March 11, 2022

1. Enables the business to operate collaboratively 2. It ensures effective supplier relationships 3. It leads to better quality 4. Team work and communication 5. Streamlining business processes 6. Brings about innovation from the supplier base. 7. Helps to identify opportunities for cost saving.

Although small deals are becoming increasingly common, the single-source mega deal is still very much in demand due to a variety of reasons, including less administrative effort in dealing with only one supplier. A single-source procurement is also greatly beneficial to a supplier and end users should expect to share in that benefit Multi-sourcing As end users continue to opt for a number of smaller, flexible and short duration deals with a number of suppliers; governance and end-to-end integration will continue to play key roles in achieving the overall business value. A culture of collaboration is also encouraged between large suppliers and SMEs rather than blame. Gain Share In today‘s difficult economic climate, end users are under growing pressure to find new ways to cut supplier costs without adversely affecting business performance. A gain share model is fast becoming the solution for many who are seeking cost-effective ways of purchasing new products or services. Mutual The Government‘s recent ‗Rights to Provide‘ scheme allows entrepreneurial front-line staff to take over and run services as a mutual, co-op or joint venture by partnering with the private and third sector. Whilst no one can downplay the fundamental role capital plays to fund any service – it is these kinds of collaborative strategies that can make a key difference to organisations and the role of outsourcing in delivering services in the Big Society. Joint Venture Since outsourcing resembles a partnership or joint venture, many outsourcing contracts have been structured as joint ventures. The rationale for outsourcing joint ventures in these times of austerity is often financial, however partner expertise often results in an increase in innovation, technology and process improvements. Social Impact Bonds Social Impact Bonds are growing popularity and provide an innovative way of attracting new investment around outcome based contracts that benefit individuals and communities. Private investment is used to pay for interventions, which are delivered by service providers with an proven track record. Financial returns to investors are made by the public sector on the basis of improved social outcomes. If outcomes do not improve, then investors do not recover their investment. Offshore With more markets beginning to embrace offshoring, multinationals are looking to consolidate vendors and geographic sites into two or three multi-lingual hubs in order to gain economies of scale, gain greater consistency and improve vendor management. Service Integration As companies continue to turn to multi-vendor models, there is a growing need to further mesh services together whilst maintaining the discipline that allows for a ―plug and play‖ approach. The introduction of cloud offerings has also added to the demand for flexibility. Service integration is the key to transforming the component service from being disjointed and focused into being business relevant, enabling and seamless Shared Service The advantages of shared services are clear. Different ways of delivering services, which have arisen purely as a matter of chance, can be harmonised, helping remove the problem of the ―postcode lottery‖. Best practice can be shared for the benefit of all. Those who only use a service occasionally can call upon a central resource when needed. Plus, staff can be freed up to concentrate on what adds most value. Sharing services does not necessarily mean that fewer staff are required overall – simply that these staff can be freed up to do other things, of greater benefit to the public. Robotic Automation The implementation of a ‗virtual workforce‘ can significantly shape the nature of back office service delivery. Robotic automation can have the effect of dramatically reducing costs as opposed to alternative service delivery approaches. Transformation can be delivered rapidly, with the potential to robotise back office services within a period weeks or days compared to other less rapid and agile systems.

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Category managers can come from a variety of backgrounds such as marketing, buying, or insight, and there is not necessarily one ‗typical‘ personality that will succeed. Some category roles are a lot more analytical, involving a lot of time dissecting the insight, whilst others are more customer-facing which will have less emphasis on number-crunching and more focus on relationship building and negotiating. However there are some overall key skills/traits that all successful Category Managers should possess… • Competitiveness: Category managers will often have a competitive nature, and will thrive on being responsible for a specific product performing well and beating the competitors. There is fierce competition amongst suppliers to persuade retailers that their products should be in pride of place within stores. Retailers will consider what the market demand is for various products, how much promotion is being done for them, and the profit margin for each of them – category managers must be aware of all of these aspects of not only their own products, but also those of their competition. • Curiosity: A category manager will always be asking themselves why the consumer is doing what they are doing; so having a natural curiosity for understanding shopper behaviour is a great trait to possess when it comes to this type of role. • Analytically Minded: The ability to interpret and analyse data, then use this insight to develop strategies and tactics which will influence consumers is a skill a good category manager will possess. The most successful category managers will have an analytical approach and way of thinking, and a love for quantitative data. • Strong Communication: Not only does a successful category manager need to be able to understand and interpret data, they also need to be able to communicate and present these findings to various stakeholders. The category manager will have a lot of influence in many areas including: product range and distribution, promotional strategy, space and merchandising etc. So, they will often have to dictate, both to their own marketing people and to the retailer themselves, what needs to be done. Within category management there is also the need to be persuasive, build relationships and negotiate – thus being a strong communicator is skill that you‘ll almost always see in a category management job description. • Creativity: As with many other marketing roles, creativity is a skill many hiring managers will look for when recruiting for category positions. Being a creative thinker is important, as the ability to come up with exciting and innovative marketing plans to help set their category apart from the rest is often a key part of the category manager‘s remit.

Buyers: Definition: A Buyer is an individual tasked with managing the purchasing process for a good(s) or a service(s) for a company. This includes running the purchase order with a set supplier base. An easy way to describe it is that a Buyer is not tasked with figuring out what to buy or who to buy it from, but how to buy it. Skills required to be a buyer: attention to detail, strong customer service skills, analytical skills and strength with numbers. Buyers do not need to necessarily have strong understanding of the details of what they buy or the business needs underlying their purchasing activities. Category Managers: Category Management is a strategic approach which organises procurement resources to focus on specific areas of spends. This enables category managers to focus their time and conduct in depth market analysis to fully leverage their procurement decisions on behalf of the whole organisation. The tricky thing is that there are actually at least two different types of Category Managers, depending on the industry: Retail Category Managers and Indirect Category Managers. Retail Category Managers: A Retail Category Manager is a Procurement Professional responsible for a certain category of goods at a retailer (or wholesaler). For example, a supermarket chain may have a Category Manager in charge of produce. They‘re in charge of purchasing those goods from suppliers for sale on store shelves. However, what separates these individuals from Buyers is that Retail Category Managers often have a sales and marketing component to their jobs. They need to help develop the overall retail strategy for that category of goods by looking analytically at current trends, seasonality and other factors – almost like a demand planner. A Retail Category Manager requires lots of foresight to be able to anticipate future trends for a particular category. Indirect Category Managers Definition: This role is a very specialized Procurement role in a particular category such as IT, Travel, or Professional Services. Unlike a buyer role, a category manager is strategic, with oversight over the sourcing and procurement process. They‘re managing the company‘s vendor relationships for the particular category. They often need to have specific expertise in their category (for example an IT category manager might have an IT background) because they‘re tasked with deciding what to buy to help the organization achieve its strategic goals – and helping implement those purchases. Their job also involves interaction with a number of internal stakeholders. Skills required to be an Indirect Category Manager: Sourcing, RF(x) expertise, contract negotiation, strong communications and relationship building skills, ability to manage vendor relationships, an understanding of service level agreements.

Principles and Practice of Marketing Principles and Practice of Marketing July 2013 Principles and Practice of Marketing Nov 2013 Principles and Practice of Marketing July 2014 Principles and Practice of Marketing July 2015 Principles and Practice of Marketing July 2017 Principles and Practice of Marketing Nov 2018 Principles and Practice of Marketing July 2019

Category managers can come from a variety of backgrounds such as marketing, buying, or insight, and there is not necessarily one ‗typical‘ personality that will succeed. Some category roles are a lot more analytical, involving a lot of time dissecting the insight, whilst others are more customer-facing which will have less emphasis on number-crunching and more focus on relationship building and negotiating. However there are some overall key skills/traits that all successful Category Managers should possess… • Competitiveness: Category managers will often have a competitive nature, and will thrive on being responsible for a specific product performing well and beating the competitors. There is fierce competition amongst suppliers to persuade retailers that their products should be in pride of place within stores. Retailers will consider what the market demand is for various products, how much promotion is being done for them, and the profit margin for each of them – category managers must be aware of all of these aspects of not only their own products, but also those of their competition. • Curiosity: A category manager will always be asking themselves why the consumer is doing what they are doing; so having a natural curiosity for understanding shopper behaviour is a great trait to possess when it comes to this type of role. • Analytically Minded: The ability to interpret and analyse data, then use this insight to develop strategies and tactics which will influence consumers is a skill a good category manager will possess. The most successful category managers will have an analytical approach and way of thinking, and a love for quantitative data. • Strong Communication: Not only does a successful category manager need to be able to understand and interpret data, they also need to be able to communicate and present these findings to various stakeholders. The category manager will have a lot of influence in many areas including: product range and distribution, promotional strategy, space and merchandising etc. So, they will often have to dictate, both to their own marketing people and to the retailer themselves, what needs to be done. Within category management there is also the need to be persuasive, build relationships and negotiate – thus being a strong communicator is skill that you‘ll almost always see in a category management job description. • Creativity: As with many other marketing roles, creativity is a skill many hiring managers will look for when recruiting for category positions. Being a creative thinker is important, as the ability to come up with exciting and innovative marketing plans to help set their category apart from the rest is often a key part of the category manager‘s remit.

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Consider these four major consumer-based category roles: • Destination category: this is a category with which the retailer wants to profile himself towards his target consumers and differentiate himself from competition. It aims to place a retailer as primary category provider and helps define the retailer as the store of choice by delivering consistent, superior target customer value. ―I go to this store because they offer the best selection of … . This store offers better value in this category.‖ • Routine category: category that aims to provide consistent and competitive value for the consumer‘s everyday needs and place the retailer as one of the preferred category providers. It helps develop the retailer as the store of choice by delivering frequent, competitive target consumer value. ―I buy these products all the time for my daily needs so I look for the store that offers me the greatest value and consistent shopping experience.‖ • Seasonal category: this category refers to products which are not purchased on a regular basis but occasionally. Seasonal categories play a secondary role in delivering profit but can be used by a retailer to differentiate himself from competition during a certain period of the year. • Convenience category: a convenience category completes the retailer’s assortment of products that are not usually found on a routine shopping list. This category aims to guarantee a one-stop-shopping and plays an important role in margin enhancement

Category identification refers to selecting the items that should be included in a particular category as well as selecting what categories that should be prioritized. A category encompasses a group of similar items that are required for specific business activities of the firm. A category can also be defined as ―a group of coherent products or services, bought from the supply market that are used in our company to satisfy internal or external customer demands‖. Examples of categories are casting, bottles, parts, sheet metal, and tires. The most important characteristic of a category is that it must mirror how the individual marketplaces are organized. The two definitions provided are not necessarily contrasting views, but the focus is slightly different. It can be complicated to find categories that truly mirror the individual market places, however. For instance, a company might be tempted to choose ‗travel‘ as a category based on that there are travel agencies that are offering travel solutions in all forms. But traveling is not a real market, and agencies are rather intermediaries who facilitate communication between its customers and multiple real markets: ‗air travel‘, ‗hotels‘, ‗car rental‘ etc. A thorough spend analysis is the starting point for a good category identification. However, the complexity of many decentralized purchasing organizations can make it a complex and long-lasting project to get good quality data. For instance, a major petroleum company spent some six months just to get a picture of what they bought at different business units. Common hurdles are low data quality and different IT and coding systems across business units. It is not unusual even for large companies to have to ask their major suppliers what they are buying in order to get even a sufficiently good picture of what they are buying. In fact, few large corporations have fully integrated information systems where they can access data on group level. Growth through acquisitions will elevate the complexity in spend integration further. Good quality data that can be aggregated over all business units is not enough however, but the data must be coded so that it can be sorted by means of a spend cube: per category or item, per supplier, and per cost center. When spend data is available, companies can use the Pareto principle to sort the data and focus their categorization on the 80 percent of the spend that are with 20 percent of the suppliers. Furthermore, companies have to choose how much of total spend they will aim to categorize. Total spend can be categorised in the three groups: ‗categories‘, ‗non-addressable spend‘, ‗and rest of spend‘. Non-addressable spend is spend that is almost impossible to influence, like tax or government-set license fees. Rest of spend is the part of total spend that is not categorized because it is not economically viable. MRO goods, commodities, and indirect materials are the most preferred item groups when companies start a pooling initiative. In addition, leverage and routine categories are most likely to be prioritized from a portfolio perspective, using the Kraljic model. Although portfolio models are frequently and successfully used in many purchasing activities, the approach results in categories substantially different from what is normally used in industry. Both current and future spend should be included in an analysis in order to create a comprehensive picture of the spend on a particular category. This is particularly important for categories with a high variation in spend over time.

Purchasing‘s resources must be put to the best possible use by allocating resources to categories with the highest potential for value generation. Global purchasing synergies can broadly be divided into economies of scale, which relates to pooling of volume in order to enforce purchasing power, reduce number of suppliers or standardize requirements; economies of information and learning, which refers to sharing knowledge on suppliers or new technologies; and economies of process, which refers to establishing a common way of working and representing worldwide one line of communication towards suppliers. All of these potential synergies are important to consider when selecting categories to prioritize when under resource constraints. However, many purchasing organizations tend to focus mostly on economies of scale and overlook the other two. Category Prioritization Matrix Companies must be able to select and prioritize between categories in order to be able to allocate resources to the categories with the best value-generation potential. One common method for selecting categories is to use the Category Prioritization Matrix (kraljic model). Categories are evaluated on their cost saving potential on the y-axis and their ease of implementation on the x-axis. The upper right hand corner quartile corresponds to a set of highvalue projects that should be assigned cross-functional teams first. Projects are carried out in different waves, starting in the high-value quartile. Common criteria for evaluation of cost savings potential includes: potential to replace a customized solution with an off-the-shelf solution; possibility to change from buying individual components to buying modularized systems; mitigate an unfavorable supplier-buyer power imbalance; and renewing contracts that have not been renewed for several years. Ease of implementation can be measured by the expected resistance in the organization of changing suppliers for a specific category; the internal technical expertise on the specific category; and the supply market expertise for the particular category. There are other types of opportunity analysis tools for prioritizing categories, but they all have very similar characteristics. Categories around MRO items have been found to be the most common product categories used.

Access to relevant purchasing data is critical for successful category management or purchasing integration overall. In a category management environment where the main objective is to identify and transform commonalities in purchasing requirements across business units and geographies, it is critical that there is basic data supporting those operations. All spend should subsequently be able to be aggregated across all business units and geographies. Purchasing spend data should be analyzed by means of a spend cube: per supplier, per category, per internal budget holder. Best-in-class companies are even able to present data based on what suppliers offer.