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Today, procurement needs to be about more than just savings. Of course, the function needs to hit its annual savings targets, but it needs to do that alongside delivering new product and process innovations that can grab market share and get products to shelves quicker.
Category managers play a critical role here, sitting as they do as experienced gatekeepers to key areas of business spend. The question though is whether, in their current guise, they are delivering value that will be recognised over the long term.
Historically category managers have been tasked with chasing short-term savings, rather than thinking strategically about other types of value they can bring to the table.
There is no doubt that they have been successful at this, and have been rewarded as a result. Procurement Leaders’ 2017 salary survey showing that global category managers earn on average €121,000 a year ($136,440).
However, this savings mind-set has taken root meaning that it is ingrained within category managers to chase savings rather than look for long-term value with suppliers and other stakeholders.
What’s more, it becomes increasingly difficult to squeeze those savings out year after year. Essentially, it is a law of diminishing returns.
There are a number of things that can be done to change this.
One option is to embrace new technologies that will allow category managers to automate a lot of their administrative work. This will free up their time to focus on more strategic initiatives.
The second is to focus on developing their skills and providing them with the support required to innovate and transform the function.
These two actions combined will give category managers the chance to engage with stakeholders and build relationships with them, which will provide them with the information they need to make better decisions that will help drive out value.
Outside of this, the hiring process for category managers should also be reviewed and ways sought to find those that will fit this profile, rather than candidates who will focus purely on savings.
It is often said that you can teach procurement to someone, but it is more difficult to teach them the soft skills that is essential to building relationships. Therefore, when it comes to hiring a focus should be placed on finding those that have these skills, or at least the potential for these skills to be developed further within them.
If the support and infrastructure is in place, then those are the people who will flourish and so will the business.
There is no doubt that over the last few years, category managers have delivered significant savings. But, it is a path that procurement cannot carry on without thinking about how the function can change and develop to help deliver the value needed to help the wider business continue on its own journey.
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This article is a piece of independent writing by a member of Procurement Leaders’ content team.