Changing demands challenge category management structure, says Deloitte

Will Green is news editor of Supply Management
18 December 2014

The traditional category management structure is being challenged as procurement professionals seek to balance different agendas, according to a report.

The Deloitte Global CPO Survey 2014 has found the tasks of addressing cost control, product innovation and other expectations are challenging existing models and forcing buyers to look for specialist skills in different areas.

James Gregson, UK head of sourcing and procurement at Deloitte, said: “The businesses they [CPOs] are serving are changing. Expectations are rising year on year and relatively small-sized procurement functions with a traditional set of skills are no longer the panacea answer to serving that broader agenda.

“We are seeing a greater level of specialist skills being created in procurement functions. Rather than a very dominant category management structure, which has been the main quest over the last 10 to 15 years, I think people are starting to challenge the category management organisation and look for specialist skills in certain areas, and looking at partnering with other organisations or looking at shared services that can deliver these things more quickly.

“Traditional blocks around category management are no longer the organisation structure of norm.”

The survey found almost six in 10 CPOs believed their existing teams do not have the skills needed to deliver procurement strategies, with the skills most lacking including relationship-building, influencing, communication and leadership.

Meanwhile, more than half of CPOs were concerned that existing procurement systems were difficult to use.

The top cited “procurement levers” for the coming year were consolidating spend (40 per cent), increasing competition (37 per cent), increasing the level of supplier collaboration (34 per cent) and restructuring existing relationships (34 per cent).

“What is clear is this whole principle of procurement having to go through the gears, creating different means of delivering the value proposition,” said Gregson.

“That multitude of different levers they are having to pull, the agendas they have to serve is putting a huge strain on the traditional procurement organisation.”

The survey also found one in four CPOs, three times more than a year ago, feared the impact of geopolitical risks, prompted by events in Ukraine and the Middle East.

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