28 October 2019by Catherine Wheelhouse
Changing mindsets for strategic success
Business PartneringCommunicating Valuestakeholder managementStakeholder Satisfaction
Respondents to Procurement Leaders’ CPO planning guide 2020 have, once again, ranked cost savings as their top priority for the year ahead, followed closely by delivering value beyond savings.
Generating value beyond savings requires category managers to challenge long-held assumptions around the efficacy and efficiency of spend. They have the opportunity to step up and really own and drive spend. But first, they need to think more like the CEO of their spend, and of the whole value journey.
Although partnering with stakeholders and suppliers is a prerequisite to success, category managers only spend 15% of their time on stakeholder engagement (source: Category management and business alignment: Delivering value beyond savings, Procurement Leaders, 2018). Category managers are now starting to recognise they must elevate stakeholder conversations and leverage data to solve a business problem through strategic sourcing.
Category managers must communicate the value they offer more clearly to engage with stakeholders successfully – that requires them to think like a chief executive. Procurement Leaders’ CEO of spend framework (see graphic, below) helps category managers organise their thoughts and prepare for meaningful, business-led conversations to drive better category strategies.
- Purpose: Pivot from facilitating spend; to influencing it. Be clear on why this spend is important to the business.
- Key talent: It is important to understand that becoming CEO of spend means category managers must relinquish control of some parts of the process; trying to do everything will prevent them from focusing on strategic activities so it is vital they delegate tasks. Category managers who do not have sufficient trust in their team must tackle this issue – whether this is through upskilling or rearranging the team.
- Engage with stakeholders: Category managers must have allies, both within their own function and throughout the business, with whom they can genuinely partner with for business success. A CEO traditionally spends around 3% of their time with their team and predominantly focuses on meeting with stakeholders to understand problem areas and generate potential solutions.
- Focus on agility: How category managers anticipate and react to challenges, and the speed at which they do this, will determine their impact on the business. This involves scenario planning to foresee problems, tackle them swiftly and convert them into opportunities. Don’t be defensive – analyse the facts and data.
The ‘4 Ts’ framework is an effective method to secure buy-in and build credibility:
- Tell: Explain the story around the purpose: why is the category important to the business?
- Teach: Demonstrate category knowledge by finding three things the business is not aware of. These can be as simple as the number of suppliers for a spend area across the business – one Procurement Leaders member, for example, recently discovered it had dozens of suppliers of toilet paper for the same office.
- Trust: Leave the team to complete tasks without the category manager’s oversight. This display of trust will encourage staff to reciprocate in kind.
- Together: Show the value of being tenacious together.
For all these parts category managers need to develop a compelling story and demonstrate their ability to act as a true partner.
By using the above tools to guide their thinking to help prioritise activities and engage effectively with the right stakeholders, category managers have the power to accelerate their function’s transformation.
Procurement Leaders members have exclusive access to the Stakeholder engagement tool: How category managers can become CEO of their spend.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.
Posted by Catherine Wheelhouse