Category Management in disruptive technologies time has to adopt to higher pace of customers and needs of changes. We all as customers heard about or already used services like AirBnB, Uber, electric scooters. All those “ways of serving customer” changed dramatically situation of other market players used to do things in the old way. Those are examples from B2C market. How about B2B market? I used to work in category management and strategic sourcing for one of the leading Tier1 automotive companies. In 2010 when I was leaving and handing over to my successor the main products were ECUs and BCMs. When I met my successor again by chance, and we had a chat three years later, I was surprised how quickly portfolio turned around from passive to active safety systems. Frankly speaking, I had to ask him what those active radars, boozers etc. do. The same was in maritime industry, for many years combustion engines, metal casted elements, hydraulic oil power transmission were major technologies in use. My cooperation with R+D realized to the Category Team that many supply chains will be soon put upside down and many have to be created from scratch (e.g. permanent magnets, composites).
What limits Category Management from embracing rapid technology and business changes?
For many years, due to technology limitation and high investment cost, the category management within purchasing was limited to tools like PowerPoint, Excel templates and endless reviews of Category Strategy with internal business partners to make sure that we all follow the same direction. Lack of transparent, instant feedback and permanent connection between current spend, R+D projects pipeline and strategic sourcing resulted in major time lags between what is in Sourcing Strategy and what business does. Reaction time to changes was more or less like a huge oil tanker reaction to direction change order!
As a result purchasing was very often blamed for lack of agility or for not understanding business pace and needs. Examples of misalignment could be:
- directing new projects to financially troubled supplier
- extending contract with a supplier with quality problems but which delivers savings
- R+D talking to suppliers which have no capability to serve high scale deliveries
- growing up “home made” monopolistic suppliers
Nowadays, thanks to digitalization of purchasing, Category Managers may finally make direct, instant impact on sourcing plans and decisions as they can insert changes directly into living source-to-order processes. Moreover past days time consuming visualizations in PowerPoint or Excel, are now available on the go and are accessible to all interested partners.
One of the key objectives, while designing ESSA concept was to enable Category Managers “to make things happen” and to have constant overview on all category related strategic sourcing projects, to allow them to act as needed, and become more agile.
We walked away from heavy, users’ time consuming modular software concept towards lean, user friendly tool to:
- enable strategic buyer to prepare sourcing plans
- allow Commodity Manager to review plans and release them for execution
- give a chance to Commodity Manager to shape TCO model and select KPIs to help to deliver key objectives
- embed quality, delivery, cost, technology and management risks into qualitative decision model