’re probably going to see a massive car crash because it won’t work quite very well.

47:58
It’s got to be right sized to your organisational, your organisation circumstances.

48:05
Got a question that says, is there any information in the report about what a good category strategy looks like or sort of content there?

48:14
Isn’t it?

48:16
That’s, I mean, it’s something that we’ve got well defined in a set of materials.

48:20
It’s not specifically in the report.

48:22
I think no, we’re trying to keep it at the level of how do we create an operating model for category management.

48:27
Obviously part of that we ask, you know, do you have a, a, an excellent toolkit that people can use and is flexible etcetera, etcetera.

48:34
So there’s some broad features, but you know, I think the kind of steps of category management are pretty well known.

48:40
And you know, there are, there are features around how you make it successful for sure.

48:45
So happy to, to give a quick view to somebody if they want to drop us an e-mail about that.

48:51
What are the, what are the, the traits we see in a, a good tool kit and, and strategy structure versus stuff.

48:58
And we’ve probably written A blog on it.

48:59
I just can’t remember when it when it was, but in fact, I definitely know we’ve written one on it because Simon Brown wrote it.

49:07
So we should point you in that direction to start with.

49:11
The case studies also when the report gave nice indicators within the context of the organisation, which has also explained some of the nice features that some of the features that they found useful.

49:22
It’s written up in a really nice way actually for the for the cases.

49:25
And I think if you had a quick look at those, probably take about 5 minutes to read each one to the, I think it’s four, you get quite a lot of a lot from that.

49:32
Actually a good question here, which is given the extreme price volatility of lots of stuff that people are buying, how can they report year on year savings and how to measure their Catman performance, especially I suppose there’s two bits there, which is the difficulty of measuring year to year savings in a volume item related business.

50:01
And the other one is how do you can you measure cat man performance?

50:05
Yeah, I mean, we, we’ve come up with six metrics that we think people should consider.

50:10
So off the top of my head, there is the financial benefit, the non-financial benefits, there’s stakeholder engagement, there is quality of category strategies.

50:20
So you know, for me they’re four of the top six off the top of my head.

50:26
But actually getting some metrics around those things, I think is really powerful, not just the financial and non-financial, but it is the quality of what we’re doing and what do our stakeholders think about it.

50:36
And so, you know, we, we often advocate and, and work with clients on putting something in place at formal gateways.

50:42
So you get your driving feedback back to your organisation to say, actually, are these people satisfied with what they’re doing?

50:49
Almost like would they recommend that other people, you know, would go through this process if, if it’s relatively new to the organisation?

50:57
So I think measuring that and especially at the strategy creation point is, is really powerful as well.

51:03
So you can play back to people.

51:04
This is, this is the feedback we’re getting.

51:06
These are the words that are being told to us.

51:08
I guess the other side, which is how do you measure savings in a volatile price environment in which prices are going up as well, then part, part of the challenge is actually having a good agreement and engagement with the finance organisation.

51:25
So at least there’s some agreed clarity about the way in which savings actually are measured and reported.

51:33
So within the organisation it’s an acceptable, acceptable outcome.

51:37
Yeah.

51:37
And what we did see in the report this time around was that the proportion of the savings that are reported that that are hitting the PNL or are cashable in public sector terms, it’s much lower as we expected because the volatility that’s gone on.

51:51
So it’s about 25% are cost reduction as we’d call it.

51:56
And you know that compares with about 48% I think it was in the previous survey that were.

52:01
So you can definitely see a slide towards cost avoidance being the way to deliver the value.

52:15
OK, if there’s nothing, I think that’s it.

52:17
Yeah, that’s excellent.

52:18
Thank you everyone for your participation and the questions.

52:22
Really, really enjoyed answering those.

52:23
And hopefully you know you’ll get a copy of the report very quickly.

52:27
And if there’s further questions, please do contact us because we’re always keen to see what your perspective is on the report and get some feedback on the content.

52:39
Many thanks.

53:03
There’s a couple of people still.

53:06
Yeah, we still have a few.

53:06
Yeah.