Operating models aren’t new – they’ve been the backbone of how organisations function for decades. However, many procurement functions struggle to implement them effectively, as their understanding is limited to organisational structure concepts and models, rather than interdependent system design. As a result, they often miss critical elements that enable true value creation.

Now, as AI and advanced technologies promise to revolutionise procurement, getting your operating model right has become more critical than ever before. Organisations are discovering that technology alone isn’t the answer – it’s how that technology integrates with strategy, processes, people, and governance that determines whether you’ll see genuine transformation.

The old saying holds true: you need to master the rules before you can break them. To successfully rethink and redesign procurement operating models for the AI age, you first need to understand how they actually work and what makes them effective.

What is a procurement operating model?

A procurement operating model is the comprehensive framework that defines how an organisation structures, manages, and executes its procurement activities. It’s a blueprint that covers everything from people and processes to technology and governance. Think of it as the complete picture of how procurement operates – not just who reports to whom, but how work flows, how decisions get made, and how procurement connects with the rest of the business.

What is the purpose of an operating model?

The purpose of a procurement operating model is to drive efficiency, cost savings, compliance, and value creation across the procurement function. A well-designed operating model establishes clear processes, role clarity, integrated systems, and governance frameworks. This enables procurement teams to make consistent, strategic decisions aligned with business objectives while allowing the business to operate efficiently without disruption.

This transforms procurement from a reactive, transactional function into a proactive strategic partner. It provides the foundation that ensures procurement activities are efficient, effective, and adaptable to changing business needs.

How organisations are using operating models today: Myths and market realities

Despite the critical importance of operating models, many organisations fall into the trap of thinking it is just another version of their organisational chart. This narrow view excludes the interconnected elements that need to fall in place to enable procurement to deliver value efficiently and economically. Similarly, many businesses believe that investing in additional technology tools will help them achieve their goals more efficiently. However, technology is merely a means to an end and must be enabled through operational adjustments to deliver true value.

The cost of getting it wrong

Confusing an operating model with an org chart usually leads to inefficient operations that struggle to deliver consistent results. This prompts continuous reorganisations as leadership searches for solutions. These frequent restructuring efforts create uncertainty, hinder progress on strategic initiatives, and ultimately lead employees to question the credibility of their leadership.

More fundamentally, the lack of a comprehensive operating model forces procurement into an operational mindset. This mindset traps teams in the tactical sphere, limiting their abilities to engage in the strategic procurement activities needed to achieve business objectives.

What strategic procurement really means

Strategic procurement goes far beyond cost reduction and transactional purchasing. It’s about leveraging procurement as a competitive advantage through:

• Cost breakthroughs
• Internal coherence and alignment
• Intelligence and insights
• Supplier innovation partnerships
• Risk mitigation strategies
• Driving business outcomes that support organisational growth

Strategic procurement teams focus on achieving long-term results, building strong supplier relationships that foster innovation, and ensuring supply chain resilience.

However, strategic procurement requires absolute clarity of purpose and direction. Teams need to understand not just what they’re doing, but why they’re doing it and how their activities connect to broader business objectives. This clarity comes from having a well-defined operating model that articulates the strategic vision, defines success metrics, and provides the structural foundation for execution.

Future Purchasing’s Procurement Operating Model

Drawing from our extensive experience conducting maturity assessments and implementing category management across more than 100 companies, we have developed a comprehensive Procurement Operating Model. This model addresses the real-world challenges organisations face today.

Our model is closely aligned with the proven Galbraith Star framework, which is widely recognised for designing effective business operating models that drive specific behaviours and outcomes. By taking into account the strategic hierarchy and understanding how different elements interconnect, our operating model provides a practical blueprint for genuine procurement transformation.

Operating model dimensions

Our procurement operating model encompasses six key dimensions that must be aligned and interact harmoniously with each other for a team to be truly effective. When these dimensions work together seamlessly, they convey a clear and consistent message to both the procurement team and business stakeholders about how procurement creates value.

The six dimensions are:

1. Strategy: Defines how procurement supports organisational objectives through a clear purpose, value proposition, and business-aligned vision that delivers both financial and non-financial outcomes.
2. Business Engagement: Defines how procurement can build strong, collaborative relationships with stakeholders across the organisation to elevate it from a transactional function to a strategic partner.
3. Processes & Toolkits: Defines the capabilities, workflows, toolkits, and governance mechanisms that enable procurement to deliver high-quality outcomes efficiently and consistently.
4. Technology & Data: Defines how procurement should leverage digital tools and information assets to improve efficiency, accuracy, and value creation through automation, analytics, and integrated platforms.
5. Organisation Structure: Defines how procurement should be designed, resourced, and governed to deliver strategic objectives effectively, including roles, responsibilities, delivery models, and optimisation approaches.
6. Capability & Mindset: Defines the people, skills, leadership, and culture requirements needed for procurement to deliver excellence through professional development and team identity.

The Path Forward

The age of AI presents unprecedented opportunities for procurement transformation, but only for organisations that build the right foundation first. A comprehensive operating model isn’t just about having the right organisation structure – it’s about ensuring all six dimensions work together harmoniously to create a function that can truly unlock procurement’s potential.

This shift from tactical to strategic procurement is fundamental. Operating models provide the framework that elevates procurement from a transactional function to a strategic business partner. When executed correctly, category management is at the heart of this transformation. It requires coordinated processes, clear governance, and integrated systems to deliver meaningful insights and supplier value.Without a robust operating model foundation even the most well-designed category management programmes have failed to translate initial success into enduring value delivery.

Organisations that continue to treat operating models as simple org charts will find their AI investments falling short of expectations. But those who take the time to understand how each dimension works and how they connect are taking the first step toward building a procurement function that’s ready for what’s next.

Ready to dive deeper? In our next blog, we’ll explore the Strategy dimension in detail – how to define a clear purpose, align with organisational objectives, and create a value proposition that transforms procurement from cost centre to strategic partner.

Applying category management in the supply chain has been undertaken by end customers for decades in certain industries, but it remains an underexploited opportunity for many, with rapid results possible.

Extending Category Management to your key suppliers

Category management is typically an internal activity that an organisation masters and applies to its directly controlled spend. However, some organisations collaborate with their tier 1 suppliers and extend this approach further down their supply chain, driven by various potential objectives.

One significant driver is that the tier 1 suppliers may not be undertaking category management to the extent or standard that the customer organisation expects. Consequently, there is a significant value improvement opportunity.

Your supplier’s decision impact your costs

When key systems or subsystems at tier 2 and below are left to the decision of tier 1 suppliers, performance, interoperability, and upgradability issues can arise, especially for asset procurement. Individual sourcing decisions are often made without an underpinning category strategy, which can result in an unnecessary proliferation of different solutions.

There can also be adverse operating expense impacts in this scenario, where tier 1 suppliers are unaware of or unaffected by downstream maintenance and support costs for the systems they select, which are paid for by the end customer. The upshot is that the total costs incurred by the customer are not considered, leading to sub-optimal decisions.

Increasing your control over n-tier supplier decisions

With potentially greater spend and longer-term relationships with the key system providers, the end customer may have greater influence. They may use this to achieve prioritised supply when the market is constrained or ensure they have the best resources working on their account. These opportunities usually require close collaboration with the tier 1 suppliers and are usually initiated and driven by the end customer.

While these aspects mostly focused on cost-related implications of sub-par category management practices at your key suppliers, the same argument can be made around risk and ESG objectives. Understanding the n-tier supply chain has been a priority for CPOs for a number of years, mostly driven by regulatory requirements around supply chain transparency. While knowing the key suppliers along your own supply chain is good, being able to influence it is better.

Category Management in the supply chain is a scalpel, not a hammer

By engaging in Category Management with suppliers, objectives related to cost management, labour practices, modern slavery, environmental standards, carbon emissions, and similar areas can be actively promoted and addressed throughout the supply chain. Much like educational programs outlining your expectations for the behaviours of tier 1 suppliers, this approach enables you to influence their own programs more profoundly.

It requires procurement team members who think strategically and can position Category Management positively with their key suppliers and internal stakeholders. The latter group is often more sceptical about what can be achieved from this approach and is concerned that, as the customer, they are taking more control and responsibility for categories that are currently managed by the supply chain, adding additional workload. This approach should, therefore, be focused on suppliers with high impact on cost structures or high potential environmental or supply chain risks only.

The crucial thing is to understand how well tier 1 suppliers are undertaking category management and then to work collaboratively on some high-priority categories to prove the effectiveness of this approach.

Assess the maturity of your category management capability with our Category Management Maturity Assessment, or contact us to discuss extending category management deeper into your supply chain.

Further reading:

Blog post: How to build a great category management process

Artificial Intelligence holds extraordinary promise for procurement—and we are only at the beginning of understanding its true potential. Just as earlier waves of automation reshaped how we work, AI will open new opportunities, but it will also bring fresh challenges that we must be ready to manage.

Learning from ERP implementations

Think back to the major ERP (Enterprise Resource Planning) programs many organisations undertook in recent years. They absorbed significant investment—both financial and human—and the results were, at best, mixed.

The research into ERP implementations is clear: success was rarely just about getting the technology right. More often, it came down to how effectively organisations managed change. Those who invested in comprehensive change management, addressing not only IT integration but also behavioural and cultural adaptation, fared far better than those who didn’t.

That history offers procurement professionals a valuable lesson as we turn to AI adoption.

Adopting AI in 2025

Recently published research by the MIT NANDA initiative reports a 95% failure rate in recent implementations of AI approaches, linked to flawed enterprise workflows – how we set up to adopt the new technology. Key success factors include setting clear objectives, adapting workflows and processes, providing ongoing change management, and empowering frontline managers to drive adoption.

What this means for AI Adoption

With AI, the same principles apply. To truly maximise its impact, leaders must look beyond the technology and consider:

• Input mechanisms: How will data be captured, structured, and trusted?
• Process design: How can processes be simplified and aligned to enable automation?
• Job roles: How will responsibilities shift, and what new capabilities will be needed?
• Stakeholder engagement: Who will be affected, and how can we bring them on the journey?
• Implementation pathways: How will AI recommendations be translated into practical, accepted action?

We need to recognise that resistance to change is human nature. Simply saying, “AI says we should do this” is not enough to carry people with us.

In fact, we’re already seeing in live AI-driven procurement projects that a lack of holistic planning can undermine results. The promise of speed, insight, and efficiency risks being overshadowed by reluctance or outright pushback from those asked to adopt the outcomes.

What is a Procurement Strategy Hierarchy?

A hierarchy of strategies ensures a clear alignment between the organisation’s overarching vision and goals and the procurement team’s strategy, as well as the agreed-upon actions taken at each level. This article outlines how a hierarchy of strategies helps create clarity and alignment across the organisation.

The Procurement Strategy Hierarchy describes a cascading model of strategies. Each underlying strategy layer is derived from and aligned with the superior strategy layer to ensure a clear connection between an organisational strategy and the actions of each individual within the organisation. Starting from the organisational and business strategy, the procurement strategy needs to be designed to support the business objectives.

The Category Management strategy and operating model need to translate those objectives into processes and mechanisms to ensure alignment across categories. Ultimately, category strategies need to be created based on the aligned business requirements. This model can be further developed into supplier management and sourcing and negotiation strategies.

Using the Procurement Operating Model to create a strategy hierarchy

The Global Category Management Report and its six dimensions provide a checklist of questions to shape a strategy and operating model for Category Management. This fits into the middle tier of the strategy hierarchy and clarifies for the procurement team and stakeholders how category management will be adopted. The procurement leadership team collectively makes these decisions.

Looking upwards in the hierarchy, the category management strategy and operating model are a subset of the wider procurement strategy and operating model, which is itself shaped by the overall organisational and business strategies. 

Looking downwards, the spend influenced by the procurement team is divided into manageable categories, often reflecting supply markets or internal structures. 

Strategic Alignment in Procurement

These are the category groups that senior managers control through an approach we call strategic alignment. Strategic alignment is a distinct activity above category and supplier management. It is used during the business planning cycle to identify and prioritise procurement activities with senior business stakeholders and consider linkages and interdependencies between categories and suppliers in the category group. The outcome is an agreed-upon pipeline of category and supplier projects to work on. Individual category strategies sit beneath strategic alignment.

Benefits of a clearly designed Procurement Strategy Hierarchy

Ensuring alignment between the overarching vision and goals of an organization and translating them into the procurement team’s strategy, ultimately breaking them down into category, supplier, and negotiation strategies, creates cohesion across the actions taken at each level by every team member. This clarity helps everyone within the organization understand how their work contributes to overall procurement and business objectives.

When this hierarchy is well designed and communicated, category strategies are co-created with stakeholders, fully supported, and implemented at speed. Responsibilities at each level are clear, resulting in improved value delivery, risk management, and agility.

Assessing Your Category Management Maturity

We offer the Category Management Maturity Assessment to assess the alignment of your category management practices and the performance of the individual steps. Contact us to discuss the ingredients of a strong operating model and how to build one.

Related Resources

• Global Category Management Report
• Category Management Maturity Assessment
• Procurement Operating Model
• Future Challenges for Category Management

The skills required to succeed in procurement are evolving more rapidly than ever before. While foundational expertise in category, supplier, and contract management and sourcing remains important, it is no longer enough on its own. Today’s procurement professionals face a dynamic mix of rising business expectations, evolving regulatory demands, and rapid technological change, especially with the emergence of AI and digital tools.

At the same time, organisations are under increasing pressure to do more with fewer resources. With tight headcounts and a competitive talent market, leaders can’t simply hire their way to a future-ready team. Instead, the focus has shifted to reskilling and upskilling existing talent.

Skills frameworks and assessments are essential tools in this journey. They help identify skill gaps, unify diverse teams, and focus development efforts where they matter most. This blog explains what skills frameworks are, why they’re important, how skills assessments work in practice, and what benefits they offer.

What is a skills framework and why do you need one?

A skills framework is a structured outline of the key capabilities required in procurement roles, with clear descriptors of what proficiency looks like at each level. Procurement teams are rarely made up of individuals with identical backgrounds, training, or experience. A skills framework creates a shared language and aligns expectations, allowing individuals and teams to honestly assess their current skills and identify development priorities. With growing complexity in areas like ESG, risk, and digital transformation, a skills framework enables targeted learning that aligns with organisational strategy.

How to create a skills framework for Procurement

Creating a robust skills framework starts with clarity. You need clear, unambiguous descriptors for each skill mapped to specific job roles within your organisation to ensure expectations are fair and relevant for each individual. Vague or compound descriptors can lead to confusion and inconsistent self-assessments that fail to provide meaningful insights.

Established models, such as those from the CIPS (Chartered Institute of Procurement & Supply) and IFPSM (International Federation of Purchasing and Supply Management), offer strong starting points. These can be customised and expanded to reflect your organisation’s specific needs, strategic priorities, and cultural context.

Key skills to include

Many procurement skills frameworks focus heavily on technical and digital skills, but tend to ignore the importance of soft skills. Our 2024 Global Category Management Report identified stakeholder engagement and alignment as the primary barrier to success in category management and procurement. And with the advancement of technology, these skills become more important than ever.

A well-rounded skills framework should include a blend of foundational procurement skills (like category management, contracting, or negotiation), behavioural competencies (including stakeholder engagement, adaptability, and communication), and digital capabilities (such as data analysis and AI tool proficiency).

Adapting when competencies change

Procurement skills are not static — they evolve in response to the environment in which we operate. While many core competencies remain relevant over time, new requirements inevitably emerge due to changing business priorities and technological advancements. It’s essential to periodically review and refresh your skills framework to ensure it remains fit for purpose.

Skills assessments explained

Skills assessments measure individual proficiency against the defined framework, providing a clear picture of strengths and gaps. Common approaches include:

• Self-assessment: Individuals rate themselves against each defined skill using the framework’s descriptors. This method is easy to implement but may be influenced by differing interpretations or personal bias.
• Manager assessment: Line managers assess team members based on observed performance. While more objective, this is limited to the manager’s direct experience with the individual and may not capture the full picture.
• Moderated assessments: A blend of self and manager assessments, where results are calibrated through manager-led or external moderation to improve consistency and reduce subjectivity.
• 360-degree feedback: Collecting input from peers, direct reports, and other stakeholders. This holistic view offers richer insight, especially for soft skills and cross-functional collaboration.

Skills assessments should be completed at regular intervals. By re-evaluating individuals and teams regularly, you can track progress, measure the impact of development efforts, and adjust learning plans as needs evolve. This ongoing cycle of assessment and improvement supports individual growth and helps organisations build more capable, adaptable procurement functions.

Skills assessments are often supported by digital platforms, which simplify distribution, data capture, and analysis. Digital tools also enable rapid reporting across individuals, roles, regions, or business units, highlighting both common skill gaps and standout capabilities. One of the most valuable outcomes of skills assessments is their ability to reveal hidden talent — skills within teams that haven’t yet been fully utilised.

Benefits and challenges of skills assessments

The benefits of a skills assessment

A well-designed skills assessment delivers value at both the individual and organisational level. Key benefits include:

• Strategic alignment: By selecting the right set of competencies, assessments help ensure that procurement capabilities are aligned with broader business strategy, positioning the function to better support organisational goals.
• Career development: With a clear view of current capabilities, organisations can design meaningful development pathways, identify high-potential talent, and build robust succession plans.
• Consistency: Assessments create a shared language and a consistent benchmark for evaluating skills across teams, functions, and geographies.
• Smarter project resourcing: Understanding who has what skills enables better project matching (putting the right people on the right initiatives).
• Prioritised Learning: With visibility into strengths and gaps, leaders can more confidently focus training investments on the most critical skills gaps.

Potential challenges

While the benefits are compelling, skills assessments inevitably face challenges. Recognising them — and tackling them proactively — can help ensure success. Common challenges include:

• Resistance to participation: In some regions or cultures, assessments may be met with scepticism or concern. Framing the process as part of organisational development is key to gaining trust.
• Leadership buy-in: Leadership plays a critical role in setting the tone. If leaders don’t champion the initiative or allocate time for it, uptake will be limited. Clear communication about the strategic value of the assessment is essential.
• Misaligned or generic frameworks: If the skills framework doesn’t reflect the unique context of your organisation, it may cause confusion or disengagement. Tailoring the framework to your specific roles, goals, and maturity level is crucial.
• Lack of visible outcomes: For individuals and managers to fully engage, they need to see tangible results from the effort. Linking the assessment to development plans, promotions, or measurable improvements helps demonstrate its value and build momentum.

Putting it into practice with Future Purchasing

Understanding the skills your procurement team requires — and assessing current capabilities — is the first step to building a high-performing, future-ready function.

At Future Purchasing, we support organisations in designing and delivering skill profiles and assessments that provide clear, actionable insight into current competency levels. Our Compass Skills Assessment tool gives you a consistent and objective view of individual and team performance across key procurement capabilities, enabling you to identify strengths, surface hidden talent, and target development where it matters most.

But we don’t stop at diagnosis. Based on assessment results and aligned to your strategic goals, we help design tailored learning and development programs that close capability gaps and accelerate progress. Whether you’re aiming to raise the bar across the function or deepen expertise in specific areas, our approach ensures training is relevant, role-specific, and impactful.

By combining structured assessment with targeted upskilling, we help procurement teams unlock their potential and deliver measurable value, both now and in the future.

Ready to get started?

If you don’t have a skills framework aligned with your organisational structure and job roles yet, now is the time to act. Get in touch to discuss your current setup and how Future Purchasing’s Compass Skills Assessment and tailored learning programs can help you build a robust foundation for long-term performance.

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.”

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.

“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.”

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.”

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.”