Insight Guide

“Cross functional teams carrying

out formal opportunity analysis
and prioritisation is an essential
element of Category Management.”
Simon Brown
Director, Future Purchasing
Is Category Management More than Just
Director with 27 years Strategic Sourcing?
experience in Procurement line
management and senior Our 2012-13 Category Management Survey
consulting roles. demonstrated that many organisations still see
Category Management as simply another term for
Simon leads the category Strategic Sourcing. However, our research concludes
management practice - that Category Management is more than that.
delivering consulting
• It is a strategic end-to-end process for buying goods and
assignments in process design
services
excellence, training, coaching, • It aligns business goals and customer requirements with
facilitation and delivery for supply market capability
organisations looking to • It maximises long-term value for the organisation
embed category management
Planning - the missing component from most
as a key business discipline.
organisations’ Category Management approach
As part of our survey, we asked over 300 global organisations:
“What activities does your Category Management process
cover?”

Only about 10%

of organisations included Category Planning as part of their category
management process.

Leaders
Other
Followers

Leaders
Supplier Management
Followers

Leaders
Strategic Sourcing
Followers

0% 10% 20% 30% 40% 50% 60%

Our survey highlights the risk that if you don’t include robust Category Planning in
your process, your organisation is likely to miss many substantial opportunities.

For example, one pharmaceutical company identified £25m of opportunity through

a Category Planning exercise.

© Copyright 2002 – 2013, Future Purchasing Consulting Ltd. All rights reserved. 1
How planning fits into Category Management
Future Purchasing recognises that Category Management is a broad concept that incorporates Category
Planning, Strategic Sourcing and Supplier Management:

• Category Planning: annual planning of sourcing & supplier management activities by Category
Directors. Joint creation with stakeholders of a pipeline of projects based on their priorities and plans.
• Strategic Sourcing: creating & implementing sub-category strategies to deliver cost savings and other
value.
• Supplier Management: proactive post contract management of supplier performance to deliver value
improvement from suppliers.

Initiate Form
project SRM team
Analyse
Research supply
& analysis
Prioritise
projects
“Category
Plan”

Develop SOURCING Engage SUPPLIER Develop

business supplier
strategy MANAGEMENT strategy

Evaluate
benefits

Select Engage
Review
supplier Implement supplier
supplier
strategy relationship
CATEGORY
PLANNING

We have seen from our survey that Category Planning is most often the missing piece of the Category
Management jigsaw, but as you can see from the schematic above, category planning is the core process
that anchors sourcing and supplier management activities.
Many organisations neglect or overlook category planning because there is often short-term pressure to
deliver rapid tactical cost savings. Yet robust planning and an integrated category management approach
allow companies to increase savings by much more than simple short term gains – in fact by between 25%
and 85%.
Seven key lessons from the Leaders - how to include category planning in your overall
approach to category management
1. Integrate your approach - Incorporate all three processes – category planning, strategic sourcing, and
supplier management – in one seamless approach.
2. Have a flexible process – Ensure your processes are flexible to fit your organisation’s needs. This will
allow procurement activity to be initiated at various points in the process. Procurement can start with
Category Planning to identify projects and then move into Strategic Sourcing or Supplier Management.
Alternatively, just start at “select supplier” or “review supplier relationship” (see schematic above), and
follow the process from there.

© Copyright 2002 – 2013, Future Purchasing Consulting Ltd. All rights reserved. 2
 3. Plan annually - Undertake your procurement planning activity annually as a minimum and align it with
your organisation’s corporate budgeting cycle.
4. Engage your stakeholders - Engage your organisation and functional areas and understand their
strategies, objectives and plans.
5. Engage suppliers – Use this as an opportunity to identify potential new suppliers, new technologies
and overlaps between subcategories.
6. Analyse your opportunities - Work closely with stakeholders to strategically review of contracts and
spend and prioritise a list of opportunity category and supplier projects.
7. Understand resource requirements - Agree the allocation of procurement team members and cross-
functional resource requirements needed to deliver category and supplier project opportunities.

Further Information

Benchmark your Category Management

More Insight capability
FP can help you to confirm the scale of additional
Find more information on benefit available to your organisation by optimising
category management and how category management
Future Purchasing can support
your initiatives in procurement We can compare you against “world class” performance and
transformation, cost reduction, confirm what you need to change in order to optimise Category
category management and Management and advance to the next level of performance.
performance learning by visiting The process takes approximately five days and the report will
our web site here: identify your strengths and weaknesses and a customised
roadmap to optimise Category Management in your organisation
www.futurepurchasing.com

For more information on category management benchmarking and

diagnostics please contact Simon Brown at Future Purchasing on:
+44 7961 110529
or email [email protected]

Future Purchasing is committed to developing and sharing best practice. You may copy, reprint or forward this document, provided that it is not changed in
any way and so long as it is not for resale or profit. If any part of the document is used or circulated in any other way, then Future Purchasing must be fully
credited with the statement, "Content intellectual property of Future Purchasing - www.futurepurchasing.com."

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Guildford, www.futurepurchasing.com
Surrey GU2 7YB, UK. +44 (0) 1483 243520

© Copyright 2002 – 2013, Future Purchasing Consulting Ltd. All rights reserved. 3