This is the thing we all need to find in strategic sourcing and category management – the dramatic breakthrough which allows us to move the category in a new direction and capture dramatic value for our organisation.
But where is it? It is unlikely to be an approach which we already know and use, because we would have already developed it and implemented it. That can only mean that the approach is hidden from us, obscured by a mass of other information and noise surrounding the category we’re looking at.
Some have challenged if breakthroughs really exist; where is the evidence, the stories which show that all the effort is worthwhile. Well, over the years we’ve worked in category management, a number of real breakthroughs have surfaced. Some fall into the category of ‘previous art’ – applying an approach from somewhere else into a new environment and getting rewards from that. Some are truly original as approaches, delivering a whole new way of thinking about an area of purchasing. However, most have the characteristic of being completely obvious once stated, although never previously contemplated.
Quite frequently, a breakthrough comes from an almost child-like challenge of the current situation. Examples in this category have included opportunities from challenging huge amounts of waste in one category or another and the consequences that brings. One we heard of involved the costs of storing overproduced items in expensive storage facilities. The initial challenge came by way of seeking stronger packaging to survive the storage conditions; the reality was a root and branch review of the cost implications of overproduction and poor warehousing and stock management approaches.
So, how do we go about uncovering the breakthrough areas? Well, it tends to be about data and the way we seek to uncover and explore new areas of knowledge. In the example above, the quest for more robust packaging could have led to stronger packaging, rather than a multi-million dollar saving opportunity. The key to uncovering the opportunity was tenacious data gathering.
In some categories, the data gathering has to be more market focussed, looking for potential new players or understanding existing suppliers capabilities better. Either way, we will need to make space to plan our data gathering activity and to find a way to be open to the possibilities identified within the discoveries we make.
Of course, the breakthrough can come through a better understanding of process. As an example, we often talk about understanding the return on investment of a particular purchase, but how often do we really think and challenge how that works. Perhaps if we spend more time thinking about ROI we could find new ways to maximise that return on investment. An interesting exercise can be carried out looking at ROI from consultancy spend. I wonder how many reports are commissioned where there is no ability to implement any findings, or indeed desire. In which case, the ROI on the outcome is not great (or infinitely small, to be precise!)
So, we know we need to find breakthroughs, and there is no alternative but to make space to research needs, markets and approaches as thoroughly as the category demands. Make space and time to do this, and your journey to delivering breakthrough will have less waste built into it.
Mark Hubbard is founder and co-CEO of Positive Purchasing Ltd, a business dedicated to helping others seek breakthrough.