In an environment where may organisations are suffering from “demand shock” with revenues and profits under significant pressure and at the mercy of forces which are beyond their abilitity to control, thoughts naturally turn to the management of cost transformation
This is true even for companies who remain busy at the current time but whom are seeing their Selling, General, and Administrative (SG&A) costs outstrip increases in revenue as a result of amplified costs to serve.
A number of recent C suite surveys, including BCG’s May 2020 CFO Pulse Survey [BCG(1)], have shown that many companies have responded by slashing capex, reinforcing existing financial performance controls including client credit management, suspending dividend payments and so on.
All very understandable, but this also begs the question:
If the answer to this question is ‘no’, companies should seek to implement an effective category management programme focused on the systemic identification and delivery of value creating (i.e. cost out, risk down and / or revenue up) opportunities across their third party spend base.
Maybe not – whilst category management is a well-trodden area with purchasing professionals and consultancies, few organisations do it really well. However, a close review of successful programmes highlights some key enablers that are central to benefits realisation.