As much as many vendors and consultancies would like to tell you that category strategy selection can be automated whenever you need to kick off a new sourcing cycle, because “it just depends on the supply vs demand imbalance and based on that you either do an auction (if [way] more supply than demand), do an RFP (about balanced), or renegotiate with the incumbent for a contract extension (if there is [projected to be] a lack of supply)“, that’s simply NOT the case, especially for highly strategic, specialized, or evolving categories.

The reality is that category strategy depends on much, much more than this. Factors it depends on include, but are not limited to:

• supply vs demand
• current and projected spend
• current relationships
• innovation requirements
• environmental requirements
• industry and regulatory requirements
• risk factors
• regional differences between source / make / sink
• etc. etc. etc.

That’s why we have so many methodologies to arrive at a strategy including, but not limited to:

• Porter’s 5 forces
• Kraljic Matrix
• SWOT
• PESTLE
• etc.

All of which serve a purpose and give us insights, but none of which actually give us a strategy. Consider Porter’s five forces — it provides insights into the current market, but then we decide what to do with that. Consider the Kraljic Matrix. It tells us whether an item is non-critical, bottleneck, leverage, or strategic based on an analysis of risk/complexity vs. profit impact, but we still have to decide what strategy to use, and, more importantly, how to evaluate the responses based on non-price factors that are also important to us (such as supply assurance, carbon / GHG reduction, etc.). SWOT helps us identify the responses, but we still need a strategy to evaluate them against. PESTLE is one of the more complete analyses of external factors encompassing Political, Economic, Sociological, Technological, Legal and Environmental factors, but you still have to build a strategy on that.

Plus, it’s not just the external factors these methodologies are based on that’s relevant. It’s internal factors that include, but are not limited to:

• current and projected category spend
• current relationships
• organizational culture and process
• organizational direction and goals
• stakeholder needs
• etc.

All of this needs to be considered simultaneously with the external factors and analytic methodologies described above in order to arrive at a proper, acceptable, and executable strategy — and a strategy is not a strategy if it is not:

• proper : an inappropriate strategy will NOT lead the desired results
• acceptable : if the stakeholders don’t buy in, your project won’t go anywhere, and you may have to start over (or just continue with the status quo)
• executable : a strategy that doesn’t provide actionable guidance cannot be executed and isn’t really a strategy at all

And that’s what akirolabs, challenging the 40-year old Kraljic matrix as the de-facto standard in category management, is building — an augmented intelligence (because they fully realize that no Artificially Idiotic technology can ever do something that requires real human intelligence and experience) solution that helps category managers build proper, acceptable, and executable strategies and do so in weeks, not months, and see the results in months, not quarters.

The akirolab platform guides you through an analyze/strategize/realize process where it helps a category manager, or management team in a larger organization, collaboratively analyze the company and market factors, develop a strategy based on value levers and strategic scenario modelling, and then realize the strategy using the project and performance management capabilities (not found in most strategic sourcing applications).

In the Analyze phase, the company pulls in the following company data:

• current spend (it just pulls in your current spend cube in a frame; it’s only volume tier and trend that’s relevant for strategy, not minutiae transaction details)
• current budget (based upon projections)
• current contracts (which formalize relationships)
• stakeholder mapping (who is involved, and how)
• strategy & requirements survey (what do the stakeholders need, why, and what are their goals and concerns)

… and the following market data …

• market intel – articles, studies, white papers, etc. found by an appropriately trained semantic search engine
• innovation factors and data
• cost drivers relevant for the category
• risks and associated data
• supplier preferences (based upon relationships, innovation, and supplier risks)

… and then completes the following analyses, with the help of the akirolabs platform:

• Porter’s Five Forces — where the category team scores and ranks the relevant factors in each force (which can be seeded from market data using the AI if enough data is available)
• Kraljic Matrix — where the category team evaluates the risk/complexity vs. cost (and where the platform can suggest risk/complexity based upon available market intelligence, risk data, and innovation factors)
• PESTLE — where the category management team can complete a full PESTLE analysis using all of the available data and the aforementioned Porter’s Five Forces and Kraljic Matrix
• SWOT — where all of the above is fused into a category SWOT analysis

And the best part about its analyze capabilities is that the strategies can be analyzed by region (or by department if each department has different needs and/or goals for the products in the category), scored and weighted separately, and then overlaid visually (using a spider graph in the case of Porter’s Five Forces) to allow a team to see the average as well as the regional, departmental, etc. differentiations.

Another unique feature is its approach to SWOT. For each quadrant, they define key questions and key parameters to ensure that the analysis is done consistently (and comparably) across categories, and to ensure that the category management team collects the right information in order to generate a good strategy.

In the Strategize phase, the category management team identifies the value levers and then creates a strategy using Strategic Scenario Modelling. Using the akirolabs strategic scenario modelling capability, a category team can build a strategy that balances cost savings, sustainability, supply chain resilience, procurement agility, innovation, quality, regulatory requirements, and growth potential by evaluating multiple scenarios inspired by the market analysis in the analyze phase. These can be overlaid graphically to provide a visual comparison of the strengths and weaknesses of different scenarios.

They can pull in the relevant information from the analyze phase, and define the strategy that will be applied as well as their reasoning as to why, backed up by all of the relevant analysis and data. They can then create Executive summaries for each executive (CEO, CFO, COO, CIO, etc.) that explains the strategy, rationale, and expected results. The platform allows the team to create standard report templates by function and makes it super easy to pull in the relevant data and graphs that explains and supports the decision.

And all of this can be done collaboratively, as it was designed to allow all stakeholders to answer the survey and all team members to work together to collect the data, associate it with the appropriate analysis, score appropriately, and collaborate on the strategy using the built in messaging platform.

Finally, as part of the Strategize phase, a category management team can assess the sustainability of the scenarios using their “Procurement with Purpose” view that assess the strategy against each of the 17 interlinked Sustainable Development Goals of the United Nations.

Once the strategy has been defined and accepted, the category management team can create a project plan and track it in the “Project and Performance Management”. They can track the stages and activities, timelines, responsibilities, status, assigned value category, expected financial effect, forecasted financial benefit, etc.

If this sounds good to you, you’re probably one of the target customers, that fall into three categories where they can provide you with great value (4.4x as per their claim):

1. Mature Procurement Organizations: leaders (under analyst frameworks) or best-in-class (under the Hackett numbers) organizations that are high on the maturity ladder and that are looking to go beyond savings and expand the core business
2. Maturing, But Fragmented, Procuring Organizations: average to average-plus maturity, but no centre of excellence, no history of formally captured category strategy development, and little experience bringing stakeholders together across regions and departments (leading to fragmented category events)
3. Immature, but Growing: and, most importantly, ready to invest the time and effort to formally mature as a Procurement organization by embracing a world-class methodology and platform to jump-start their efforts and success

And if you’re still on the fence, it doesn’t just support traditional “Category” strategy. It also supports “Beyond Category” for organizations that want to use it for supply chain design, logistics & warehousing, sustainability improvements, etc. Not just traditional material or procurement hierarchy categories. And that’s a differentiator. If any of this sounds good to you, be sure to check akirolabs out.