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- September 24, 2015
What makes a great category manager? It’s not necessarily category expertise. Few category managers have the luxury of managing a single category they can know in such minute detail that they are experts. Most manage multiple categories, maybe related but usually not. The best category managers are those that have the ability to get up to speed quickly on just about anything they’re asked to source. The true expertise is the ability to become expert enough.
To do that, you have to be creative, curious and collaborative. You have to be willing to learn, to talk to a lot of people, build relationships, ask a lot of questions and dig deep. And you have to apply those skills to both supply and demand. This is what separates the best from the rest.
Most category managers have got the supply side covered. They know all the ins and outs of the market and who’s who among the vendors. But sometimes they focus so much on market and pricing they forget to look inside and understand how whatever it is they’re sourcing is used within the company. Looking inside helps you ensure that what you’re buying meets the needs of end users. It can also lead to innovation and savings. Here are some examples.
I once had the opportunity to watch a colleague as he sourced security guard services for a large retail chain. He didn’t know anything about the category, so naturally he read up on the market to understand the different guard services companies. How did they segment themselves? There are some very large ones and some smaller regional companies. So how is all that structured? How does that structure affect pricing?
He talked to a lot of guard companies and a lot of people, down to the receptionist that sits at the front desk and interacts with the guards, to really understand how the industry works. But he didn’t stop there. He went out and talked to store managers, the loss prevention team and every other team that would touch guard services. When a lot of sourcing people I’ve known probably would have stopped, he dug deeper.
What he learned was that what stores needed depended on crime in the area, so that also became part of his research. He didn’t go too deep; the company had too many stores for that. What he did was segment the stores by location – big city, suburban, mall, etc.
He realized he didn’t need to source guard services for every store. Not all stores needed guards standing there. In a suburban area, cameras could be enough. They could even be fake cameras. In some locations just the perception of surveillance could be enough to reduce theft. Based on all he learned about both the market and internal needs, he was able to put together a much more cost-effective sourcing program that still met the needs of each type of store.
In the bag
The best sourcing professionals also treat suppliers as partners, rather than adversaries. Sourcing packaging, my team and I first researched the market. Then we invited a bunch of packaging vendors to come in for a trunk show to show us what was new in the industry. It was a fun day, and we also got some new ideas: We could save money by using new stronger, thinner material for our plastic bags, and by reducing the size of the print area on our paper bags.
But we didn’t stop there. My team and I went out and sat in stores and watched the associates use bags. We noticed that when they ran out of small bags, they would put things like socks and underwear in big bags instead of going back to the stockroom and getting a new box of small ones. The big bags cost more, and over thousands of bags the cost adds up.
We put small plaques under the cash registers--not where the customers could see them--that showed a picture of each size bag and the cost to the company. We also did some training to raise awareness of the cost of using the big bags unnecessarily. That combined effort helped cut waste and we never would have been able to do that unless we’d taken the time to study actual usage.
Find the expert
Not every category will lend itself to cutting demand, but understanding demand should still always be part of that process of becoming expert enough. It always leads to a deeper understanding of the business, and often leads to new ideas and savings on what you do need.
And that’s the end goal of any sourcing program – spending money as efficiently as possible. Even though sourcing implies buying and a supply side orientation, the best sourcing professionals apply equal rigor to the demand side.
One day they might be sourcing guard services. The next day it will be HVAC maintenance. It really doesn’t matter what the category is, or whether you’re studying the supply or demand side. The key is not to be the expert, but to know where to find the experts. It’s talking to them in an intelligent and collaborative way, asking enough questions and digging deep until you become expert enough.