This content was made possible by a collaboration with the team at JAGGAER
Category management is one of the many processes – like spend analysis, supplier performance management, and strategic sourcing – that form the center of procurement’s domain.
One thing that all of these processes have in common is a reliance on technology for consistency, scalability, and success. What is not the same, however, is the precise connection between the process and supporting technology. Process-driven practices like spend analysis and strategic sourcing have an almost 1:1 relationship with technology, while the exact role that technology plays in executing a category management program is not as clear.
I recently authored a whitepaper in cooperation with the JAGGAER team, titled Category Management: Overcoming Barriers to Sources of Value and Innovation in Your Supply Base. In this paper, we make the argument that category management is often both misunderstood and under automated. While these obstacles have led to a great deal of frustration, and even an inability of category management to gain traction and deliver ROI in some organizations, technology can play a key role in increasing adherence to the key principles of category management and generating tangible results.
The following are three key examples of the critical role enabling technology plays in the execution of category management strategies:
- Visibility: Since the ultimate goal of category management is to elevate the level at which spend and suppliers are managed, transcendent visibility – with contextualization – is absolutely essential. With a category management platform or dashboard, procurement can connect strategy with action, standardize processes and workflows, ensure that reporting is conducted at the appropriate level to represent procurement’s full impact, and coordinate cross-functional (and potentially geographically distributed) teams of stakeholders and contributors.
- Supplier Management: For procurement to leverage the capabilities of the supply base as broadly as possible, it is necessary for them to understand the current supply base. This includes ready access to a full listing of current suppliers’ capabilities, past performance, and potential risk factors at the supplier or industry level. Rather than existing alongside sourcing or category management activities, this information needs to be fully incorporated into category management processes and platforms.
- Advanced Analytics: As with suppliers, procurement’s management of data has to be as broad and comprehensive as possible to realize the benefits of category management. This means bringing raw transactional data and also third-party data enrichment out of the systems or operational silos they were created in and centralizing them in one database. This makes it possible for representative data to be analyzed at scale and in near real-time without preconceived notions or artificial partitions that might limit the resulting recommendations and results.
The elusive value proposition associated with category management has always been to empower procurement to manage spend, suppliers, and contracts from a big picture point of view. Not only does this bring more expansive strategies into play, but it also elevates procurement’s point of view and allows it to become more closely aligned with the priorities, objectives, and competitive landscape that are the focus of the executive team.
The same procurement organizations that have struggled to get formal category management programs off the ground have often also failed to sell the C-suite on their ability to strategically impact the top and bottom lines.
Enabling category management through fit-for-purpose technology will not only drive results and improve distributed buyer satisfaction, but it may also contribute to procurement’s ability to build lasting influence.