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Do you want your procurement organization to understand 200 marketplaces all at once?

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by Norman Timmins
14 July 2015

In the previous blog, I had written about how the globalized nature of business and the rise of disruptive players are forcing businesses to move quicker -- at the speed of the marketplace.

Procurement Organization to Understand 200 MarketplacesAs procurement shifts from being a transactional to strategic function, the key question is can it help the company gain competitive advantage? The answer is yes: procurement can enable businesses to keep pace with the change.

Now we all know that the business complexity is increasing by the day as the world gets interconnected more and more. We no longer talk about regional supply chains; it has already gone global.

One of the key ingredients for procurement organizations to keep pace with the change is to hire top talent. This is easier said than done. An industry acquaintance was looking for an experienced late-stage clinical trial procurement specialist in Spain, who is fluent in Spanish. Additionally, the candidate should have analytical skills and also be able to understand the marketplace on his/her own. Would a company be always successful in finding such niche candidates across the entire organization in multiple categories? I doubt.

Another factor for procurement organizations to stay ahead of the competition is to keep track and manage developments in the marketplace. And since procurement touches markets north and south of a company's supply chain, procurement managers are expected to know all that is happening across the supply chain. This proves to be a very big challenge.

Expecting one company to understand its own market place isn't easy but asking procurement at once to understand 200 marketplaces in a constantly evolving environment is too much of an ask.

It isn't easy to keep track of what's happening around the globe all by oneself. Instead, one needs external feed of up-to-date market intelligence.

What then is the right role/profile for category managers and what you want each one of them to be doing? Ideally, they would need to spend more time in engaging with their suppliers, manage contracts and make use of market intelligence that is provided by a focused third party in order to drive strategic value for the organizations.

Increasing business complexity requires us to be focused and requires us to specialize in what we do best.

If category mangers end up doing all the research on their own then their time won't be efficiently utilized. By freeing up their time to focus on activities that bring about business value, category managers can focus more on what is important instead of attending only to the urgent.

Also, by equipping them with suitable market intelligence, category managers can develop both analytical as well as strategic depth, together with executional efficiency and effectiveness.

Category managers are increasingly best placed at understanding stakeholders and also in driving organizational change. The key to success lies in freeing up the bandwidth of category managers so that they become the most effective stakeholder managers and internal change agents.

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