Category Management: Managing Risk Is Vital

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To say supply chain risk is probably at it’s most complex these days is not hyperbole.  What is surprising is that many organizations are still woefully inadequate when it comes to managing these risks and that is unexplainable – I simply cannot explain why.  Managing supply chain risk has to be a basic foundational aspect of Category Management (CM) and yet it remains unaddressed.  We recently updated a list of Risk Management(RM)  Best Next Practices that we expect to see when assessing clients on our Category Management Maturity Model and then conducted a benchmarking study to see where our profession is as a whole.  I thought I would share a few of the practices and the results of the study because they were not close to what we expected.  If you would like further details on the CM Maturity Model or the benchmarking study, please contact us.

We recognize that different operating models are optimal for different clients (centralized through decentralized and everything in between) but that does not diminish the absolute necessity of aggregating and managing risk on a portfolio basis and yet according to our study, 41% are still in the occasionally/Rarely category – a much higher number than we wanted to see.

This one should scare all of us and we must take responsibility for it.  What this tells us is that we are not educating our senior management which means that we will never get alignment to take any action.  How can 90% of the responses be Occasionally/Rarely and even if the survey may not be scientifically accurate, that is still a scary number?

And the following may explain the preceding chart. If we ourselves are at 66% between Occasionally/Rarely, what chance do we have of educating our executives and getting them to act?  I am at a loss for words to be able to offer any insight into this and it’s such an easy fix. You can start with this simple step:   Assign these topics to small teams and have them lead lunch workshops with the rest of their team .

And that would also explain the following:

For a profession that has long complained about not being considered a strategic function and being relegated to the back offices, how can we justify that 83% of the respondents, 83%, are caught in the Occasionally/Rarely/Never categories.  Again, any lower adjusted version of that number is still a scary thought.  Why would we not be taking advantage of this and fully exploiting it for the benefit of the corporation and our function?  Simple suggestion to start:  take the work product of the lunch workshops from above as the base and create a road show or an advisory email and share it with your internal stakeholders.

Now, if you have not ensured that your Procurement (Sourcing/Supply Chain et al)  is able to do any of the above, well then I guess (to paraphrase the Bard), the fault lies not in our stars but in ourselves.  If your organization does not have the tools AND the competencies to deliver the above, then we really need to be looking in the mirror?  And yes (ad nauseum), you need to make sure that they have the Strategic competencies necessary because they will be far, far more critical than the tactical functional competencies.  So please don’t discount the numbers above but take a honest look at your organization and see where you would fall – and then do something about it now.

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Dalip Raheja
Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.
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