Category Management: Defining, using, and practising a key business function

To those unfamiliar with the term, Category Management may well sound like yet another management concept devised by a cabal of faceless business people with too much time on their hands. It could easily be some new management style from the States with a bucket load of associated jargon we have to rote-learn.

To others it will seem ‘old hat’ or ‘yesterday’s news’ compared with predictive analytics, blockchain and cognitive procurement.

It’s only when you put your cynicism to one side and revisit what Category Management refers to, that a simple, pre-existing and still very efficient way of managing your business is revealed.

 

What is Category Management?

Before we can begin to extoll the benefits of introducing Category Management into your business model, it’s important to define what it actually is.

Stripped to its simplest definition, Category Management is the process of categorising elements of a business and managing them individually. Take, for example, a sportswear shop. From one supplier they might purchase trainers, tracksuits and rackets. Now, the temptation might be to track the sales of these products as a collective in order to plan for future purchases. Using Category Management, each product set is managed specifically so a clearer picture of the value of each market can be analysed and acted upon.

Though this process might take a little longer, it allows the sportswear shop to ensure that the value attained from the products purchased is maximal.

 

Why use Category Management?

The example above might already serve as a compelling enough reason to deploy Category Management, but it’s benefits and advantages go further still. Moreover, it delivers in ways that are beneficial not just to the business, but to the professional as well.

The Business:

  • As illustrated in the example of the sportswear shop, by managing specific elements of the business process, continuous improvement on cost base is more readily realised.
  • Long term plan can be more accurately aligned to business outcomes.
  • Risk is balanced between your supply chain and your business.
  • As the various elements of the business are subject to greater scrutiny, overall quality can be improved.

 

The professional:

  • By taking responsibility for Category Management, you become a relevant person of interest to stakeholders.
  • If you excel in this position, you stand an improved chance of catching the attention of upper management and securing promotions.
  • Category Management positions are amongst the most well-paid in corporate management.
  • It is, quite simply, a more interesting role than its equivalent; tendering.

 

What does ‘good’ Category Management look like?

Real-life outcomes and successes are far more compelling to stakeholders than general savings targets, or Category Management plans that resemble the latest edition of the Yellow Pages. Good Category Management is about sharing stories and bringing to life for stakeholders what’s ‘in it for them’. To illustrate this point further, let’s look at two practical examples.

  1. Facility Management (FM): A persistent bugbear amongst senior executives, be it limited parking, long queues for bad coffee, or even blocked and poorly maintained toilets. Category Managers responsible for FM tend to look towards a move to a holistic outsourced service provider with the ability to consolidate services over time. A consolidation based on continuous improvement from the primary provider.

To get this idea off the ground and achieve the delivery you want, the benefits of such a move must be presented to senior executives in terms that go beyond numbers on a spreadsheet. You must instead sell a vision of short queues for great coffee, pristine facilities, and a sparkling canteen serving healthy, delicious food.

  1. Grass cutting: An odd example you might assume but allow us to explain. Just because a task has traditionally been completed inhouse, doesn’t make it off-limits to Category Managers. And just because it might not be the most ‘glamourous’ area of the business, doesn’t mean that significant cost-savings can’t be achieved.

For the majority of companies, grass cutting is not a core operational task. So why remove employees from core operational tasks to do it? Again, presenting a cost-saving spreadsheet to senior executives will not excite in the same way as painting a picture of heightened customer value achieved by keeping the workforce focused on more mission critical activities.

 

How can I be a great Category Manager?

So, we’ve defined Category Management, provided practical examples of how it can be deployed, and touched upon how plans should be presented to stakeholders. We’ll now look at how you can be a great Category Manager capable of producing plans all stakeholders will buy into. It relies on just four principles:

  1. VALUES – Aligning your values to those of your stakeholders
  2. GOALS – Ensuring your goals reflect the business priorities of your stakeholders, not your savings targets
  3. BEHAVIOURS – Focusing your behaviours on what will influence people most effectively
  4. SKILLSET – Continuously improving your Category Management skillset

 

Values and Goals – Our behaviours are primarily driven by motivation to achieve self-worth.  Self-worth can come from, one’s self (being valued by yourself) or others (being valued by others).  This can be simplified by saying we are all motivated by a concern for three factors: People – wanting to help others, Performance – wanting to achieve results, and Process – wanting to establish order. It is in the pursuit of one, or a combination of these factors that people achieve their all-important sense of self-worth.

Within a business context, your senior stakeholders will set goals in accordance with a broader set of corporate goals. However, they will be coloured and delivered in a style reflective of their personal values and strengths. It is imperative that you learn which of these three primary factors influence their thought processes and decision-making.

It is with this knowledge that you can build a plan which truly resonates with your stakeholders’ values and stand a greater chance of a successful outcome.

 

Behaviours and Skills It is often said, with regards to some investments, that people don’t buy the product; people buy from people. There is certainly a degree of truth in this, but to become a Category Manager from whom stakeholders wish to ‘purchase’ a plan, you need to learn and exhibit some key behaviours.

From a personal perspective, people prefer interacting with others who possess warm personalities. From a business perspective, professionals have a greater degree of respect for those who display a toughness in their convictions. Marrying the two together is a crucial skill to develop when putting forward a Category Management plan.

It is imperative to the long-term success of a project that when a plan is signed off, all parties are happy. Being warm, but soft in convictions can lead to the Category Manager being stripped of many of their proposals and working from a plan which leaves them unhappy. Being cold and tough in convictions comes over as aggressive and can lead to stakeholders feeling harried and ultimately troubled by an ‘approved’ plan. Being cold and soft is just plain weird.

The ‘sweet spot’ as it were, is to develop an approach that exudes warmth and congeniality whilst remaining tough on the core elements of the plan being presented. Such a behavioural skillset does not come easily. To achieve it takes time and practice. You’ll also need the necessary technical skills to accompany your style and behaviours. Our advice for any budding Category Manager is to create a five-year plan based on an assessment of your current technical skills, and outline how you intend to improve over time. More importantly still, identifying what experiences you will need to develop the skillset and behaviours most effectively.