We need to change our perception of procurement. For too long, it’s been synonymous with red tape and roadblocks. When people think of procurement, they think of a lumbering, complex, process-heavy beast that slows everything down. But that’s procurement done wrong.
Procurement is meant to make life easier and more efficient; it really is. When implemented correctly, the procurement function doesn’t need to be noticed. It’s in the background, humming away quietly, creating friction-free processes in all aspects of daily operations.
So what are you doing wrong? Simply put, you don’t have a Category Management Playbook.
What is a Category Management Playbook?
It’s a living buying guide that’s continually updated. Anytime a stakeholder begins the process of purchasing a product or service, whether they’re in the marketing department or HR, this is the bible they consult. It gives them a step-by-stop process to follow in order to complete the order in a manner that benefits the organisation, but it’s not just a process guide, it’s so much more than that, it allows them to work without the intervention or advice of procurement.
The playbook is the evolution of your category management strategy and involves really determining what your supplier base looks like and how your stakeholders treat them. It uncovers the balance of power between buyer and seller and, therefore, how to influence it.
When the playbook is in place your stakeholders will understand how to deal with their suppliers, which levers to use and how to drive best value from the category – all without having to seek advice from procurement.
No doubt, you can see the advantages already. Let’s take a closer look at three of them.
Diversify your knowledge base
In the digital world, backing up data is everything. In fact, it’s now de rigueur to have backups of the backups. Considering this, it’s ludicrous that many large organisations have crucial information stored solely in the minds of one or two employees. If they go, what then?
Procurement practitioner are like any other employee; they move on, they move upwards, they move out. Depending on the circumstances, losing a worker isn’t necessarily a bad thing. Losing their knowledge, though, is always a setback.
The Category Management Playbook is the purchasing data cloud for your organisation. All the knowledge your procurement officers have is contained in its (digital) pages. Somebody runs the process to purchase a particular product or service for the first time in the history of an organisation – how they did it and the ROI is recorded for future guidance and comparison.
You can see where this is going. If knowledge is diversified within the workplace, then the chance of bottlenecking is reduced.
Without a Category Management Playbook, the procurement team needs to be consulted every time something meaningful is ordered. This is staggeringly inefficient. Not only does this slow down every buy that needs to be made, it also takes the procurement team away from doing what they do best, which is identifying areas to reduce cost and uncovering innovation.
Scenario: the marketing department has decided to do a piece of radio advertising. They consult the Playbook and find that radio advertising has been done before and that it returned an ROI of 3:1. Great. But the Playbook also lists other forms of advertising undertaken in the past with ROIs of 4:1. Wisely, the marketing team changes tack and goes with the advertising that will return more bang for their buck.
A Category Management Playbook puts in place processes that increase efficiency. It’s not meant to stifle innovation; you’re not going to reinvent the wheel with each purchasing order. This is about creating a historical record upon which current and future actions can be considered.
Identify your weaknesses
There are many facets to procurement. There isn’t a procurement team on the planet that’s master of all of them. Every single one has its strengths and weaknesses. The important thing is that your strengths are in the areas relevant to your organisation. This is where your Category Management Playbook comes in to play.
As we’ve mentioned earlier, each category, dependant on the categories maturity, is assigned levers that those placing the order can utilise. For instance, a hospital is developing a purchase order for scalpels. They consult the appropriate category in the Playbook and find that, for this order, pro-active negotiation and benchmarking are levers to be manipulated when in discussion with suppliers.
Unfortunately, no one in their procurement department has the tools or depth of knowledge in how to benchmark. They also find that benchmarking may be a useful lever in many other categories they work within as well.
So, obviously they need to skill-up in this area. Two options: train existing staff or hire a specialist. Either way, you need services like those offered by Skills Gap Analysis and Academy of Procurement.
If you decide to skill up existing staff, Academy of Procurement offers deep-dive courses in negotiation and benchmarking. If you want to hire a specialist, run them through a skills gap analysis to determine exactly what their strengths are (and if they’re as good as what they say!).
Designing your Category Management Playbook.
Developing a Category Management Playbook is a specialised task; there aren’t many organisations that have the skills or software to do it in-house. Comprara has skin in the game. It’s an area in which we specialise and we’ve spent years acquiring the technical capability and experience to do it right.
Of course, it’s not a small undertaking. Something as transformative as a Playbook requires a certain amount of investment. I’ve been developing them for years with multi-billion dollar companies and government departments dealing with restrictive budgets.