Introduction
In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)
In our last instalment, we continued our review of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …
In this instalment, we’re again continuing to work our way up the list from the bottom to the top and continuing with “Category Management”.
Category Management
There were 2 predictions across the eight articles which basically revolved around a shift from generic sourcing to “category management”. As with almost every “prediction” and “trend” in this series, this is yet another prediction that makes headlines every year, no more important this year than the last, and still as unlikely to actually happen because, despite all the lip service around the value achievable from a category focus, at the end of the day, unless the C-Suite is convinced it will save more money (since it’s only savings they are ultimately concerned about), it doesn’t happen. Before we discuss further, here were the two predictions:
- Category Management Takes Center Stage
- We’ll See More Emphasis on Category Management Innovation
Category Management is yet another topic that a small contingent of thought leaders, Gurus, and consultants bring up year after year. And it’s yet another topic that never really sees the light of day. Especially when you consider that, at any given time, less than (half-a) dozen vendors take a category-centric approach to sourcing, and only a handful of consultancies push the approach.
We wholeheartedly agree that category centric Procurement is the key to value creation in certain enterprises where some categories are more strategic than others, have unique characteristics that can be exploited at the category level, and where experts can identify unique avenues of pursuit that will allow for strategic differentiation that can allow the company to charge more for the finished products, thus creating the value management that the experts say Procurement should be focussed on. However, as this is a value-centric activity that is, initially, far removed from the cost-cutting focus that CFOs and CEOs ultimately hand down to the head of Procurement, it will continue to live on the periphery of Procurement and only come into play in select organizations for select strategic categories.
What Should Happen? (But Won’t!)
What should happen is stupid simple. Analyze all the categories you buy and determine which categories, if any, should be sourced and procured using a category-centric approach. Then, category strategies and processes should be implemented for those categories and the remaining products and services should be sourced as they typically are. That’s it.
Nine down. Just one (big one) to go!