CIPS Category Management Strategy Implementation

5.0 Category Management Strategy Implementation

5.1 Kraljic Matrix of Category Management Strategies

After successful identification of the current situation, need for change and the team to be involved, the Kraljic Matrix could be used in the segmentation of the different categories based on risk and profitability as shown in figure 6 (Terpend et al., 2011);

Figure 6: Kraljic Matrix

Source: Adopted from Terpend et al. (2011)

For leverage items identified by organisation change, new talent for supporting digital operating model would be engaged. Also, relationship with multiple suppliers and stakeholder’s engagement would be harnessed in XXX by sharing data and the cross-functional teams in developing solutions with suppliers and all internal stakeholders.

For strategic items, the change process would involve strategic sourcing. This is by using digital tools for advanced category management, improved forecasting and compliance enforcement, the right talents engaged, stakeholders engagement involved would ensure that costs are reduced by buying better and spending better.

Further, routine items which include small supplies, e-procurement (ERP), vendor management solutions (VMS) and multidomain master data management would be included. Also, e-procurement would be implemented through roll-out electronic procurement and procurement cards to demonstrate value of digitizing procurement.

Lastly, for bottleneck items which are only available from one supplier, collaborative procurement would be involved. This is by using new technologies which include collaboration platforms, real-time data collection, and predictive analytics and block chain. The talented teams would be recruited, relationship with suppliers aided by data, stakeholder engagement by sharing data across the cross-functional teams to improve internal coordination and supplier performance.

5.2 Steps in the Implementation of the Category Management Strategy

According to Future Purchasing (2019), there are five strategies which are involved in the implementation of the category management strategy. This is as shown in figure 6;

Figure 7: Steps in the Category Management

Source: Adopted from (Future Purchasing, 2019)

Further, the steps involved in the change process are equally informed by the Kotter and Schlesinger 8 step process of change. In each of the category management change implementation phase, different activities suggested by the Kotter model would be embedded. A description of the 8 stages in context of XXX change process is as shown in figure 8;

Figure 8: Kotter and Schlesinger 8 step process of change

Source: Adopted from Varkey and Antonio (2010)

The components in the 8 step process of change would be further be integrated into the different category management change implementation phases. In the context of XXX and its category implementation which involve the modernisation of their operations, the category management model as highlighted in the CIPS Purchasing Models Handbook would be used (CIPS, 2019). This is as shown in figure 9;

Figure 9: The Category Management Model in the context of XXX organisation

Source: Adopted from CIPS (2019)

Step 1: Initiate/Prepare

The scope of change implementation includes a transition from the manual system of procurement to a modernised approach. This would target an improvement of talent management, supplier relationship, stakeholder engagement and digital transformation. Relevant suggestions on how modernisation of activities would be critical for XXX progress. The questions to be asked in this step include;

Step 2: Identifying and Priorities

The senior management in XXX expects the involved team to master the digital transformation tools used and offer best service all-inclusive of stakeholders, best talent in place and engagement without necessarily increasing incurred costs. This will be an opportunity for more strategic activities in other departments. For the analysis, the Porters 5 forces (see appendix 1), SWOT analysis (see appendix 2), category change implementation characteristics would all be conducted and PESTEL Analysis (see appendix 3).  Also, value chain mapping and determination of the category sourcing characteristics, formalising the category management role within the XXX contract procedure rules would be harnessed. The answers to the identified questions would offer critical context for identifying the right procurement digital strategy.