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Where are we now? Benchmarking our category management approach
By Mark Hubbard |
It is one of the great questions for procurement professionals – where are we compared to our peers? It’s a real challenge to understand both whether our own approaches are adequate, or what the effort required to make any improvements would actually deliver.
This is a crucial question in the area of category management. As an approach, it can be hard to deliver a high quality category strategy, it requires strong buy in and pretty much everyone agrees that their category strategies are not at the quality they should be.
At one level, we can understand that if the outcomes are not at the level we expect them to be, then either the process is wrong, or our application of it is wrong. Naturally, the former is easier to believe, and many procurement organisations revert to sourcing activity as it is closer to the core of what purchasing and procurement are perceived to be about.
We should be operating as a business function which creates value for the organisation and makes a positive contribution, not one tied to a world of compliance and process.
However, there is inherent risk in this. The challenge of category management is more about how we ensure that procurement is known for being core to the development of genuinely business strengthening approaches, and not just the most effective way of buying stuff ( and sometimes not even that). We should be operating as a business function which creates value for the organisation and makes a positive contribution, not one tied to a world of compliance and process.
However, to make that progress, we need to understand where we are at the moment, and where we’d like to be in the future, together with an understanding of the business case which sits behind the effort required to make that journey.
How can we find out where we are compared to our peers?
Fortunately for all concerned, the Future Purchasing Category Management Leadership Report does all of that. By taking responses from 380+ individuals spread across a similar number of businesses, the report presents both the performance of a whole range of businesses in areas core to the delivery of category management programs, and shows the results achieved from those programs.
This allows the reader to place their own organisation within the broad spread of approaches and capabilities described by the respondents, and also seek to establish the change in delivery which might be available.
Identifying priorities
The report identifies the various practices needed to be successful in priority order, allowing organisations to develop an understanding of which areas they might want to address first. The priority order has been determined by testing the statistical significance of the practice against the results presented; the first practice on the list had the greatest effect on delivery, and so on.
With help, it is possible to construct an excellent picture of where we are compared to our peers, and what we might need to do to improve.
It is important to understand the scale of benefit delivery from the move from not good to excellent at the practice of category management. The raw numbers speak of at least a two-fold improvement in value delivery.
The implication of this is clear; if our competitors are able to access twice as much value from their supply chain, then we will rapidly fall behind. Addressing this provides either a competitive advantage to the business, or stops a decline in competitiveness.
This is an expression of strategic procurement at its best, and benchmarking in this way is something businesses should aim to undertake as soon as possible.
You can download a preview of the report here: https://futurepurchasing-2434470.hs-sites.com/catman-preview.
Benchmarking – further reading
Blog post: Benchmarking your category management performance
About Mark Hubbard
Director
30+ years experience in procurement and supplier management, in line and consulting roles
Previous employment: Positive Purchasing Ltd, SITA,
QP Group, BMW, SWWS, Rover
Education: BSc in Engineering Metallurgy, MBA University of Plymouth
CIPS: Member
