Category manager to focus on the following top 10 activities

Category manager to focus on the following top 10 activities – a general introduction to the focus areas. Can see what is different from strategic sourcing?

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As a procurement expert and consultant, I would advise a newly appointed category manager to focus on the following top 10 activities to start with:

Understand the business objectives: Familiarize yourself with the organization’s strategic goals and objectives to align your category management strategy with the overall business strategy.
Conduct spend analysis: Analyze the organization’s historical spend data to identify trends, key suppliers, and potential areas for cost savings or improvements.
Define the category: Clearly define the scope of the category, including the products, services, or suppliers it encompasses, to ensure a focused and effective management strategy.
Perform market research: Understand the supplier market landscape, including key players, emerging technologies, and market trends, to identify potential opportunities and risks.
Develop a category strategy: Create a comprehensive strategy that outlines objectives, goals, and tactics for the category, including sourcing strategies, supplier relationship management, and performance measurement.
Engage stakeholders: Collaborate with internal stakeholders, such as end-users, finance, and quality teams, to ensure their input and buy-in for the category strategy. This will help create a sense of shared ownership and support successful implementation.
Identify and evaluate suppliers: Develop a list of potential suppliers, assess their capabilities and qualifications, and evaluate their fit with your organization’s needs and strategic objectives.
Negotiate contracts: Leverage your market knowledge and supplier evaluations to negotiate favorable contracts with suppliers, including competitive pricing, terms, and conditions.
Implement the category strategy: Execute the tactics outlined in your category strategy, such as supplier consolidation, contract management, and supplier performance monitoring.
Monitor and review performance: Continuously track and evaluate the performance of the category, suppliers, and implemented strategies. Use this data to identify areas for improvement and make adjustments as needed to optimize results.

If a Category manager to focus on the following top 10 activities, a newly appointed CM can establish a strong foundation for effective category management and drive value for their organization.

Three most important learnings from Procurement executives.

But, even if Category manager to focus on the following top 10 activities, the procurement executives need to do their part. The three most important learnings from procurement executives, when appointing a category manager are:

It is a strong option to look outside the procurement community and find a person having extended market/product knowledge and train the person in procedures of Category management, assuming the candidate for Category manager position has the personal skills, where business acumen and strategic perspective are the most important. Blogpost: How a customer took a different approach when recruiting a Category Manager – CASE.
Create the organizational framework. Category management is a cross-functional activity and assuring access to relevant contacts outside the procurement is a success factor.
Thinking out of the box.When procurement executives encourage category managers to think out of the box, create a wanted position, and assure significant change through a longer perspective and strategic approach, they are essentially asking them to innovate and push beyond traditional category practices.

Create the organizational framework

Establishing an effective organizational framework is crucial for successful category management. A best practice approach in this area involves forming a cross-functional team and implementing a sourcing council to approve the category strategy and assure access to resources. Let’s discuss these elements in detail:

Cross-functional team: A cross-functional team consists of representatives from various departments within the organization, such as procurement, finance, operations, quality, and other relevant stakeholders. This diverse team composition ensures that the category strategy is developed with input from all relevant perspectives, leading to a well-rounded and comprehensive approach.

Best practices for forming a cross-functional team include:

Selecting team members based on their expertise and understanding of the category, as well as their ability to contribute valuable insights and support the team’s objectives.
Ensuring clear communication channels and regular meetings to facilitate collaboration and information sharing among team members.
Defining roles and responsibilities for each team member to ensure accountability and effective teamwork.
Encouraging open discussion and active participation from all team members to foster innovation and creative problem-solving.

Sourcing council: A sourcing council is a governing body responsible for reviewing and approving category strategies and ensuring that the necessary resources are allocated to support the category management team. The sourcing council typically comprises senior executives or representatives from key departments within the organization.

Best practices for implementing a sourcing council include:

Establishing clear objectives and decision-making criteria for the sourcing council to ensure a consistent and transparent approach to reviewing category strategies.
Regularly reviewing the category strategy to ensure alignment with the organization’s strategic goals and to assess progress towards achieving the desired outcomes.
Providing guidance and support to the category management team by sharing insights, expertise, and industry best practices.
Ensuring that the sourcing council is composed of diverse perspectives to foster a comprehensive understanding of the category and its potential impact on the organization.

By implementing a cross-functional team and a sourcing council, organizations can create a robust framework for effective category management. This approach ensures that category strategies are developed with input from various perspectives, leading to more comprehensive and successful outcomes. Additionally, the sourcing council’s involvement helps secure the necessary resources and support, while maintaining alignment with the organization’s strategic goals.

Thinking out of the box:

This involves adopting a creative and open-minded approach when developing category strategies. Category managers should explore unconventional ideas, consider alternative sourcing options, and identify innovative technologies or solutions that can provide a competitive edge to the organization.

Creating a wanted position: The wanted position refers to a desired future state for the category that aligns with the organization’s strategic goals. To achieve this, category managers should develop a clear vision for the category, taking into account emerging trends, potential disruptions, and opportunities for improvement. They should then create a roadmap to move from the current state to the desired future state.
Assuring significant change: Category managers should focus on driving transformational change within the category rather than just incremental improvements. This could involve adopting new procurement models, redefining supplier relationships, or implementing innovative technologies to optimize procurement processes and deliver maximum value.
Longer perspective: A strategic approach to category management involves considering the long-term implications of decisions and anticipating future market developments. Category managers should analyze market trends, monitor emerging technologies, and assess potential risks to develop proactive strategies that address the organization’s needs over the long term.
Strategic approach: Category managers should align their strategies with the organization’s broader strategic goals and objectives. This involves understanding the organization’s vision, mission, and values, and collaborating with key stakeholders to ensure that category management initiatives contribute to the overall success of the organization.

By embracing out-of-the-box thinking, creating a wanted position, and adopting a longer perspective and strategic approach, category managers can drive significant change within their categories and deliver lasting value to their organizations. This progressive approach to category management can lead to enhanced cost savings, increased efficiency, and better supplier relationships, ultimately contributing to the organization’s competitive advantage.