Category Management (CM) has the power to deliver better insights into spending and promote healthier supplier relationships. This strategy involves categorically organizing your spend in a way that treats each product or service as its own separate, strategic entity.

At Source One, we proudly encourage and apply this method for clients because it heightens supplier performance and, in turn, client satisfaction. However, we never claimed that implementing such a program was easy.

A successful CM program requires many components, but its most essential element is a highly proficient category manager. In parts one and two of the category management series, we discussed exactly what CM is and how to initiate a CM program. Today, we will discuss what the ideal category manager looks like.

Buyers vs. Category Managers

First off, you have to recognize the difference between a category manager and a buyer. Often, buyers will label themselves as category managers due to the overlap between their responsibilities.

A buyer’s job is to conduct the purchasing process by engaging with a specific supplier. To reiterate, the buyer is assigned a specific supplier and assigned a specific product. They do not choose what to buy or from whom to buy it.

While a buyer’s responsibility is purely transactional, a category manager’s job requires more involvement. A category manager (not to be confused with a retail category manager) oversees the entire vendor management process and is responsible for choosing the best combination of suppliers and resources to make the end product. This individual needs to have a combination of relevant category expertise and sourcing experience to perform this role adequately.

Buyers and category managers are often confused because while the responsibilities are not interchangeable, the titles can be. For example, a buyer might be in charge of a certain category of goods or services and get the CM title. On the other hand, a category manager might have the buyer title even though their responsibilities require procurement-related oversight.

Hard Skills

Once you’re able to make that distinction, you can begin to highlight some key skills a category manager should possess. These hard skills indicate that an individual is well-equipped to serve as a category manager:

Industry Expertise - For a product or service to be treated as a separate business unit, the organizer needs to have an advanced understanding of the industry. Category managers should have a good grip on how the industry works so that they can strategically source materials and negotiate accordingly. A sourcing background in one field might not necessarily constitute the ability to source in another.

Project Management - Category Managers must have the capacity to manage complex projects. CM programs have several layers and not every professional is prepared to orchestrate the entire operation. Category managers running parallel with a project is key because there will be critical time stamps, tight budgets and tricky decisions to make.

Zero-Based Budgeting - The zero-based budgeting method involves justifying expenses at each new period of spending. The idea is that suppliers will need to logically justify each and every need so that no hidden or unnecessary costs are included. Strategic investing and zero-based budgeting go hand-in-hand.

Digital Fluency - It should be no surprise that digital fluency is an absolute need in category management. Most procurement positions need this skill to maintain a competitive advantage and promote innovation. Digital tools have aided the procurement function time and time again and CM is no exception.

Analytical Skills - Determining what works and what doesn’t work is an important part of making decisions. How can category managers make an informed inference? The simple answer is data. A lot of valuable deductions can be made when the right data is on-hand. If the data can’t be read correctly, however, managers will fail to come to those conclusions. For example, if a category manager fails to detect that suppliers are costing more than they're providing, you could miss out on huge cost reduction opportunities.

Soft Skills

Hard skills are important, but they can’t be applied correctly without the soft skills to match. Here are some traits to keep in mind when staffing a CM position:

- You want your CM program to be a well-oiled machine, but you also want there to be room for innovation. The most powerful and effective CM programs have a creative light behind them. Category managers should be able to think outside of the box. Big ideas generally produce big results.

Communication - A good category manager should set the stage for consistent and open communication. You should have extensive contact with your team and stakeholders to keep up to date with the status of your CM program. Healthy supplier relationships also lead to better partnerships in the long haul and therefore, better results for your projects.

Positivity - Things won’t always go as planned. Category managers need to be prepared for unexpected events to occur. Positive thinking will help to promote a problem-solving environment and provide for change that suits the company’s needs.

You might be thinking, “That’s a lot of qualifications… where can I find someone with this unique combination of skills?” The answer depends on the maturity of your CM program thus far and the industry that you’re in. If you already have a solid program in place, you might look into hiring someone with more industry expertise than sourcing experience.

If you’re looking to start a CM program or advance one that’s at its baby stages, a procurement professional might be the answer for you. You can also look into outsourcing your category management needs to a third party. Third-party consulting groups tend to have both the domain knowledge and hard skills you’ll need to flourish.

A CM program can’t work unless you find the right mix of these hard and soft skills. Most importantly, you’ll need to build a team with your company's unique circumstances and needs in mind. Your CM team might look different from the next company. What matters most is ensuring that your CM gives each category of spending the respect it deserves.
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Siara Singleton

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