Do You Know the Difference Between Strategic Sourcing & Category Management? Shop Your Closet!!!

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I’m sure you’re thinking, what does shopping or your closet have to do with Category Management?  Everything!!  It’s that time of year when you are hiding from the mounds of snow piling up outside your front door (we are expecting another 10 inches in Chicago in the next 24 hours – YIKES!!) and you need to do something productive (or not 😊).  I always take the opportunity to clean out my closets.  While painful, I also find it to be a joyous experience where I discover a whole bunch of things I bought and have never worn or completely forgot about.  I started writing about this “ shop your closet ” concept about five years ago when I was shopping with a girlfriend for a black skirt.  She looked at me and asked, “how many black skirts do you already have?”  and to be honest I had no idea.  I skipped buying the black skirt that day and went to my closet that evening to discover that I already had over a dozen (I won’t tell you exactly how many – embarrassing!!).   What it made me realize though was that this desire to buy something new without considering what you already have (and are not using) does not only apply in our personal lives but runs rampant in our professional ones.

Let’s get back to – how does this apply to Category Management?  It actually applies in two ways:

  1. Demand Management / Rationalization / Optimization – It is our responsibility to rationalize / optimize what we are being asked to buy from our internal customers.
  2. Adoption – It is our responsibility to ensure that the processes, tools, technology that we have already invested in are being utilized to their full potential before we “buy” new ones.

Let me give you a few examples.  We have a number of clients that are buying or have bought new P2P systems.  Some already have stand-alone P2P systems like Ariba and are moving to Coupa or have P2P capabilities within their ERP systems but are simply not using them?  First question – why are we buying yet another technology solution?  Second question – IF we can justify the purchase (with a positive ROI) then what is the plan to ensure that the functionality is adopted to achieve the projected ROI?  To be honest, those questions are rarely asked.  Here is another example.  We are often brought in to help clients “transform” their shared service (procurement, finance, etc.) organization or bring them to the next level of maturity.  Our job is to start with what they currently have and we OFTEN discover that they have already “invested” in process(s), tools and even training but are simply not using them.

Adoption, in particular, is a tricky thing.  We have done A LOT of research in this area and what we have discovered is that whenever you introduce “something” new (innovation) only about 8% of that “something” will actually be adopted – think about that, 8%.  What that tells me:  as Category Management professionals, it is our job to help our internal business partners think about adoption as part of the buying process.  If we can take that 8% adoption number and just double it, we will have added tremendous value.  Also, let’s force ourselves and the rest of the organization to “shop your closet”.  We may find a whole lot of black skirts (hidden gems) sitting there that we didn’t even realize we had 😊!

Let us know what you think and join in the conversation  . . . . . .

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Anne Kohler
Anne has been leading consulting and financial management organizations for over 25 years. She has extensive expertise in Strategic Sourcing, change management, contracting & contract management (both the buy side and sell side) organizational design and supply chain management. Anne has a passion for collaborating and educating her clients while helping them to uncover hidden value in their organizations. In addition, Anne has been named by Supply & Demand Chain Executive as a “Top 100 Provider Pro to Know” every year since 2007 and a 2013 Top Female Supply Chain executive.

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