Unblocking a Stuck Category in Procurement
Have you ever heard the words, “The low hanging fruit is all gone”?
At some point, every category manager hears this from a stakeholder or their own team. It really suggests that the team is struggling to come up with new ways of generating new savings.
As a Head of Procurement, you might start seeing savings tailing off or people working on long term projects that show little chance of success.
How do you reinvigorate a category when it has started to run out of steam? Here’s a few ideas that you can try.
Try setting a BHAG
The term “Big Hairy Audacious Goal” (BHAG) was first used in the book “Built to Last: Successful Habits of Visionary Companies” in 1994. The idea goes: Instead of looking for incremental improvements, sometimes an outrageous, almost unachievable target can get the team thinking and working together in a completely different way.
This can be supported by a “Burning Platform”, or a “Fund our Growth” rationale as to why the teams need to re-think about the long-term vision. What follows from a BHAG is often a much clearer plan about which initiatives to pursue. Often, even if the final goal is not 100% achieved, it usually makes step changes that were previously un-thinkable.
Unlock the Sacred Cows
A lack of progress can occur when procurement and the stakeholders tacitly agree to close down areas of opportunity. You might hear people saying, “We tried that,” or “We’ve just appointed a new supplier,” or “It’s out of scope”. These are all indicators that the team are limiting themselves and their thinking.
You might need to get the team to re-open some of these pre-conceived ideas. Tactics include:
- sending the team to see another company.
- getting the team to read the latest press articles and news
- Inviting a supplier to participate in discussions
There are always opportunities in any category and it’s important that the category team do not limit their scope to smaller, less impactful initiatives.
Focus on a different value lever
Procurement people tend to feel most comfortable looking at the price lever – How can I reduce the price of what we buy?
The best teams look at all different value levers – Innovation, Specification management, Process improvement, or even income-growth projects.
Introducing a structured approach to assessing any (or all) of these levers can reap massive value. In particular, thinking about the use of new technology, digital solutions and engaging with procurement tools can open different avenues of supply chain efficiencies.
Change the team
Even when you have done all of the above, sometimes, it is just that the team are not being effective as a team. This can be because of inter-personal stresses, but it can equally be when the make-up of the team is too similar.
In any team, you need a mix of personalities. Tools like MBTI, Strengths Finder, SDI, Insights (and many others) can give a hint about where a team is not balanced. If you are missing creative people – add someone into the mix. If you have too many analysts, swap one team member out for a results-driven doer…….and if all else fails, you can bring in some external expertise; consultant or interim managers.
It may make the team less comfortable but may drive some actions.
Probably the overarching reason for category teams not working well at converting ideas into savings is a simple lack of time together working on the problem.
Stakeholders are focusing their best members on operational tasks and are not committing high quality time to the category process. Procurement is focusing on running tenders and the day-to-day compliance activities.
All of this means that the search for high quality savings is being rushed or under-invested.
The cure is to dedicate real time to go through the category strategy process and time with each other to focus on possible solutions.
An effective category management strategy and plan takes days to prepare…. Collaboratively… with key people working in the room together. It is absolutely not something that is prepared by a procurement category manager in isolation.
Recognizing that a category has become stagnant is the first step in resolving the issue. It doesn’t necessarily mean that the category manager or the stakeholder is under-performing, but as a leader, you need to recognise that the category may need an external impetus to effect a change.
Like any team, procurement-led category teams need nurturing to make them high-performing and collaborative. The challenge is knowing the right intervention to get the category back on track.