Category management (cips)

Copyright © SpringTide Consulting Ltd 2013
www.SpringTideLtd.co.uk
Consulting | Training | Qualifications | Negotiation | Outsourcing | Cost Reduction
In search of the
Category Management Holy Grail
Presented by: Mike Utting – Director
SpringTide Consulting Ltd
March 2013

Category Management
Launch Process
Current
Position
Strategy
Development
Strategy
Selection
Strategy
Implementation
• Category
Profiling
• Business
Needs
• Sourcing
History
• Stakeholder
Mapping
• RACI Matrix
• Communications
Charter
• Change
Management
• Portfolio
Analysis
• Supplier
Perception
Matrix
• Relationship
Positioning
• Risk Analysis
• Specification
Challenge
• Supply Market
Analysis
• Opportunity
Analysis
• Request for
Information
• Conditioning
• Price & Cost
Analysis
• Supply Chain
Analysis
• Quick Wins
• Options
Analysis
• Request for
Proposal
• Supplier
Selection
• Capability
Assessment
• Negotiation
• Contract Award
• Debriefing
• Implementation
Plan
• Savings
5, 7 or 8 steps… matters not:
each company and each
consultancy has their own
methodology

OK, so I’ve got a Mandate
• Corporate Governance
• Business Process
• Top-level support
• Understood by all
• RRAA must be clear
• Condition the market
1

I’m working on the chain gang… 2
• Not always a sequential
process
• Avoid the ‘tunnel’
• Think of ‘clusters’
• Not a form-filling
exercise
• Requires expertise
• Depth is driven by
category complexity
• Creative not predictive

Break the category down…
• What are the sub-categories
for?
– Stationery
– BSS
– FM
– RS Components
• Why do you think this is
important?
3

Know what has gone before…
“Study the past if you would define the future” – Confucius
Sourcing
History
What
worked?
What
changed?
Why did it
change?
Performance?
Innovation?
Bare
minimum?
Contract
parameters?
4

Data is king
• Use it powerfully
• Don’t observe it
• Ask questions
• Is the past the same
as the future?
• What is missing?
• How have you been
influenced?
• Who made the
decisions?
“As we know, there are known knowns.
There are things we know we know.
We also know
There are known unknowns.
That is to say
We know there are some things
We do not know.
But there are also unknown unknowns,
The ones we don't know
We don't know.”
– Donald Rumsfeld
4

Learning and changing
Stage 1: Unconscious incompetence
(Don’t know that we don’t know)
Stage 4: Unconscious competence
(Don’t know that we do know)
Stage 3: Conscious competence
(Know that we know)
Stage 2: Conscious incompetence
(Know that we don’t know)
Lost
unaware
Searching
aware
Learning
aware
4

If you keep doing the same thing… 5
• Be creative…
• How could you
approach these
categories differently?
– Stationery
– Office space
– Mobile phones
• Contract terms
• Duration
• Performance regime
• Relationship

6Know your marketplace
OMG global economic crisis
Agency Workers Regulations
Currency fluctuations
Energy prices
Raw material movements
BRICS
Bankruptcies
M&A activity
NAFTA/EU
Spending cuts
Porter’s
PESTLE

Know your supply chain
• Who owns whom
• Weak points
• Conversion process
• Profit points
• Delay
• Haphazard
• Contrived
• Interference
7

“In the long history of humankind,
those who learned to collaborate
and improvize most effectively,
have prevailed.”
– Charles Darwin
Know your stakeholders
• They are not the same
• Some play games
– some enjoy it
– others can’t be bothered
• Humans are influenced
• Bad press can be good
press
• Beware of Social Proof
8

Champion: takes personal
responsibility for ensuring
the project’s success
Helper: willing to assist
Fence-sitter: not engaged
but waiting to see how the
project unfolds
Cynic: tests the team’s
resolve by challenging at
each step
Blocker: undermines at
every opportunity
Champion
Helper
Fence-
sitter
Cynic
Blocker
Disposition
Negative Positive
Involvement
Classical Stakeholder Mapping 8

I want it all… but do I need it? 9
Wants
Aspirational
Feature
driven
Supplier’s
USPs
Even ego
driven
Needs
Business
driven
Logical
Non-
negotiable
Precise
“On the road from the
City of Scepticism, I had
to pass through the
Valley of Ambiguity.”
– Adam Smith

Know your Category
• If you go blindly, accept
the consequences
• Stakeholders may know
more than you
• Acting dumb is not a
strategy
• Logic is hard to
challenge: Category
Management is logical
10

• Doctors are considered respected authorities
• Nurses trust doctors so much that they appear to
turn off their own intelligence when receiving
instructions from them
– e.g. a doctor’s use of abbreviations to prescribe
medication for earache resulted in the rectal
administration of ear drops (the nurse read ‘R ear’
as ‘rear’ and complied despite it making no sense;
the patient did not question the procedure either)
– e.g. nurses were found to blindly follow obviously
and dangerously incorrect dosage instructions
even when instructed by phone by a ‘doctor’ they
didn’t know
Obedience to authority: examples 10

Don’t be afraid to be the spy
• You must make Functions
trust you
• Some may be paying for you
• Represent their views
• Be able to extol the virtues of
Category Management
• Speak their language
• Get them to speak yours
– thinking
– practices
– behaviours
11

Visualise the relationship
• Roadmap
• Know exit strategy
• Time
• Effort
• Resource
• Never equal
• Consensus
• Realistic
• Trust
• Transparency
12

Targets and measurement 13
• Use correct baseline
• Do not pluck out of thin air
• Prioritise approach
– resource
– benefit
– time/payback
– complexity
– PA and preferencing
• Make sure that savings
are real not imaginary
• Get sign-off from CFO

Price and Cost
• Why is competition not
always the best solution?
• Why do suppliers price in
a particular way?
• What can you tell me
about
– price?
– cost?
– value?
– quality?
14

Develop a range of options
• Done well, CatMan is
highly innovative
• New technologies
• New processes
• New contracting
philosophies
• New solutions
• New entrants
• New supply chains
• New markets
"Everybody has accepted by now that
change is unavoidable. But that still implies
that change is like death and taxes
– it should be postponed as long as possible
and no change would be vastly preferable.
But in a period of upheaval, such as the one
we are living in, change is the norm."
– Peter Drucker
Management Challenges for the 21st
Century (1999)
"Only the wisest and stupidest of men never
change."
– Confucius
15

Get out of the office
• Testimonials mask reality
• Not a desk job
• Paper v reality
• Unannounced
• Access all areas
• Use your eyes
• Questions sparingly
• Time for shift changes
• Key function first
• Take colleagues
• Speak to people
16

Look for visual clues
Lots of new cars –
perhaps indicates
higher-than-average
salaries/packages/fleet
programmes
Containers may
suggest that stock has
been rejected, hiding
excess products,
tooling
Disposal policy;
pride or lack of it
amongst employees;
volume of waste
Care and maintenance
of building fabric;
building itself; owned or
leased
Location; rents and
rates; distribution
network; labour market
pool and average
wages
Inability to hide surplus
stock; condition may
indicate that it has been
there a while!
16

Employee attitudes: company certificates; employee awards; is
there a harmonious atmosphere?; what is the attitude to customer
service?; are staff busy getting things done?; is there an excessive
overhead burden?
Care and maintenance: dirty or clean;
old or new; proper size for operation;
safe; worn
Staff knowledge: is there intellectual
capacity to improve present operations;
enhance product designs; refine service
levels; recognise need to refresh?
Quality control: degree of inspection and
validation; frequency of checks; customer
care; statistical quality control
Observe key parts of the operation 16

Plan your implementation
• Debrief fully
• Be realistic
• Recognise constraints
• Cover the patch
• Assume nothing
• Inform the business
• Involve stakeholders
17

Communicate your success
• Buyers are not sellers
– useless at self-promotion
• Business needs to know
• Congratulate entire team
• Communicate all benefits
• Create Case Studies
• Learn from mistakes
• Let the supply market know
• Let management know
18

Any questions now?… or get in touch later
Ferryside: 01267 267553
Bristol: 01179 666513
Cannock: 01543 404667
SpringTide Procurement Solutions @ProcurementSTMike Utting

Category management (cips)

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