Talent and strategy make for successful category management at ExxonMobil

Case study ExxonMobil

Talent and strategy make for successful category management at ExxonMobil

By Future Purchasing |

Pamela Kearney Skaufel
ExxonMobil Logo

Pamela Kearney Skaufel
VP Global Procurement, ExxonMobil

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

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

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

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

Strategic category management is a way of thinking

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

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

Talent and strategy make for successful category management at ExxonMobil

Visibility breeds credibility

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

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

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

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

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

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

Talent is an important element of the strategy

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

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

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

Cross-organisational alignment

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

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

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

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

What it takes to make category management successful

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

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

Digitalisation will only increase the impact of category management

Digitalisation will only increase the impact of category management

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

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

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