Three pillars of effective category management

Attendees at the US Institute of Supply Management (ISM) conference this week came away from…...

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Attendees at the US Institute of Supply Management (ISM) conference this week came away from an illuminating panel discussion addressing the issue of category management with three key focus areas for extracting business value. Contributors to the debate included Professor Janet Hartley of Bowling State University’s College of Business, Matt Devlin, director of strategic sourcing at the popular American Asian and Chinese food restaurant chain P. F. Chang’s, Hugo Evans, VP in digital at A. T. Kearney, Lisa Martin, and Jami Bliss, executives at UK healthcare firm GSK.

The first area was the need for category management practitioners to avoid the trap of looking internally and basing spend only on that data. Professor Hartley maintains that looking at wider market conditions is crucial. Matt Devlin endorsed her view, suggesting that a market analysis for category management should include supply and demand issues, including the disruptive effects of natural events, such as flooding, which recently affected P. F. Chang’s ingredient supply. He also included trade policy and consumer preferences – US trade tariffs, for example, have forced many firms to rethink strategic sourcing and re-analyse the categories of goods they buy.

Discussants agreed that the second area of focus was digitally-powered automation, such as robotic process automation (RPA) and predictive analytics. Both help to automate many time-consuming aspects of category management. Hugo Evans speculated that the time may be approaching when category managers are no longer necessary.

Finally, the need to ensure the appointment of candidates with the right skill sets emerged as the third consideration. Noting that staff turnover was relatively high for category managers, Professor Hartley emphasised that the key to retention lay in appointing people with the necessary mix of analytical, creative, and entrepreneurial skills. Jami Bliss and Lisa Martin said that their firm had implemented employee training events when category management was introduced to inculcate this blend. The training needs to be ongoing to encourage staff to avoid slipping into old habits.

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