Category Management #CMM Protips below!
Can the Non-Addressable Spend have Potential Opportunity to Source?
Addressable Categories: Consulting, Advertising, IT Software, Facilities, Capital
Non-Addressable: Taxes, Utilities, Transfer Pricing, Salaries, Benefits
But are these really not-addressable? (And yes, by definition, it’s literally that.) But, why can’t you take a second look at their status? You can negotiate your utilities you owe as a single person, why can’t an entity? And are salaries and benefits really non-addressable when you consider back-fills and changes in the organization?
Pro Tip 1 – Challenge the status quo – for those who are part of organizations that have been sourced, sourced again, and then re-sourced… look outside your usual suspects. See how relationships, ideas, and other ‘outside the box’ ideas could change a categories’ status. Ask questions as moving the organization headquarters location be worth the change in TCO?
Pro Tip 2 – Look for other ‘big ideas’ that could impact these categories such as zero based budgeting, new AI technologies, etc.
Protip #1 – Not every organization will have the same category structure due to size and spend (and that’s okay!) Therefore, you should always assess the structure before moving into the sourcing phase (See the three arguable levels below).
Protip #2 – Since there is no hard and fast rule, you must take a look at everything that can help support your choices, such as:
- Internal Spend Levels / Budgets per Category
- Number of Stakeholders
- Overlap between Categories (ex: Meetings / Travel is typically outside S&M)
- External Supplier Capabilities (one or mlutiple categories at what levels)
- Previous strategies/successes and failures at each level
- External Benchmarks and Best Practices
- UNSPSC – Classificiation
Protip #3 – There is no right or wrong! So don’t get bogged down on aligning with external sources, companies or benchmarks. It may help with the implementation of sourcing technology (spend analysis, etc.) but it’s not useful if you are left with way too many or too little categories defined.
#CMM Protip 1 – These are all questions, you should as PRIOR to starting a new project
- Do you have ALL major stakeholders aware/involved?
- Are project goals and milestones clearly defined?
- Are all requirements clearly documented and agreed upon?
- Do you have the proper resources/support and are they committed to seeing the project succeed?
- Do you have a communications plan for the duration of the project?
- Are there any potential process improvements that might impact the project?
- Are there any risk involved? If so, is there a plan in place to address this?
- If budget is needed, has it already been approved by management/finance?