To be credible, all category plans must be developed ‘’bottom up’’ – category management is thus a business not a procurement process. It requires the right quality and degree of cross-functional participation from the business, including Finance and Procurement, for each agreed category area and associated sourcing initiative. Use of mechanisms such as joint target setting can be helpful to focus minds, embed category management disciplines, and prompt full consideration of all means to drive value from both a technical and commercial perspective.

As a minimum this should focus on:

• Creation of a credible overall business case (‘the case for action’) and Programme plan. The plan typically comprises a number of activity ‘waves’ based on an assessment of factors such as benefit to the business, speed / ease of implementation, and the ability to build in and also address current business priorities / key projects.
• Generating programme momentum via delivery of a number of quick wins.
• Effective management and reporting of overall progress, including benefits, in line with defined programme governance.
• Ongoing alignment to

(i) any other third-party sourcing activity that might be underway, being clear what is in and out of programme scope and
(ii) complimentary internal programmes of work such as zero-based budgeting (ZBB) initiatives.

This will vary from organisation to organisation dependent on business dynamics, category dynamics, relative business performance and organisational culture. It also provides a basis for gearing programme activity levels to the amount of change the organisation can deal with. In broad terms:

• In the first 12 months the programme should create a pipeline of rapidly implementable opportunities that deliver in year benefits. This creates a fast-paced attitude to driving change and builds confidence in category management.
• Activity beyond the first 12 months provides an opportunity to deliver changes that take more time to identify, agree, design and implement and which should result in step-change improvements driven by increased levels of internal collaboration, e.g. new product development involvement and external supplier innovation capture.

That said it is also viable to target a number of such opportunities for delivery at the beginning of the programme in parallel with those that deliver in year benefits to maintain savings velocity.

This should address savings definition, savings sign off protocols, details of how savings are dealt with (e.g. are they taken out of budget), and ensure recognition is given to all parties involved and not just Procurement, along with accountability for benefits realisation post contract award. Typically, Finance should play a significant role here and attest benefits delivery to both the Executive and Category Sourcing Boards.

Without this the danger is that the revised cost base will simply ‘balloon’ once the dust has settled. To prevent this:

• Accountability for ongoing contract / performance management of each sourcing solution must be clearly assigned at an early stage of the sourcing activity.
• The personnel whom will manage each solution must be part of the category management activity set, including strategy development and delivery.
• Opportunities for value improvement post contract award must be captured and tracked to ensure these are actioned going forward.

Not only does this aid initiative prioritisation, it also enables the organisation to act as an ‘intelligent buyer’ and avoid self-imposed limitations about the ‘art of the possible’ through appropriate consideration of sourcing initiatives including any synergies that span sub categories of associated spend. Equally, good insight allows effective consideration of rationale solutions – for example pursuing a global aggregation strategy will not work if the supply market is regional in nature.

This requires some effort, specifically:

• Identification and integration of key business processes, such as the annual budgeting cycle, alongside the Category Management process. Aligning objectives at this stage, including the activities to be progressed, increases the likelihood of success.
• Putting in place an agreed Category Management process and tool kit, complimented by training of key business personnel to create good levels of awareness and understanding linked to their role.
• Measurement of programme effectiveness aligned to business goals and objectives potentially also including:

(i) how much spend is being addressed (spend penetration)

(ii) how fast and often spend is being sourced (spend velocity).

This should address any ‘’why bother’’ and prioritisation challenges.