Do you Know the Difference between Strategic Sourcing & Category Management? – It’s MORE About Change Management Than Ever….

The conversation around the differences between Strategic Sourcing and Category Management is one of the hottest topics in our profession today.  The response to this blog series has been overwhelming and for that I am truly grateful because it signifies that we are at the very edge of significant change.  But change does not happen without some pain and for that we do need a heavy dose of Change Management. 

If  you look at our Sourcing Maturity Model which we have used as the foundation for this series, Change Management is nowhere to be found? 

Yet, Change Management is the one element that is absolutely NECESSARY as you move from Traditional Purchasing to any and all other maturity levels to the right.  It is the one constant that must be present in all domains, across all maturity levels to build the support and credibility required to be successful in our discipline.  Over 20 years ago, when “Strategic” Sourcing was considered to be rocket science 🙂 , The Mpower Group declared at a major industry conference that “Strategic Sourcing IS Change Management” and we were subsequently, publicly laughed out of the room.   That was the “public” view.  Yet many, many of the conference attendees came to us saying – “Wow, I thought I was the only one feeling the pain of trying to make this transformation” –   BINGO!!!

Let’s fast forward 20 years and the challenges are real and more painful than ever.  The more strategic we try to become (moving from Strategic Sourcing to Category Management), the more challenges we face.  Since most of the issues are internal (working with suppliers is the easy part 🙂 ) we need to be Change Management experts with a full complement of tools and approaches at our disposal.  Here is a definition of Change Management that I believe captures the real essence of why Change Management is SO important:

Change Management is an organized, systematic application of the knowledge, tools and resources of change that provides organizations with a key process to achieve their business results. Effective change management must bring the organizational and people sides of change together in order to increase the speed of implementation and thereby insure the realization of business benefits.

What I appreciate most about this definition is the linkage to business results and benefit realization.  That is really what Change Management is all about.  It is a set of practices that helps us deal with the internal issues and challenges in a positive way so that we can get to the real work – Category Management.  It is in fact an accelerator even though it does take time.  I often tell my clients that I can provide them the best Category Management process, tools and technology available BUT if they can’t break through those internal challenges then they’ll never get their business benefits.

I was a non-believer 20 years ago because I had a picture in my head that Change Management was about everyone standing in a circle singing Kumbaya.  It wasn’t until I tried to execute Strategic Sourcing in a global organization that I realized that resistance to change was real and a major roadblock.  As I integrated Change Management into my Sourcing process, I discovered that it was the “silver bullet” (for me) to break through the issues and challenges.

Now, as I help clients move to Category Management – another big change for both the Procurement organizations and their stakeholders – the issues, challenges and resistance are exponentially bigger.  Category Management requires MUCH more collaboration with Business Units and Suppliers individually and collectively. In Category Management, we start to view our Suppliers as an extension of our organization’s workforce and capability and this is not a concept that many organizations are willing to accept.  A heavy dose of Change Management is required to educate and align your internal business partners and get them to be supporters as opposed to adversaries.  So now 20 years later, I will say  – Category Management IS Change Management 🙂 !

Please join in the conversation and let us know what you think . . . . .