What are the key steps and deliverables of a category planning process?

A successful category manager should be concerned with ensuring a reliable source of goods and services, at negotiated prices, from preferred suppliers, within a compliant process that promotes efficiency and limits risk to the organization. Don't limit your scope to mere negotiation and supplier selection.

An example of creating clear definition is engagin with the internal customer. In our industry, utilities, the business units' goals often change throughout the fiscal year. A Supply Chain that creates a plan but fails to engage and remain engaged with the customer serves no one and loses the confidence of the internal stakeholders. Becoming an integral, respected, reliable part of the stakeholder's team allows the Supply Chain to become more nimble and serve the goals of the company more efficiently.

First of all, identify the category or categories you wish to plan for. Define the category/ies’ scope and the respective key stakeholders involved. Consider if there are opportunities for sub-categories synergies where planning efforts can be combined or incorporated into one combined category plan.

When identifying Environment, Social and Governance objectives, focus on understanding how ESG outcomes relate to the applicable category domain area(s). What do these important areas actually mean in practice? Remember-each category has its own set of dynamic inputs and outputs. Ask yourself- which realistic and effective metrics and indicators can be introduced to measure alignment to the ESG objectives?

The category planning process begins with scoping and defining the category under consideration. Define the boundaries, objectives, and scope of the category to be managed. Clarify the strategic importance of the category and its alignment with organizational goals.

to get a full view of the category you need a 360 degree view at all internal and external factors driving category demand, cost, risks and supply and a review of past performance, challenges and opportunities ahead.

Be sure that assessment includes a thorough understanding of the underlying operational activities that drive demand or consumption of the goods and services in your selected category. Without this, you are not fully equipped to evaluate your options for improving your category. Improvement goes well beyond squeezing margin out of your suppliers.

The contract manager should analyse and assess the category/ies to develop a proper understanding of what the applicable category domain(s) mean in practice and how these relate to market trends. It is important to have a strategic mindset and to be able to build and maintain relations and influence outcomes in this area. Also, focus on creating relevant and business-value outcomes across related sub-categories for economy of scale and supplier rationalisation benefits.

Regularly managing supplier relationships, creating partnerships that work, is a key driver to Supply Chain category management success. Are your contracts forward looking? Do they provide enough time to grow a lasting relationship that benefits both parties so that long-term success is fostered and rewarding? Are category managers engaged in the industry, analyzing trends and exploring the players that best serve your organization's purpose? A category manager who is engaged with the internal stakeholders and fully understands their goals, knows and analyzes the category and its players and key component market segments is able to be more flexible and utilize relationships to achieve corporate goals.

Conduct a comprehensive assessment and analysis of the category. This involves gathering data on market dynamics, supplier landscape, demand patterns, and internal requirements. Analyze key performance metrics, risks, and opportunities associated with the category. Identify cost-saving opportunities, innovation potentials, and areas for improvement.

Develop a strategy that will allow you to lock-in advantages or flexibility based on what you learn in the assess and analyze phase. Each time you refine your strategy, you have an opportunity to improve the quality of information available to you for the next cycle. Take time here to create processes that give you better data quality, more feedback about supplier and product performance. Don't neglect the importance of switching costs when choosing your optimal strategy. Procurement technology can make switching very easy for catalog suppliers, but any goods or services that are purchased outside of a system you control may require significant effort to switch.

In my experience, the next step is to develop the category vision, as aligned to the overall category management strategy and organisational objectives. Consider the following ? understanding the business needs and future short- and mid-term strategies ? understanding of the marketplace trends and dynamics, as these relate to the category area ? identify immediate opportunities to be benefited from whilst the strategy is developed.

Based on the assessment, develop category strategies and select appropriate sourcing approaches. Formulate sourcing strategies that optimize value, mitigate risks, and drive category performance. Select sourcing options such as single sourcing, multiple sourcing, or strategic partnerships based on the category's characteristics and organizational objectives.

One thing I found helpful is benchmarking and market intelligence. These questions might help: - How leading industry players structure the selected category (sourcing model: single source or multi-source; contracting model: global or regional/local) - What can we learn from suppliers? (existing and potential). They often see multiple designs, if you triangulate multiple opinions you might get useful insights.

The goals, initiatives, timelines and resources must be able to flex and change with the needs of the organization and its key stakeholders. A plan must be adaptable to the market and to changing corporate goals and initiatives. A strategy cannot stand alone and deliver on Supply Chain's promise. The risk of a pursuing a plan that becomes irrelevant is loss of internal customer confidence. Confidence is twice as difficult to reestablish as it is to lose.

Before finalising the category strategy, set category objectives aligned to the vision and ask yourself what the risks are to be addressed and what are the organisational priorities. Then agree the strategies that need to be implemented to meet the categories' objectives. At this point, consider the following ? Are the recommendations supported by the analysis ? Are the anticipated benefits favourable compared to the anticipated risks and the resources required to deliver them ? Are the business challenges and objectives as identified initially, effectively addressed and optimised?

Execute the category plan by implementing sourcing initiatives, supplier contracts, and performance monitoring mechanisms. Engage stakeholders, negotiate contracts with suppliers, and establish governance structures for effective category management. Implement process improvements and initiatives to achieve the desired outcomes.

Often the continuous improvement metrics are focused on savings to the company. Continually squeezing the supplier until the turnip is bloodless. Performance management needs to encompass all aspects of the relationship - along with the give and take required to ensure the supplier's health and positive relationship is also fostered. Verify that the strategy developed can be adjusted as necessary to address industry changes. Develop open and frank strategies with suppliers. Foster open communication. Monitor markets impacting suppliers and strive to understand and support where possible to positively impact those markets. Ensure strategies are meeting corporate goals, and if not, be prepared to make a change.

If the execution of your strategy includes any possibility for supplier or process changes for your stakeholders, be sure that you communicate those changes effectively to the right people. A mass email doesn't work if your stakeholders don't read it. Telling the administrative person who processes invoices about a supplier change isn't helpful if someone else is requesting the services and turning the invoice in afterwards.

In my experience, sponsorship is key in implementing category planning, especially if there is a lot of change involved. Its key to develop partnerships with stakeholders who can be your advocates.

Some aspects for review include ? Is the category strategy delivering the expected benefits? ? Is performance effectively monitored ? Are the identified and unforeseen issues effectively managed and resolved? ? Are we managing supplier and internal stakeholder relationships effectively?

Continuously review the performance of the category against defined metrics and targets. Monitor supplier performance, cost savings, quality, and other relevant KPIs. Identify deviations from the plan and take corrective actions as needed. Refine category strategies based on insights gained from performance reviews and changing business requirements.

Communicate category plans, progress, and results to stakeholders across the organization. Provide regular updates on category performance, initiatives, and achievements. Present reports and dashboards that highlight key metrics, successes, challenges, and areas for improvement. Foster transparency and alignment among stakeholders through effective communication.

Communicate the results, but FIRST communicate from step one throughout the process. Ensure the key stakeholders are part of the decision making process. Engage and become a part of the stakeholder's team so that as stakeholder goals or corporate goals change, Supply Chain can adjust strategies. Communication, positive and negative, is key to maintaining the partnerships developed and ensuring that Supply Chain delivers on its promises.

Communication and reporting are key steps because they help to build trust making it easier for the next category review. This is where procurement professionals need to put on a "sales hat" and promote their work. In the literature is called "salespersonship" skill.

Category Management is a strategic end-to-end process for purchasing products and services and managing suppliers that connect business objectives and requirements with supply market capabilities. Done properly, it increases the long-term value generated from an organization's entire supplier spend, resulting in optimized costs, lower risk, better service, and higher revenue.

Category planning involves a comprehensive analysis of a specific industry or organization, defining objectives such as market share, profitability, or product expansion. A category strategy is developed, including target customers, pricing, assortment, and promotional strategies. An assortment plan is created based on customer needs and preferences. Supplier relationships are managed to ensure a reliable supply chain. Pricing and promotional strategies are developed to maximize sales and profitability. Performance tracking and analysis are conducted to measure the category's success. A continuous improvement plan is developed based on feedback from customers, suppliers, and internal stakeholders.

In my experience it is helpful to review the immediate organisational landscape in parallel with the category planning process. Consider internal and external changes and assess how they might present risk or opportunity to the category strategy implementation. Consider the alignment of the appropriate internal behaviours and structures to generate and deliver change and innovation, and the key role of the category manager and senior sponsors as change agents.

Parallel to category planning, also focus on resourcing. Develop and implement strategies related to success planning, acting in roles and job shadowing. These will ensure your department is better equipped around continuity of category support.

In order to make your process more agile, don’t be afraid to revisit your scope and category strategies throughout every step of the process. You may have started wanting to improve your plough with new technology, but as you progress, and especially as you engage suppliers, you may decide you want a buy a tractor instead. You may even want to scrap the plan and pivot to something else. A rigid process isn’t always the best.