Category management (cips)

Copyright © SpringTide Consulting Ltd 2013

www.SpringTideLtd.co.uk

Consulting | Training | Qualifications | Negotiation | Outsourcing | Cost Reduction

In search of the

Category Management Holy Grail

Presented by: Mike Utting – Director

SpringTide Consulting Ltd

March 2013




Category Management

Launch Process Current Position

Strategy Development

Strategy Selection

Strategy Implementation

• Category

Profiling

• Business

Needs

• Sourcing

History

• Stakeholder

Mapping

• RACI Matrix

• Communications

Charter

• Change

Management

• Portfolio

Analysis

• Supplier

Perception

Matrix

• Relationship

Positioning

• Risk Analysis

• Specification

Challenge

• Supply Market

Analysis

• Opportunity

Analysis

• Request for

Information

• Conditioning

• Price & Cost

Analysis

• Supply Chain

Analysis

• Quick Wins

• Options

Analysis

• Request for

Proposal

• Supplier

Selection

• Capability

Assessment

• Negotiation

• Contract Award

• Debriefing

• Implementation

Plan

• Savings

5, 7 or 8 steps… matters not:

each company and each

consultancy has their own

methodology




OK, so I’ve got a Mandate

• Corporate Governance

• Business Process

• Top-level support

• Understood by all

• RRAA must be clear

• Condition the market

1




I’m working on the chain gang… 2

• Not always a sequential

process

• Avoid the ‘tunnel’

• Think of ‘clusters’

• Not a form-filling

exercise

• Requires expertise

• Depth is driven by

category complexity

• Creative not predictive




Break the category down…

• What are the sub-categories

for?

– Stationery

– BSS

– FM

– RS Components

• Why do you think this is

important?

3




Know what has gone before…

“Study the past if you would define the future” – Confucius

Sourcing History

What worked?

What changed?

Why did it change?

Performance?

Innovation?

Bare minimum?

Contract parameters?

4




Data is king

• Use it powerfully

• Don’t observe it

• Ask questions

• Is the past the same

as the future?

• What is missing?

• How have you been

influenced?

• Who made the

decisions?

“As we know, there are known knowns.

There are things we know we know.

We also know

There are known unknowns.

That is to say

We know there are some things

We do not know.

But there are also unknown unknowns,

The ones we don't know

We don't know.”

– Donald Rumsfeld

4




Learning and changing

Stage 1: Unconscious incompetence

(Don’t know that we don’t know)

Stage 4: Unconscious competence

(Don’t know that we do know)

Stage 3: Conscious competence

(Know that we know)

Stage 2: Conscious incompetence

(Know that we don’t know)

Lost

unaware

Searching

aware

Learning

aware

4




If you keep doing the same thing… 5

• Be creative…

• How could you

approach these

categories differently?

– Stationery

– Office space

– Mobile phones

• Contract terms

• Duration

• Performance regime

• Relationship




6 Know your marketplace

OMG global economic crisis

Agency Workers Regulations

Currency fluctuations

Energy prices

Raw material movements

BRICS

Bankruptcies

M&A activity

NAFTA/EU

Spending cuts

Porter’s

PESTLE




Know your supply chain

• Who owns whom

• Weak points

• Conversion process

• Profit points

• Delay

• Haphazard

• Contrived

• Interference

7




“In the long history of humankind, those who learned to collaborate and improvize most effectively, have prevailed.” – Charles Darwin

Know your stakeholders

• They are not the same

• Some play games

– some enjoy it

– others can’t be bothered

• Humans are influenced

• Bad press can be good

press

• Beware of Social Proof

8

http://images.google.co.uk/imgres?imgurl=http://www.davidsuzuki.org/files/climate/skeptics.jpg&imgrefurl=http://www.davidsuzuki.org/Climate_change/science/skeptics.asp&usg=__RV7W_dEQ3qw-FHMDNhKIJpVIuWs=&h=455&w=564&sz=55&hl=en&start=15&um=1&tbnid=142p15N6Dd7h_M:&tbnh=108&tbnw=134&prev=/images?q=change&hl=en&rlz=1T4DKUK_en-GBGB289GB289&sa=N&um=1




Champion: takes personal responsibility for ensuring the project’s success

Helper: willing to assist

Fence-sitter: not engaged but waiting to see how the project unfolds

Cynic: tests the team’s resolve by challenging at each step

Blocker: undermines at every opportunity

Champion

Helper

Fence-

sitter

Cynic

Blocker

Disposition Negative Positive

Involvement

Classical Stakeholder Mapping 8




I want it all… but do I need it? 9

Wants

Aspirational

Feature driven

Supplier’s USPs

Even ego driven

Needs

Business driven

Logical

Non-negotiable

Precise

“On the road from the City of Scepticism, I had to pass through the Valley of Ambiguity.” – Adam Smith




Know your Category

• If you go blindly, accept

the consequences

• Stakeholders may know

more than you

• Acting dumb is not a

strategy

• Logic is hard to

challenge: Category

Management is logical

10




• Doctors are considered respected authorities

• Nurses trust doctors so much that they appear to

turn off their own intelligence when receiving

instructions from them – e.g. a doctor’s use of abbreviations to prescribe

medication for earache resulted in the rectal administration of ear drops (the nurse read ‘R ear’ as ‘rear’ and complied despite it making no sense; the patient did not question the procedure either)

– e.g. nurses were found to blindly follow obviously and dangerously incorrect dosage instructions even when instructed by phone by a ‘doctor’ they didn’t know

Obedience to authority: examples 10




Don’t be afraid to be the spy

• You must make Functions

trust you

• Some may be paying for you

• Represent their views

• Be able to extol the virtues of

Category Management

• Speak their language

• Get them to speak yours – thinking

– practices

– behaviours

11




Visualise the relationship

• Roadmap

• Know exit strategy

• Time

• Effort

• Resource

• Never equal

• Consensus

• Realistic

• Trust

• Transparency

12




Targets and measurement 13

• Use correct baseline

• Do not pluck out of thin air

• Prioritise approach – resource

– benefit

– time/payback

– complexity

– PA and preferencing

• Make sure that savings

are real not imaginary

• Get sign-off from CFO




Price and Cost

• Why is competition not

always the best solution?

• Why do suppliers price in

a particular way?

• What can you tell me

about

– price?

– cost?

– value?

– quality?

14




Develop a range of options

• Done well, CatMan is

highly innovative

• New technologies

• New processes

• New contracting

philosophies

• New solutions

• New entrants

• New supply chains

• New markets

"Everybody has accepted by now that

change is unavoidable. But that still implies

that change is like death and taxes

– it should be postponed as long as possible

and no change would be vastly preferable.

But in a period of upheaval, such as the one

we are living in, change is the norm."

– Peter Drucker

Management Challenges for the 21st

Century (1999)

"Only the wisest and stupidest of men never

change."

– Confucius

15




Get out of the office

• Testimonials mask reality

• Not a desk job

• Paper v reality

• Unannounced

• Access all areas

• Use your eyes

• Questions sparingly

• Time for shift changes

• Key function first

• Take colleagues

• Speak to people

16




Look for visual clues

Lots of new cars –

perhaps indicates

higher-than-average

salaries/packages/fleet

programmes

Containers may

suggest that stock has

been rejected, hiding

excess products,

tooling

Disposal policy;

pride or lack of it

amongst employees;

volume of waste

Care and maintenance

of building fabric;

building itself; owned or

leased

Location; rents and

rates; distribution

network; labour market

pool and average

wages

Inability to hide surplus

stock; condition may

indicate that it has been

there a while!

16

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http://upload.wikimedia.org/wikipedia/commons/d/df/Container_01_KMJ.jpg




Employee attitudes: company certificates; employee awards; is

there a harmonious atmosphere?; what is the attitude to customer

service?; are staff busy getting things done?; is there an excessive

overhead burden?

Care and maintenance: dirty or clean;

old or new; proper size for operation;

safe; worn

Staff knowledge: is there intellectual

capacity to improve present operations;

enhance product designs; refine service

levels; recognise need to refresh?

Quality control: degree of inspection and

validation; frequency of checks; customer

care; statistical quality control

Observe key parts of the operation 16

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http://www.detroitdiesel.com/images/press/med-res/on-the-job/quality-control.jpg




Plan your implementation

• Debrief fully

• Be realistic

• Recognise constraints

• Cover the patch

• Assume nothing

• Inform the business

• Involve stakeholders

17




Communicate your success

• Buyers are not sellers

– useless at self-promotion

• Business needs to know

• Congratulate entire team

• Communicate all benefits

• Create Case Studies

• Learn from mistakes

• Let the supply market know

• Let management know

18




Any questions now?… or get in touch later

Ferryside: 01267 267553

Bristol: 01179 666513

Cannock: 01543 404667

SpringTide Procurement Solutions @ProcurementST Mike Utting

Leadership & Management

Category management (cips)