Category Management’s Role in an Ultra VUCA World

Our recent research into Category Management (CatMan) has looked at the strategies CatMan practitioners need to employ and the ways technology can assist them in doing so. To speak to a more concrete experience of this, we talked with Stéphane Morel, a procurement leader with more than 25 years of experience. Throughout his career, he has focused on driving the upgrade of procurement, with deep expertise in large-scale transformation programs, procurement excellence, category management, sourcing process, supplier relationship management and business partnering. Today, he works at a leading dialysis treatment company, shaping standards and practices across the entire procurement organization. He shared with us his personal view of what is shaping category management today.

How does Procurement look in a landscape defined by ultra VUCA?

“The strategic ambition of procurement has not changed,” Stéphane says. “The ‘how’ though, has. Throughout the past decade, we have been operating in a context moving from VUCA [volatility, uncertainty, complexity and ambiguity], to ultra-VUCA, and now we see four main forces: 

• Disruptive innovations in all industries from many new (often small) players, including AI impacts already happening
• Permanent and multiple geopolitical disruptions
• Planet Earth kicking us out
• Unpredictable new regulations and laws from governments

“This has made Procurement simultaneously more essential and more overwhelmed. To meet the moment, we must change its operating model. Digital, which now includes AI, will not work without such a change, nor has it worked for the last 15 years.

“Under the new way of working: 

• A big part of the function focus will be on operational efficiency and strategic effectiveness.
• Another, smaller group of experts will connect the business with key suppliers. 

“The first group will have data experts, tech product owners, the managers of all AI agents, the tactical buyers becoming buying channels experts, the sourcing managers (launching major tenders and renegotiating large contracts supported and augmented by AI) and other procurement staff. They should no longer obsess over having 100% of spend under control; instead, they should support the largest purchases and make repeat purchasing easier by automating high-volume transactions. Moreover, some purchases will be delegated because procurement does not always add value. 

“The second group consists of a small number of real procurement business partners. Specifically, I imagine a senior group that has segmented spend to identify the ultra-strategic categories. These senior professionals have a well-defined stakeholder map covering the company’s most strategic areas and projects. Their focus will be on stakeholder engagement and deep support for company strategic projects: for that reason, they will carry out true SRM and practice reverse category management where it brings real value to the strategic business projects. This is also where we will find the leaders of risk management and ESG programs.

“Business Partners should be highly business-driven professionals, focused on business challenges, opportunities and objectives. They will integrate the most strategic suppliers, and they will create the real value that the business positively perceives and recognizes.”

What is Category Management’s role in this ultra-VUCA-filled context?

“While some procurement leaders have declared CatMan outdated, this ultra-VUCA world, which places increasing amounts of importance on strategic suppliers, makes CatMan needed more than ever. That said, it must evolve.

“At its heart, CatMan’s purpose is to build and carry out strategic plans that turn category spending into value by connecting business needs, requirements and constraints with supply-market risks, opportunities and top-performing suppliers. Successfully executed CatMan strategies align procurement with the business for strong execution, optimize spend and strengthen collaboration with strategic suppliers to maximize value delivery while ensuring compliance and greater risk mitigation.

“Many organizations still struggle to implement robust CatMan, however. And we should be candid about the weaknesses most of them face. Collaboration with the business is often hard and insufficient, and many category managers lack the necessary skills. They have limited tools and time for data analysis, which often results in poor insights. There is also confusion between CatMan, strategic sourcing and SRM. As a result, category managers end up stretched across too many categories and spend areas, with limited knowledge management and underdeveloped strategy-building and approval processes. Then there is, of course, the difficulty of aligning global, regional and local needs, especially when organizations rely too heavily on tools like MS Excel and PowerPoint. In addition to gaps in supporting collaboration, such tools also lack predictive capabilities, which makes responding to an ultra-VUCA-heavy context difficult.

“It is why only a minority of companies do CatMan well. Instead of eliminating or replacing CatMan, we need to evolve it. 

“CatMan should take a ‘less is more’ and a business-centric approach instead of being driven by the supply market. The full CatMan methodology should be reserved only for the few and most relevant categories overseen by Business Partners. So far, category managers have been organized based on macro categories as per supply market and corresponding third-party spend.

“Business Partners will be organized according to the business structure and areas of highest impact, beginning with partnerships in which they manage a select group of key stakeholders along with the few, highly relevant categories and top suppliers associated with them. A small and highly skilled analytics and intelligence team could support them.

“The strategy too needs changing. Too often the strategy is quite traditional, and we often miss clear links between the analysis and the strategic recommendations. It does not really answer the true business top challenges and priorities, and it generally focuses far too much on supplier consolidation and cost and cash optimization. We could reverse this approach, starting with a Category Canvas. The strategy comes first, while analysis fills the building blocks. However, the most important step here is basic business understanding. You need to map the stakeholders, business needs and priorities related to the category. 

“Such analysis should probably include risk management, buying channel strategy, digital and technology understanding, innovation and sustainability. It also should be future-looking when appropriate. We spend a lot of time on historical data. So, if we continue to have bad data (despite the promises of AI), it is better to try to clean inaccurate data related to the future. CatMan needs insights more than data; we need the ‘so what’ after the data. This requires extra effort, but it is how we get the full value of category management. One benefit of that effort is that it helps with storytelling, which is something that Procurement is not always good at. Procurement people are very good at explaining their own world, job, tools, analysis and recommendations, but they often lack good storytelling to get the real buy-in from the business.

“Even with all this, we must remember that our current context is defined by uncertainty. Category strategies must be easy to adjust when internal or external conditions change. This, is the next big-ticket item.”

How can tech help?

“Digitalization is not optional. It is a great enabler of Catman’s evolution. Digital CatMan platforms can bring a standardized methodology, integrated external market intelligence and better summaries of information. AI will soon provide recommendations, automate analysis, predict trends and generate story lines. This leads to faster strategy creation and more consistent outputs. 

“In a nutshell, it can align, alleviate, accelerate and automate. But it cannot and won’t replace the category manager. Only humans can embed internal context, manage confidentiality, and make final decisions. It’s not about competition; it’s about 50% human and 50% machine collaboration.”

What does the future look like?

“In the future, CatMan needs to improve:

• Make or buy business cases 
• TCO considerations, even if we don’t and can’t do it in a perfect way 
• Value chain or supply chain mappings (Tier 2+ visibility) in Direct Procurement 
• Better connect the category strategy to SRM programs  

“Procurement’s future depends on people who are passionate and knowledgeable. Proactive category management is difficult, misunderstood and often misapplied, yet it remains a powerful methodology when combined with SRM, digitalization and human collaboration. The world is moving fast. Procurement and CatMan must move faster.”