Hunter Campbell’s Supply Chain Salary & Employment Forecast Series profiles roles within the Supply Chain job family including jobs in demand, salaries, and employment prospects.
In our fifth instalment, the role of Procurement Category Manager is in the spotlight.
Clarity first: Procurement vs Buying
Procurement is the most commonly misunderstood area that Hunter Campbell specialises in. Terms such as buying, purchasing, strategic sourcing, contract management and more are often used in different contexts. So to understand the purpose of a Procurement Category Manager, we first need to understand what Procurement is and how it differs from Buying.
In simple terms, Procurement is a strategic approach to sourcing the goods and services an organisation needs efficiently, at a good price and with favourable terms and conditions.
Buying, or Purchasing, is responsible for buying the goods and services from suppliers and vendors that are identified through the Procurement process. An easy way to describe it is that Buying is not tasked with figuring out what to buy or who to buy it from, but how to buy it.
Purpose of the role
Category Management is a core function of Procurement. The Chartered Institute of Procurement & Supply (CIPS) describes Category Management as a strategic approach to Procurement where organisations segment their spend into areas that contain similar or related products to enable focus on opportunities for consolidation and efficiency.
There are at least two different types of Category Managers, depending on the industry:
1. Retail Category Managers
A Retail Category Manager is 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. This role would take the lead in purchasing those goods from suppliers for sale on store shelves. Retail Category Managers often have a sales and marketing component to their jobs. They help to 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.
2. Procurement Category Managers
This role is a very specialised Procurement role in a particular category such as IT, Travel, Professional Services or Direct Categories (goods needed for production such as ingredients, materials or packaging).
Procurement Category Managers have oversight of the sourcing and Procurement process as well as managing relationships with vendors in a 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 organisation achieve its strategic goals.
The job also involves helping to implement purchases and liaising with internal stakeholders, to ensure business requirements are being met.
Confusion can arise as often a Buyer will have a Category Manager job title, even if their role is purely transactional. But unless the individual has experience managing the process and helping to determine the company’s strategic vision for that category, they are not truly a Category Manager but a Buyer or Purchasing Specialist.
Both Retail Category Managers and Procurement Category Managers employ high levels of strategy to capture supplier value and consolidate the suppler base. Category management uses in-depth market insight to drive value and evolve categories in real time as the market changes.
Key skills and qualifications required
Procurement is constantly changing and evolving. Category Management professionals need to make sure they have the key skills required to take themselves and the profession to the next level.
Last year saw a shift in thinking about Procurement and generally a reprioritisation to risk mitigation. Due to global Supply Chain disruption, companies are less focussed on cost than perhaps they were previously and are more focussed on ensuring a reliable supply of goods and services. This might involve sourcing new products and suppliers, looking at different Supply Chain solutions or changing the Procurement strategy to include more local suppliers. Either way, Procurement professionals are at the forefront of research and decision-making.
It goes without saying that there are key technical and communication skills required to be successful: sourcing, RF(x) expertise, contract negotiation, strong communication and relationship building skills, the ability to manage vendor relationships (influencing and negotiation), analytical skills and an understanding of service level agreements. Additional skills and experience in P2P, contract management, governance and more could be required depending on the role and Category Management area. You can find out more about Category Management, and the skills required by visiting the CIPS Category Management Guide
There are five key skills that are in demand for 2021:
1. Risk Management
As such it is no great surprise that risk management is the number one skill we are seeing in demand for 2021. When it comes to the Supply Chain and global trends, it’s time to think the unthinkable and be as prepared as you can be for anything that comes your way. This isn’t just about the external environment, but also the manner in which all sourcing activities are conducted.
Procurement must be an organisational leader through the development of skills in risk management. In the macro environment, this means being up to date on rules and regulations governing the Procurement process. Professionals also need to be aware of changes in national and international legislation on Health & Safety and employee relations.
Category Management professionals need to conduct thorough risk analyses for sourcing activities throughout their Supply Chains. This is far more complex in the era of multi-tiered Supply Chains, when knowing and understanding the supply base is critical.
It is also important that professionals understand issues such as modern slavery, ethics and sustainability that form part of the decision-making process for their supplier management strategy.
2. Critical thinking
Category Managers need a varied set of skills that include observation, interpretation, reflection, evaluation, problem solving, and decision making to analyse a wealth of facts and figures in order to select the best fit suppliers.
These skills are invaluable not only for new sourcing initiatives but also for the ability to step back and course-correct when things are getting off-track.
3. Business intelligence
A key component of Category Management is deep knowledge of the category and the marketplace. Professionals should stay up to date on the latest developments so the Procurement approach can be optimised to the market’s offerings.
This insight can be gained through external market research, professional associations, industry newsletters and internet news searches. Something as simple as setting up a desktop alert based on certain keywords can help you stay informed of changing dynamics in a particular industry or supplier group.
4. Relationship building and management
The ability to build relationships to manage the business through insight and analytics that drive oversight across all levels and functions, internally and with suppliers, is a core skill.
Influencing internal and external stakeholders can often take time, and not all negotiations end in favour of Procurement teams. To truly drive value, resilience and patience are tangible skills that serve Procurement functions well. Professionals that see the longer-picture when having hard conversations with stakeholders and how the negotiations they are having today can help shape the business in the future, are valuable in an ever-evolving business landscape.
The Procurement process is under pressure to better leverage technology to make the entire process more strategic. Having additional business, digital, and analytical skills to help organisations innovate and grow will serve professionals well.
The Procurement department is traditionally one of the most paper-intensive places in an organisation, so technology tools are a tremendous asset. The best Procurement professionals understand the value they add to the organisation comes from the ability to problem solve, negotiate, delegate and communicate — not their ability to track paper requisitions throughout the office.
In the post-COVID era of remote and / or home working, professionals may also choose to focus their training and professional development in digital skills. Previously face-to-face activities like negotiation and supplier relationship management will be carried out on a digital platform. From maintaining eye contact to visible hand gestures, these digital skills will be critical for professionals to continue delivering for the business.
COVID-19 has left the future of many careers uncertain. While there are many new pressures coming on Procurement (Supply Chain disruption, risk mitigation, changing budgets, cash flow etc), the career prospects for Procurement professionals in New Zealand look very encouraging.
Real opportunities exist for professionals to progress their careers and gain valuable skills in an ever-changing environment. Those able to take on new responsibilities, continuously learn and develop and embrace new technologies and genuinely make a difference (through relationships, data, insights and commercial contribution) will have the potential to accelerate their careers.
There is an increasing expectation from employers that employees are committed to personal and professional development and your ability to do this is paramount. Additionally, the importance of qualifications is becoming more increasingly important, with CIPS qualifications and membership being highly regarded.
It is an exciting time to be working in the Category Management profession with an increasing number of organisations making the move from a tactical to a strategic Procurement function.
During 2020 the demand for Procurement Category Managers (particularly within IT and Digital) increased from the levels we saw in 2019. Interestingly, while there were inevitably some redundancies, largely Procurement teams remained intact in 2020. This is largely down to the fact that organisations saw the importance of Procurement, both at the time and in light of the economic recovery.
Last year Category Management professionals managed risk at much higher levels as global Supply Chains broke down and lockdowns wore on. Even after the COVID-19 pandemic is behind us, this will continue. Any business benefits from adopting Category Management as one of its best practices in Procurement because it has the capacity to reduce Supply Chain risk and minimise cost. As such Procurement professionals will remain (at a minimum) remain very much in demand, and we expect the demand to increase, putting additional pressure on organisations looking to secure talented Procurement individuals.
Additionally if the borders continue to remain closed to non-residents, there could be a significant talent shortage emerge.
- Procurement Specialist/Junior Category Manager: $85,000 – $110,000
- Intermediate: $120,000 – $140,000
- Senior: $150,000 – $180,000
An experienced, accomplished Procurement Category Manager who is able to engage with and influence suppliers and stakeholders as well as effectively manage a full Procurement process can expect a salary in the region of $120,000 – $140,000.
Individuals who take on increased responsibility managing more complex or important categories (typically measured in dollar value), typically command a salary in the region of $150,000. This can be more for areas such as IT or categories that require specific attention to risk management, continuous improvement or supplier management.
Roles involving team management or leadership add a premium with salaries varying greatly depending on the complexity of the role and teams managed. A manager can expect to earn anywhere between $120,000 to $180,000 plus.
For more information: CIPS
If you would like to find out more about the role of Procurement Category Manager, please contact Senior Consultant Wayne Fry. Wayne specialises in the recruitment of Supply Chain, Procurement & Operations roles. For more news and views visit our website by clicking here, see what opportunities we have available here or follow us on LinkedIn.