The Procurement Category Manager role has been the backbone of the procurement profession over the past 20 years. In larger organisations especially, it’s has been a symbol of procurement’s metamorphasis from an operational to more professional, strategic focus.
At the same time, procurement technology has become more affordable and easier to use. The number of procurement tools on the market has of course multiplied too, especially in the last 5 or so years. In addition, supply chains and risk management have become more complex, requiring a less siloed and more joined-up approach to managing strategic suppliers.
So, how will this impact category management?
Is the procurement category manager an endangered species? Or does the role just require evolution and some fresh ideas to remain relevant?
I believe that category management can survive, prosper and become indispensable. But, as we’ll explain, this will only happen in forward-thinking businesses. And it’s inevitable too that fewer category manager roles will be required in future.
What is the role of a procurement category manager?
Category Management in procurement is inherently a strategic role. The job is to essentially manage all aspects of a category, commodity or area of spend within an organisation.
For example, a Category Manager for non-ferrous metals will be the company subject matter expert on all commercial aspects of this area of spend.
He or she won’t need to be a metallurgist. This expertise will typically be elsewhere within the business. In the testing or quality departments, or in the laboratory, for example.
But the Category Manager should understand all influences on pricing and commerce. This would cover knowledge of the metals markets, supply, current and future demand, geopolitical factors, transportation challenges, conversion costs, opportunities and threats facing the industry, knowledge of the supply base, and so on.
If we look at an average procurement category manager job description in large corporations, the role usually requires the following skills and objectives:
- Stakeholder management
- Influence and persuasion
- Negotiation
- Knowledge of the company’s ERP system (SAP, Orcale, MS Dynamics being the major ones), as well as maybe experience with one of the legacy Source-to-Pay suites such as SAP Ariba, Coupa, Ivalua
- Analytical capabilities
- Strategic thinking
- Business and financial acumen
- Excel and Power Point (ugh)
- Supplier management
- Strategic sourcing
- Driving change
- Delivering annual cost reductions
The challenge is that the role doesn’t usually describe these requirements in the job description:
- Resolving invoicing issues
- Responding to delivery and quality issues
- Preparing reports
- Cleaning data
- Preparing Power Point slides
- Booking travel
- Constructing and updating spreadsheets
- Administrative support for compliance procedures
And yet, as anyone who has worked in a Category Management role in procurement knows, these are often an integral part of our day.
What’s the difference between purchasing manager and category manager?
And herein lies the problem. The latter list comprises of tasks which could, and should, be either automated or performed by an administrative job role.
Many procurement category manager roles end up being consumed by what would traditionally be viewed as purchasing management.
Whereas category management is strategic in its function, purchasing management is more focused on the day-to-day operations of the business. This can also include aspects of purchase-to-pay (P2P). In manufacturing businesses, it also often deals with operational issues in supply chain and logistics management.
What is a typical procurement category manager salary?
Now, let’s consider the average category manager’s salary.
It’s a mid-senior level role. As an example, here are some stats on procurement category manager salaries in the UK, the US, Australia and Germany.
This is not the type of role which should be spending between a third and a half of their time on administrative, operational or non-value added tasks.
If this workload could be eliminated or delegated to a junior team member, it most definitely should.
But even better, what if it could be automated by technology?
Whether you consider either delegation or automation, getting rid of administrative, operational, or tactical work from a Category Manager’s inbox should be a top priority.
Let’s consider a factory process that was producing more than a third in waste. There would be lean consultants crawling all over it, frantically trying to remedy the problem. And yet, this “white collar waste” within procurement is overlooked in almost every business.
Why? I wish I had the answer. It seems like madness, but it’s there for all to see.
What I can say, however, is that tech is going to have a massive impact.
Why procurement tech will reduce the demand for category managers
Chief Procurement Officers (CPOs) rarely have the necessary resources to deliver what the business expects of them. While Sales & Marketing teams are well-staffed and resourced, procurement departments are very lean.
And while digital procurement tools have been around for years, we’re experiencing a rapid period of change. These changes will enable CPOs to plug their resourcing deficiencies, while also being able to reduce headcount.
Two factors especially will ensure that tech becomes more widely adopted.
1. Cheaper and more user-friendly procurement tools
Procuretech has been around since the late 1990s, when we saw the advent of e-sourcing software. In the late 2000s, we then saw the introduction and widespread adoption of the legacy Source-to-Pay suites.
Robotic process automation (RPA) and optical character recognition (OCR) are not new technology. Indeed, many S2P suites have these built in. The limited adoption – and thus expansion – of digital procurement tools has been mainly constrained by two factors.
Firstly, the historically high cost and long implementation cycles of procurement software. This meant that procurement tools were only within reach for enterprise organisations.
Secondly, legacy procurement tech is complex and not very user-friendly. It takes a long time to implement, and often requires a lot of customisation for it to work properly.
Best-of-breed procurement software that’s both user-friendly and easy to configure can now be purchased for a few thousand dollars. If you’re leading a smaller procurement team, digitisation of P2P, sourcing and contract management is well within your grasp.
Ten years ago, it wouldn’t have been.
This will allow automation to reach more businesses, and free up category managers to spend time on more strategic work. Their output will increase, meaning as a CPO, you’ll be able to deliver more with fewer resources.
2. Increasing use of LLMs into procurement business processes
Large language models (LLMs) – i.e. the tech that powers ChatGPT – has been a game-changer. It’s drastically cut the amount of time a procurement category manager needs to perform certain tasks.
I’ll give two quick examples to show that even just two years ago, these tasks would have required a lot more time to execute.
Contract authoring
A basic contract template or outline can now be generated in draft form in less than an hour. By intelligently prompting your favourite LLM tool, you can now get a coherent document in no time.
Perfect? No, but a good, solid starting point.
Previously, this would have taken days, or probably even weeks. How many of you have legal departments who respond immediately to contract support requests? All of this means less category manager time spent waiting and chasing.
Generating RFPs
One of my biggest time sucks in my days as a Cat Man was writing RFP documents, tailored specifically to whatever it was that I was sourcing. It would typically take me a couple of days to put together everything I needed for an RFP. And that was assuming that my stakeholders gave me a decent material specification or scope-of-work.
Just like the contracts example, with a little trial, error, refinement and finesse, your team can use LLMs to write your RFPs.
Yes, you’ll need to modify and expand on them. ChatGPT is not going to suddenly become a category expert in machined parts tolerances or marketing agency procurement.
That’s the whole point. It’s there to do the heavy lifting for you. Which then leaves your team’s category expertise, communication skills and clarity to make it relevant to your targeted suppliers.
Why the best procurement category managers will thrive
All of this means that there will be fewer category managers in future.
If tech can automate or reduce the need for manual work in many areas where category managers are currently engaged, there will be a need for fewer of them going forward.
A future procurement team will contain a more diverse set of roles than we have historically seen. With that will come the transition of category managers into truly strategic roles.
Those who are frustrated in their current roles with all of the operational firefighting, data crunching, and non-value-added tasks are about to feel way more job satisfaction.
Tech can:
- Guide you through and then design your category strategies.
- Help you write RFPs and Contracts in a fraction of the time.
- Handle basic negotiations for non-complex, non-repeatable spend, freeing up your team’s time to drive tangible savings or wider value.
- Provide consolidated market intelligence on raw material costs or supply chain disruptions.
- Track changes in PO status and automatically update ERP systems
For years, tech has already been:
- Automating simple, repeatable procure-to-pay (P2P) processes.
- Hosting e-sourcing events
Fewer category managers will be needed in future because of this evolution. However, it most certainly does not mean that the Category Manager role will disappear.
Top-quartile Category Managers will be highly in demand. Under performers will either need to up-skill or consider transitioning into a different role.
Think about what has happened in the writing profession with the advent of ChatGPT.
The top 10% of writers are seeing skyrocketing demand. Those who can write engaging content or persuasive sales copy can command top rates for this precision skill.
The bottom 90% of writers have seen their jobs become automated in less than two years. AI has wiped out a whole industry of outsourced content “farms” in low wage countries.
The reason? ChatGPT and other large language model (LLM) applications can now write better content.
How to stay relevant as a Category Manager
So, we’ve established that category management roles in procurement will remain alive and well, but there will likely be fewer of them.
What if you’re a Category Manager reading this and are concerned?
I’m sure most of you are familiar with the pareto principle.
How can you ensure that you become one of the top 20% of category managers who will be in demand, rather than the 80% who could become irrelevant?
- Learn about how procurement technology can be your ally, rather than treating it as the boogeyman.
- Develop your soft skills and become effective at internal communication. Nobody is interested in 15-page boring processes or long emails. Be brief, and be gone. Your stakeholders are busy.
- Understand the needs and goals of the business, and how those align to your work. Procurement doesn’t sit in a silo, and is irrelevant in its role as the “compliance police”.
- Embrace a more entrepreneurial mindset. Approach category management like a business owner would, and think of pragmatic, unconventional ways to solve problems.
If you’re considering the first one, I recommend you check out our free, introductory Digital Procurement 101 Course.
Likewise, if you’re a CPO or Head of Procurement, I’d recommend this to all of your Cat Mans.
This gives you a basic overview of procurement technology, and you can watch it on your lunch break or morning commute.
Category management isn’t dead.
But technology and supply chains are changing it. Organisations must recognise this and adapt how they staff their procurement teams to remain relevant.
