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In search of the Category Management Holy Grail
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Category Management
Launch Process Current Position Strategy
Development Strategy Selection
Strategy Implementation
• Category Profiling
• Business Needs
• Sourcing History
• Stakeholder Mapping
• RACI Matrix
• Communications Charter
• Change Management
• Portfolio Analysis
• Supplier Perception Matrix
• Relationship Positioning
• Risk Analysis
• Specification Challenge
• Supply Market Analysis
• Opportunity Analysis
• Request for Information
• Conditioning
• Price & Cost Analysis
• Supply Chain Analysis
• Quick Wins
• Options Analysis
• Request for Proposal
• Supplier Selection
• Capability Assessment
• Negotiation
• Contract Award
• Debriefing
• Implementation Plan
• Savings
• Category Profiling
• Business Needs
• Sourcing History
• Stakeholder Mapping
• RACI Matrix
• Communications Charter
• Change Management
• Portfolio Analysis
• Supplier Perception Matrix
• Relationship Positioning
• Risk Analysis
• Specification Challenge
• Supply Market Analysis
• Opportunity Analysis
• Request for Information
• Conditioning
• Price & Cost Analysis
• Supply Chain Analysis
• Quick Wins
• Options Analysis
• Request for Proposal
• Supplier Selection
• Capability Assessment
5, 7 or 8 steps… matters not: each company and each consultancy has their
own methodology
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OK, so I’ve got a Mandate
• Corporate Governance
• Business Process
• Top-level support
• Understood by all
• RRAA must be clear
• Condition the market
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I’m working on the chain gang… 2 Not always a sequential process
Avoid the ‘tunnel’
Think of ‘clusters’
Requires expertise
Depth is driven by category complexity
Creative not predictive
Not a form-filling exercise
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Break the category down… 3
What are the sub-categories for? Stationery
BSS FM
RS Components
Why do you think this is important?
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Know what has gone before…
“Study the past if you would define the future” – Confucius
Sourcing History
What worked?
What changed?
Why did it change?
Performance?
Innovation?
Bare minimum?
Contract parameters?
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“As we know, there are known knowns. There are things we know we know. We also know There are known unknowns. That is to say We know there are some things We do not know. But there are also unknown unknowns, The ones we don't know We don't know.” – Donald Rumsfeld
Data is king 4 Use it powerfully
Who made the decisions?
How have you been influenced?
What is missing?
Is the past the same as the future?
Don’t observe it
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Learning and changing
Stage 1: Unconscious incompetence (Don’t know that we don’t know)
Stage 4: Unconscious competence (Don’t know that we do know)
Stage 3: Conscious competence (Know that we know)
Stage 2: Conscious incompetence (Know that we don’t know)
Lost unaware
Searching aware
Learning aware
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If you keep doing the same thing… 5
Be creative!
How could you approach these categories differently?
Stationery
Office space
Mobile phones
• Contract terms
• Duration
• Performance regime
• Relationship
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6 Know your marketplace
OMG global economic crisis
Agency Workers Regulations
Currency fluctuations
Energy prices
Raw material movements
BRICS
Bankruptcies
M&A activity
NAFTA/EU
Spending cuts
Porter’s
PESTLE
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Delay
Haphazard
Contrived
Interference
Know your supply chain
Who owns whom
Weak points
Conversion process
Profit points
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“In the long history of humankind, those who learned to collaborate and improvise
most effectively, have prevailed.” – Charles Darwin
Know your stakeholders 8 They are not the same
Beware of Social Proof
Bad press can be good press
Humans are influenced
Some play games
…some enjoy it
…others can’t be bothered
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Champion: takes personal responsibility for ensuring the project’s success
Helper: willing to assist
Fence-sitter: not engaged but waiting to see how the project unfolds
Cynic: tests the team’s resolve by challenging at each step
Blocker: undermines at every opportunity
Champion
Helper
Fence-
sitter
Cynic
Blocker
Disposition Negative Positive
Involvement
Classical Stakeholder Mapping 8
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I want it all… but do I need it? 9
Wants
Aspirational
Feature driven
Supplier’s USPs
Even ego driven
Needs
Business driven
Logical
Non-negotiable
Precise
“On the road from the City of Scepticism, I had to pass through
the Valley of Ambiguity.” – Adam Smith
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Know your Category
• If you go blindly, accept the consequences
• Stakeholders may know more than you
• Acting dumb is not a strategy
• Logic is hard to challenge: Category Management is logical
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Obedience to authority: examples
Doctors are considered respected authorities
Nurses trust doctors so much that they appear to turn off their own intelligence when receiving
instructions from them
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Don’t be afraid to be the spy 11 You must make Functions trust you
Speak their language
Be able to extol the virtues of Category Management
Represent their views
Some may be paying for you
Get them to speak yours • thinking • practices • behaviours
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Visualise the relationship
Roadmap
Know exit strategy
Time
Effort
Resource
Never equal
Consensus
Realistic
Trust
Transparency
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Targets and measurement 13
Use correct baseline
Get sign-off from CFO
Make sure that savings are real not imaginary
Prioritise approach • resource • benefit • time/payback • complexity • PA and preferencing
Do not pluck out of thin air
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Price and Cost
Why is competition not always the best solution?
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Why do suppliers price in a particular way?
What can you tell me about
– price?
– cost?
– value?
– quality?
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Develop a range of options
Done well, Category Management is highly innovative
• New technologies
• New processes
• New contracting philosophies
• New solutions
• New entrants
• New supply chains
• New markets
"Everybody has accepted by now that change is unavoidable. But that still implies that change is like death and taxes – it should be postponed as long as possible and no change would be vastly preferable. But in a period of upheaval, such as the one we are living in, change is the norm." – Peter Drucker Management Challenges for the 21st Century (1999)
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"Only the wisest and stupidest of men never change." – Confucius
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Get out of the office 16 Testimonials mask reality
Time for shift changes
Access all areas
Unannounced
Paper v reality
Not a desk job
Question sparingly
Use your eyes
Take colleagues
Key function first
Speak to people
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Look for visual clues 16
Lots of new cars – perhaps indicates higher-than-average salaries/packages/fleet programmes
Inability to hide surplus stock; condition may indicate that it has been there a while!
Disposal policy; pride or lack of it amongst employees; volume of waste
Location; rents and rates; distribution network; labour market pool and average wages
Care and maintenance of building fabric; building itself; owned or leased
Containers may suggest that stock has been rejected, hiding excess products, tooling
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Observe key parts of the operation 16 Employee attitudes company certificates; employee awards; is there a harmonious atmosphere? what is the attitude to customer service? are staff busy getting things done? is there an excessive overhead burden?
Staff knowledge is there intellectual capacity to improve present operations; enhance product designs; refine service levels; recognise need to refresh?
Quality control degree of inspection and validation; frequency of checks; customer care; statistical quality control
Care and maintenance dirty or clean; old or new; proper size for operation; safe; worn
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Plan your implementation
• Debrief fully
• Be realistic
• Recognise constraints
• Cover the patch
• Assume nothing
• Inform the business
• Involve stakeholders
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Communicate your success 18
Buyers are not sellers, useless at self-promotion!
Business needs to know
Congratulate entire team
Communicate all benefits
Create Case Studies
Learn from mistakes
Let the supply market know
Let management know
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Any questions now?… or get in touch later
SpringTide Procurement SpringTide Procurement
SpringTide Procurement @SpringTide_News
Mike Utting Mobile: +44 (0) 7973 445297 [email protected]
[email protected] www.SpringTideProcurement.com
David Wightman Mobile: +44 (0) 7495 468 488 [email protected]