Expert category management requires a unique combination of procurement disciplines and skills. This is even truer today, as our ever-evolving global economy continues to create the types of spend management challenges that take teams of individuals with specific skill-sets to overcome.
Similar to professional sports, the role of the category manager (i.e., the coach) is to make the whole procurement team work better than the sum of its parts. This is why, when setting up a procurement team, strategic category managers must ensure their team possesses the correct mix of talents. Strategic category managers should also act as coaches who can help make suppliers better, more effective contributors to the supply chain.
For them to be able to accomplish all of this, your company must be organizationally prepared to do what's necessary to manage the entire lifecycle of contracts. A big part of this involves ensuring your team possesses these six skills (that corporate spend management departments commonly lack):
1. Analysis: Strategic category management (SCM) will always require that savings be identified and realized. However, being able to quantify and report those savings will be a more complex and challenging process. Having the skills to measure the total cost of ownership (TCO) improvements and demonstrate the dollar value of those changes to your chief financial officer (CFO) is paramount to the success of implementing SCM.
3. Contract management: Creative relationships must be governed by creative contracts and individuals with an advanced skill-set for contract management – this is the centerpiece of effective SCM. By employing the systems and skills required to be best-in-class contract managers, companies create significant efficiencies, while mitigating the risk associated with long-term contracts.
4. Talent management: Companies that move from traditional procurement practices to SCM typically identify a talent gap. In fact, bringing on board the right people is perhaps the biggest obstacle to becoming a leading SCM practitioner. Having a deep understanding of what skills are required, where to find them and how to keep them is fundamental to achieve the next level of direct and indirect spend management.
5. Information management: “Trust but verify” means having something to verify. Being able to gather information from suppliers, users and outside sources is a critical element of SCM. If you lack this information, your ability to understand market dynamics is also lost – along with the possibility of developing best-in-class SCM. Beyond having this information, you must know how to read and respond to it.
6. Supplier development: The impact of strategic sourcing is declining and the need to create savings is growing. Consequently, the final component of SCM is arguably the most important: Supplier development means leveraging category expertise and supplier relationship management tactics to identify the opportunities that create total cost savings above and beyond piece-price reductions.
Applied together, these six skills will empower your procurement team to create dramatic and sustainable value for your company – now and in the future.