CATEGORY MANAGEMENT

Automation and innovation

The future of category management

category management

Strategic category management is one of the foundation stones of procurement, but it’s also rife for disruption according to chief procurement officers who claim that the process will become more focused, more automated and more aligned with wider business processes.


Our Futures Radar trend watch, a bi-monthly survey and community discussion for senior Procurement Leaders’ members, finds that the vast majority of CPOs expect category management to become more strategic in its nature, increasingly focused on the development of innovation and further supported by automation.


Findings from the latest survey show that

  • 83% of procurement chiefs believe their category managers will spend more time on fewer, more strategic spend categories
  • 79% believe that category management will in the future focus on scouting for innovation
  • And while only 12% of CPOs believe that category management will become fully automated, 74% believe that such technology will remove large portions of what category managers do today

One CPO from the food and drinks industry summed up these thoughts well when they said that category management will “focus on categories and areas which will have significant impact to our business and where relationships have to play a crucial role”.


This CPO touches on an interesting point when it comes to the issue of where category managers will then spend their time. Building relationships with strategic suppliers in those key areas will be essential and so too will be working with those suppliers to draw out new innovations. As such, procurement chiefs should be focusing their attention on identifying those strategic categories of spend that they need to focus on and then on developing the skills within their category managers to build these relationships and identify new technologies.


 


A hold on progress


Category management as we know it has existed in the same guise for decades. As such it is ripe for development, but there are a number of factors at play that could hold this back. The inhibitors identified by procurement chiefs include a lack of skills, a lack of data, a lack of support across the business and a lack of the right solutions.


  • 50% of CPOs told us that they believe they do not have the right capabilities/skillsets/knowledge within their functions to develop category management
  • 42% said believe they do not have the right data and information
  • 42% said they believe they do not have the right technology
  • While 30% said that they believe they do not have the right stakeholder engagement/support/buy-in


The most worrying of all those statistics is the half of CPOs who do not believe they have the right skills/capabilities within their teams to make category management more strategic.


Buy-in can be won, technology can be bought, and the right data can be analysed, but skills and capabilities take a whole lot longer to hire in or develop. The focus of those CPOs who want to push category management forward should therefore be on skills development.


Category managers need to be able to engage with stakeholders both inside and outside the business, they need to be able to build and manage relationships and they need to be digitally-savvy.


This position was summed up nicely by one procurement chief from the beauty industry when they said that category management would “move into a more strategic/all-round role and will focus on internal and external stakeholder management to drive value through the development of new innovations. It will leverage automation and easy to access data to build strategies”.


If these developments transpire and category management is disrupted, it will find itself embedded deeper into the business and its focus won’t be on buying individual parts, it will instead be on the complete picture of the products and services the company sells. This, in turn, will open up new avenues of value, savings and flexibility for the business. One potential future outcome from this could be that category management actually transforms into product management, of which an entire cross-functional team is dedicated to.