Do You Know the Difference Between Strategic Sourcing & Category Management? Analytical Skills REQUIRED!    

As your organization is making the journey from Strategic Sourcing to Category Management, understanding the skills and competencies required to get you there are key.  Does your Procurement / Sourcing organization have a competency model that articulates those required skills?  Do you know where your skills gaps are and how you are going to fill them?  I’d like to give you a few things to think about.

1. You need to define the role(s) you want your group to play within your company.  IF you are striving for Category Management status, here are the roles you MUST play:
   • Strategic Business Partner
   • Change Agent
   • Internal Consultant
   • Process Manager
   • Relationship Manager
2. To play those roles, your group will need a combination of both functional and strategic competencies such as:
   • Functional (illustrative)
     • Strategic Sourcing Process knowledge
     • Developing an RFP
     • Negotiations
     • Contracting
     • Analytics
   • Strategic (illustrative)
     • Change Management
     • Problem Solving
     • Communication
     • Relationship Management
     • Collaboration / Influencing
     • Risk Management
     • Facilitation
     • Analytics

Please note the skillset that runs between both Functional and Strategic is Analytical skills.  This is OFTEN the skillset that represents the greatest gap among Procurement / Sourcing professionals AND the one skill that can provide the greatest Value to your Stakeholders.  So, what do you do about it? First, you need to acknowledge that it is important.  Many organizations rely heavily on Finance to provide those skills but to be frank those are the organizations that will NEVER get to Category Management.  That is because your Stakeholders will look at you as simply Process Leaders and NOT as Internal Consultants OR Strategic Partners.  Don’t get discouraged – there is still hope!!!  You can either hire sourcing professionals that have that skill set OR develop those skills in your current resource pool.  In order to do either, you need to define (here comes the competency model) the specific skills you are looking for.  Here is a simple illustration:

• Technology – Exploits existing technology fully, including the Microsoft Office Suite, as part of a “consulting” toolkit.
• Defining Measures / Metrics – Establishes KPIs that are tightly integrated with the Stakeholder Value Drivers of the business through a measurable, result oriented process
• Spend Analysis – To proactively identify opportunities and provide the highest value, develops a comprehensive spend analysis for all spend categories.
• Total Cost Analysis – Evaluates the “total cost” of products and services based on the integration of strategic cost management (global prices, payment terms, warranty costs, etc.) and total cost in supplier selection (cost, quality, cycle time, inventory, etc.).
• Make vs. Buy – Ensures the right strategic decisions are made by Stakeholders by conducting appropriate analyses (TCO, risk assessment, etc.) to determine the most viable sourcing strategy.
• Research – Navigates the internet as a primary resource for research and benchmarking activity. Utilizes D&B, Gartner and other sources to determine supplier capabilities and performance.
• Industry Trends – Utilizes knowledge about your Industry and other industries to identify trends impacting categories of spend and improve effectiveness.
• Financial Acumen – Applies fundamental business and financial analyses (return on investment, time value of money, cash flow, total cost of ownership, etc.) to evaluate spend categories, projects, suppliers, and other business needs.
• Capturing Business Benefits – Develops a benefit tracking process / system to ensure business benefits and Stakeholder Value Drivers are captured and sustained.

All of the skills noted above, and much more advanced ones can be taught in the context of your core process – Strategic Sourcing / Category Management.  This model can also be used in your recruiting process and your talent development processes because you will have a guide for the specific skills you are looking for.

If your goal is Category Management, then analytical skills are key.  If you need help in defining those specific skills and OR training your people, we are here to help 😊!

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