EFFECTIVE CATEGORY MANAGEMENT FOCUS TO DELIVER MORE November
EFFECTIVE CATEGORY MANAGEMENT FOCUS TO DELIVER MORE November 2016
ABOUT DENALI GROUP Procurement Transformation, Assessment & Strategy, Technology Strategy, Change Management On-demand high-end supply chain talent for project-based work. Temp-hire conversions Direct-hire placement of supply chain professionals ROBUST FOCUS ONLY ON PROCUREMENT Expanding Procurement’s Value for The Global 1000 Since 1996 Category Management, Sourcing, Contracting, Supplier Management, Analytics and Managed Source to Pay Programs Learn, Play and Reinforce: Category Management, Strategic Sourcing and other Procurement Training Subscription and Custom Supply Market Intelligence GLOBAL TEAM MEMBERS 3 YR GROWTH RATE 156% 300+ • • • US INDIA CHINA TURKEY IRELAND 2 © 2016 Copyright Denali Group. All Rights Reserved.
TOPIC OVERVIEW § Procurement teams are increasingly asked to deliver MORE § Leading Procurement organizations turn to Category Management to help them deliver against their new, increasingly complex objectives § Organizations need to understand what it takes to successfully institute a sustainable Category Management approach 3 © 2016 Copyright Denali Group. All Rights Reserved.
MAKING THE CASE FOR CATEGORY MANAGEMENT Procurement is increasingly asked to do MORE. In order to meet these new demands and increase value for the business, a fundamental change is required in the way that Procurement is executed. “Traditional Savings Focus” • Focused primarily on cost savings • Reactive • Driven by Procurement Goals and Metrics • Year-to-year focus • Tactical execution of projects “Total Value Generation” • Drive results based on business objectives • Proactively align with the business needs • Measured on business goals • Long-range vision and planning required • Execution based on established strategy Procurement increasingly looks to adopt a Category Management approach, in order to meet their new objectives. However, it is not enough to simply brand a Procurement organization as following a Category Management approach. 4 © 2016 Copyright Denali Group. All Rights Reserved.
CATEGORY MANAGEMENT TRANSFORMATION IS A JOURNEY Transforming procurement to a category management-based approach drives significant benefits for the business, but it does not happen overnight. Successful companies use a multi-year vision to build, scale and sustain Category Management within their organizations. Scale & Globally Optimize Business Results § Accelerate & Consistently Apply § § § § High Business Engagement & Decision Making Updated Vision/Roadmap, Linked to Bus. Objectives Enablers / Core Foundations Improved, Optimized Consistent Governance with Risk Measurement Global Multi-Year Category Roadmaps, Pipeline Robust Strategies, Deep Market Understanding CM Excellence Training, Catego. Rise CM Game Category Coaching, Targeted Skill Development § § § § Collaborative, Results Oriented Culture Fully Integrated Business Planning, Budget Cycle Advanced Strategies Drive Lifecycle Alignment Globally Aligned Process, Technology, Knowledge Global Category Councils Manage All Spend CM Mastery Training, Project Competition Category Coaching, Targeted Skill Development Developing Business Leaders, Category Expertise Build Foundation § § § § 3 -5 year Procurement Vision and Roadmap Clear Org Roles, Aggressive Yet Achievable Targets CM Process, Tools and Templates Established Category Roadmaps, Multi-year Project Portfolio Assess CM Capabilities, CM Competency Plans CM Foundations Training, e. Learning, Exercises Category Coaching, Application Workshops Intentional Comm & Change Mgmt (ongoing) Failure to Scale Failure to Sustain Failure to Launch Time 5 © 2016 Copyright Denali Group. All Rights Reserved.
CATEGORY MANAGEMENT SUCCESS FACTORS Transforming procurement to a category management-based approach impacts all of the dimensions of Procurement, from direction setting through processes and enablers. Dimensions of Procurement Effectiveness Vision & Strategy Direction Setting Work Processes Organization & Culture Governance Category Management Sourcing Supplier Mgmt Contracts P 2 P Competencies and Performance Enablers Market Intelligence Data Technology Category Management Factors • • • Multi-year Vision and Organization Structure Linkage with business planning cycles Prioritized Category Roadmap established Category Plan Review process Governance and cross functional Category Councils Communication & Change Management Plan • • • Stakeholder Engagement and Participation Best practice Process, Tools, Templates Project Portfolio Management and Compliance End-to-end Lifecycle Integration Supplier Performance and Risk Management • • • Capability Assessment and Performance Metrics Training, Coaching and Targeted Skill Development Data, Analytics, Market Intelligence Enablers Knowledge Management Align Technology to Strategy and Process 6 © 2016 Copyright Denali Group. All Rights Reserved.
EXAMPLE: HIGH LEVEL PROCUREMENT ROADMAP TOWARD FUTURE CM VISION 5 -Year Roadmap to reach Best-In-Class Category Management Vision Future Vision Year 4 Year 3 Year 2 Year 1 Establish Foundation Launch Category Management Discipline Build core methodology, processes, and tools CM 101 Training and Application Workshops Accelerate & Consistently Apply Adoption of discipline gaining momentum Core processes & tools established and tested CM 201 Training and Application Workshops Incr. Value Delivered Accelerate & Consistently Apply Stakeholders shifting from customers to partners Scale & Globally Optimize Broad adoption and culture forming Refined processes and tools at category level Refresh and refine processes and tools Annual CM Training and Application Workshops CM 301 Training and Application Workshops Incr. Value Delivered “Best-In-Class” Category Management is engrained in culture Clear and proven framework, tools Many Category Managers are category experts, drive thought leadership Incremental value consistently delivered Incr. Value Delivered Define and communicate details within each area to set expectations and define success for each step. 7 © 2016 Copyright Denali Group. All Rights Reserved.
OPERATING IN A CATEGORY MANAGEMENT MINDSET Establishing Category Management Methods and Tools enables a consistent delivered experience to the business. Internal Assessment Activities External Assessment Activities Strategy & Planning Strategy and Planning Activities § Who are the stakeholders? § What are the key value drivers? § What are the strategic options? § What does the business require? § What is the supply base dynamic? § What is a clear category vision? § What is the scope of the category? § Who has the power in the market? § What is the full opportunity range? § What have we spent previously? § What is the risk profile? § What is the portfolio of activities? § Where do we think we will spend? § What is contract profile & strategy? § What is the business case? § How mature is the category? § Who are top suppliers? § Can you tell a compelling story? § What is the category maturity goal? § What are relevant benchmarks? § Do you have a multi-year Plan? Tools and Templates q Internal Assessment Questions q External Assessment Questions q Strategy and Planning Questions q Stakeholder Map q Category Trend Report q Category Positioning q Category Map q Porter’s Five Forces q Spend Analysis Systems & Tools q SWOT Analysis q Business Requirements q Contract Summary q Maturity Model q Supplier Performance (Kraljic/Supplier View) q Strategic Option Review q Opportunity Assessment Tools q Category Plan Template Ongoing Stakeholder Engagement and Continuous Improvement 8 © 2016 Copyright Denali Group. All Rights Reserved.
CATEGORY MANAGER COMPETENCIES Developing methods and tools is not enough; team members need to have proper training and support to meet the new expectations and objectives placed upon them. • Identify stakeholders and develop a communication plan • Deliver high-quality, written and approved strategies • Establish and participate in Category Councils to manage against plan • Analyze data and market intelligence; draw conclusions • Participate in annual planning process Stakeholder Management Documented Strategies • Project manage the strategy creation process CM Skills • Facilitate identification of a prioritized, actionable portfolio • Conduct appropriate opportunity assessment steps • Provide planning visibility toward business and procurement objectives Planning & Portfolio Development Vision & Governance • Produce a clear, documented Vision, supported by specific strategies • Demonstrate journey progression and maturity; establish a roadmap • Identify metrics and drive governance through process and performance measurement Strengths and areas of opportunity will vary across each Category Manager. Practical application coaching is key. 9 © 2016 Copyright Denali Group. All Rights Reserved.
SIMPLIFYING THE CATEGORY MANAGER COMPETENCIES Adopting a Category Management approach can be overwhelming to newly branded Category Managers; simplifying the new role into a few critical imperatives may reduce concerns and confusion. 1 2 3 KNOW YOUR STAKEHOLDERS UNDERSTAND YOUR CATEGORIES DELIVER RESULTS q Be with stakeholders q Get dirty with the data q Take a portfolio approach q Intimately know their business needs (AQSCIR) q Get to true insights q Know your targets q Be curious q Eliminate extraneous work q Be intentional q Don’t let perfection keep you from starting q Establish true alignment q Sell YOUR vision q Bring new, meaningful opportunities to the table q Plant seeds with Stakeholders Your category knowledge will grow with time, and your credibility with stakeholders… q Be “in the market” q Network with category peers q Understand your suppliers Knowledge grows with time – but should not delay execution… q Leverage all available resources q Sustain the value Have a sense of urgency, with a bias towards execution 10 © 2016 Copyright Denali Group. All Rights Reserved.
<TITLE> 11 © 2016 Copyright Denali Group. All Rights Reserved.
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