One of the themes that came up a few times at the Hackett Best Practices Exchange was that of category management and moving beyond the first generation category sourcing plans that defined “strategic sourcing” for most of the last decade. Just like the savings from repeated reverse auctions on the same category quickly trend to 0, the savings from a first generation sourcing strategy also trend to 0 over time unless the strategy is continually kicked up a notch over time.
Of all the presentations I attended, I think Disney best nailed where an average organization needs to be with its category sourcing vs. where it is today, a transition that takes the organization from category sourcing to true strategic category management.
|Category Sourcing||Category Management||The Difference|
|Project-Based||Value-Focussed||The focus is on understanding the total cost associated with the category and the value it delivers.|
|Sourcing Waves||Supply Chain Landscape||Each category is managed holistically, and not as part of a wave, and reexamined anytime significant market changes that could impact the category occur.|
|Single Lead||Cross-Functional Leadership Team||In line with the holistic view of the category.|
|Compliance||Strategy||Compliance with sourcing plan and regulations is not enough. A strategy that goes beyond complying with current requirements to expected requirements to innovation is required.|
|Show Me the Money||Let Me Help You Find the Value||It goes beyond simple saving reports to actually engaging the business leaders and C-suite as part of overall strategy formulation.|
|Contact Engagement||Engagement Plan||There is a plan to engage the right stakeholders at the right time, not just as needed to put out fires.|
|Historical Spend Analysis||Future Spend Forecasts||Understanding past spend is a great start, but the best results come from optimizing against future demand.|
|Supplier Concessions||Supplier Expertise||Next generation supply management focusses on working with suppliers on cost reduction and innovation, not browbeating them with a hammer until they reduce their margins until their own viability is at risk.|