The Point by Buyers Meeting Point
Book Review: Category Management in Purchasing
“Very few organizations manage sourcing so well that there is no room for big gains. Category management is about changing sourcing in a radical way or a way that gives radical improvements.” (p. 33)
This quote from Jonathan O’Brien’s Category Management in Purchasing neatly sums up not only the idea of category management as he defines it, but also the full use of the content in his book, which is to support purchasing or procurement teams with a desire to significantly improve the way they manage sources of supply. The book provides all the background, strategy and tactics to stage a successful procurement transformation along category lines.
As with other approaches to transformation, the effort recommended by the author is not to be taken lightly. Category management is not just a new or more thorough way of managing spend. It is a full alternative approach, and requires the same level of effort, talent, executive engagement and cross-functional involvement desired by organizations using a strategic sourcing discipline for the first time.
This second edition is absolutely current, as evidenced by the emphasis on value generation, collaboration, and connection between procurement and corporate performance. It balances what you might describe as the philosophy of category management with the processes and tools required to execute such a program.
As with many other internal initiatives, executive engagement is an absolute must, as are cross-functional category teams that have real responsibilities. Category management is not a procurement driven approach as much as it is procurement led, with significant investments of time from the rest of the organization. On this point, O’Brien has a realistic understanding of how these efforts often work, “Typically, cross-functional teams will begin with little interest in the project purpose, they will fight with each other, do the wrong work badly and generally stir up problems. But as the team settles they will also be the people who begin to understand the power of the project and who begin to work together, who uncover the data which is needed, who have the best breakthrough ideas and, most importantly, who will support and drive the implementation.” (p. 37)
O’Brien has put in the requisite years to make such statements. He has over 25 years global experience in purchasing training, consulting and execution. Like many of us, he ended up in the field unexpectedly, but has made it his own. He is currently the Co-CEO of Positive Purchasing, an international purchasing consultancy and training provider.
A particularly interesting chapter is found at the very back of the book: ‘What the Future Holds’. While procurement and category management obviously play a role, the chapter is predominantly focused on the changes and forces affecting the global business environment. I actually recommend reading this chapter first. It is general enough not to require prior knowledge of the information in the rest of the book. If you are unclear whether your particular situation merits a transformational effort, this chapter will provide you with plenty of motivation and spur you to action.