Fashions come and go, and then re-branding invents a return. There have been past pronouncements claiming the death of category management, but it is a little like saying that the Newton laws of motion are outdated. So what? Application and practices evolve as we subject them to new tests, but basic theory remains sound.
For those not familiar with the Category Management term, my favored definition is:
” Category Management is the strategic end-to-end process for buying goods and services that aligns business goals and requirements with supply market capabilities.
It transforms the long term value achieved from an organizations spend and drives reduced cost, reduced risk, improved revenue , improved service and ultimately better business performance.
Effective internal and external collaboration is the bedrock of successful Category Management ” – Future Purchasing
How does this differ from strategic sourcing ? In short, category management underpins procurement’s strategic understanding of goods and services that it acquires from the relevant market and allows the organization to create subject matter expertise to help structure supply side focus. Category Management is as much as an organizational construct as well as a vehicle for those sourcing strategies to be determined.
Unfortunately not all organizations have been able to successfully implement Category Management. A typical failing is that procurement talent lacks the dual ability to perform the analytics, develop the insights and most importantly, engage in a collaborative relationship with stakeholders to challenge the status quo and agree an appropriate action plan.
The inability to embed Category Management is a result of missing ‘soft’ skills, and a lack alignment with the business. Alignment extends beyond understanding the business goals, it is becoming that trusted member of the team; a valued contributor. This trust needs to be earned.
Value success measures these days are much broader and arguably makes the challenge more complex. Strategic sourcing is a bigger play. This does not mean that the category management approach is dead; it is in my opinion more valuable then ever given the current supply chain disruptions. There is no substitute for good product and market knowledge, however the procurement terminology and language used outside the function needs to be more explicate and inclusive. Long live Category Management!
AYSCO CONSULTING 