The death of category management?

David Rae

Reports of its demise may have been exaggerated, but the process will change

A couple of weeks ago, Procurement Leaders held a CPO Connect Call entitled “the death of category management”. It was well attended – as one might expect, given the emotive title – with great discussion and debate about what the future might hold for the process.

Many of my conversations with CPOs over recent months have focused on the core procurement process, procurement operating models and how change is required to help manage a new landscape.

That landscape is far more complex than ever, with constantly moving regulatory goalposts, shifting value drivers and an uncertain economic outlook. Without getting bogged down again with the ingredients of the heady cocktail of issues CPOs are currently contending with, it’s fair to say that old, cumbersome, labour-intensive frameworks need a radical overhaul.

It’s not surprising, then, that 13 of those 28 group CPOs who joined the discussion have recently or are planning to carry out a complete transformation of the category management process, with a further 11 saying they have recently or are planning to soon make some alterations to the process.

There are various schools of thought about what the future might hold for category management, from those who think that digitalisation will automate it entirely to others who believe that it’s going nowhere.

The most likely scenario, however, is likely to be somewhere in between.

As one of the contributors on the call said: “I reckon the findings from the poll are pointing in the right direction. First, there must be more of a business focus, including a better understanding of the value chain and an understanding of end-customer needs. Second, the agenda must be broader to include sustainability, innovation and solutions to business problems.”

The main enabler of this, he went on to say, will be digitalisation.

The CPO added: “We have three types of tasks in procurement: influence; decide; and execute. The role of influencing – stakeholders such as suppliers, partners, colleagues – will be greater in future, and will be complemented and speeded up by AI.”

CPOs would do well to think about how future approaches to category management provide support in each of these areas.

World in motion

It’s not often I stray from the world of procurement in this space but, as Uefa’s Euro 2024 kicked off with the mighty Scotland taking on Germany on Friday, I was reminded of how the truly global nature of the Procurement Leaders community.

Contributing to the insights were CPOs dialling in from England, Germany, the US, Spain, Switzerland, Finland, South Africa, the Netherlands, with the mix of nationalities stretching even further.

Welcome to the united nations of procurement.

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