Ted Weyn, Managing Partner
What is more valuable to a sourcing/procurement organization, Category Managers with strong sourcing expertise, or individuals with strong domain (direct experience and knowledge from the category/industry that they manage) expertise?
As we continue to work with organizations in both procurement transformation and category management outsourcing, we are seeing an increased desire to have category managers who come from the industry for the category in which they will be assigned to manage. There seems to be an accelerated value creation and a decreased learning curve for these “domain experts”. The “hire a thief to catch a thief” approach seems to be returning great dividends for companies who are recruiting and deploying such resources.
Question: “Would it take me longer to teach an industry expert sourcing or a sourcing expert a specific industry”?
In certain indirect services categories we are seeing companies hiring travel industry experts to manage the travel category; hiring print services professionals from Xerox, Canon and others to manage print services; etc. The value comes when the “expert” intimately understanding the suppliers business formulas and profit areas and can leverage the knowledge in a meaningful and balanced way to the suppliers. This is not about gaining supplier cost elements so a company can “squeeze” the supplier on price. It’s also about providing insight as to how best to achieve savings given the suppliers cost and margin structures; how to managed suppliers needs based on intrinsic value; what KPI’s to consider, what value is the company to the supplier, and how to make the relationships more strategic.
Another value of the domain expert is in the difficult to manage and impact categories like legal and marketing. These require longer term approaches for procurement to penetrate effectively but can have accelerated results when the industry domain expert is brought to the equation. We’ve all experience the “leper syndrome” of departmental heads screaming down the hallways when procurement calls a meeting to discuss their expenditures with them. Visions of budget cuts and lost supplier relationships makes the entire department breakout in a cold sweat. This is a big exercise in change management for procurement but if executed properly and in delivering industry domain informed resources, can identify areas of value creation before anyone calls for an expenditure review meeting.
Invest in the department. Lend them your expertise as a resource for a limited time. Allow them to become a trusted adviser. You’ll be amazed what the department will share with you and your team if they know you’re there to help them get more for less or more for the same. The best case studies in marketing, legal, call center, and other tough departments are where procurement brought value first, savings second.
Ironically, the same thing the sales people who are calling you each day are trying to do in becoming a “trusted advisor” is the same things you need to do to the lines of business to get them to afford you the opportunity to help them. Maybe the consumer needs to learn from the supplier.
Share with us your thoughts and experiences.