Effective Category management focus to deliver more November 2016

FOCUS ONLY ON PROCUREMENT About denali group Expanding Procurement’s Value for The Global 1000 Since 1996 Procurement Transformation, Assessment & Strategy, Technology Strategy, Change Management On-demand high-end supply chain talent for project-based work. Temp-hire conversions Subscription and Custom Supply Market Intelligence Learn, Play and Reinforce: Category Management, Strategic Sourcing and other Procurement Training Category Management, Sourcing, Contracting, Supplier Management, Analytics and Managed Source to Pay Programs Direct-hire placement of supply chain professionals ROBUST 3 YR GROWTH RATE GLOBAL TEAM MEMBERS   300+ 156% US INDIA CHINA TURKEY IRELAND FOCUS ONLY ON PROCUREMENT

Procurement teams are increasingly asked to deliver MORE TOPIC OVERVIEW Procurement teams are increasingly asked to deliver MORE Leading Procurement organizations turn to Category Management to help them deliver against their new, increasingly complex objectives Organizations need to understand what it takes to successfully institute a sustainable Category Management approach

Making the case for category management Procurement is increasingly asked to do MORE. In order to meet these new demands and increase value for the business, a fundamental change is required in the way that Procurement is executed. “Traditional Savings Focus” “Total Value Generation” Focused primarily on cost savings Reactive Driven by Procurement Goals and Metrics Year-to-year focus Tactical execution of projects Drive results based on business objectives Proactively align with the business needs Measured on business goals Long-range vision and planning required Execution based on established strategy Procurement increasingly looks to adopt a Category Management approach, in order to meet their new objectives. However, it is not enough to simply brand a Procurement organization as following a Category Management approach.

Category Management transformation is a Journey Transforming procurement to a category management-based approach drives significant benefits for the business, but it does not happen overnight. Successful companies use a multi-year vision to build, scale and sustain Category Management within their organizations. Scale & Globally Optimize Collaborative, Results Oriented Culture Fully Integrated Business Planning, Budget Cycle Advanced Strategies Drive Lifecycle Alignment Globally Aligned Process, Technology, Knowledge Global Category Councils Manage All Spend CM Mastery Training, Project Competition Category Coaching, Targeted Skill Development Developing Business Leaders, Category Expertise Business Results Accelerate & Consistently Apply High Business Engagement & Decision Making Updated Vision/Roadmap, Linked to Bus. Objectives Enablers / Core Foundations Improved, Optimized Consistent Governance with Risk Measurement Global Multi-Year Category Roadmaps, Pipeline Robust Strategies, Deep Market Understanding CM Excellence Training, CategoRise CM Game Category Coaching, Targeted Skill Development Build Foundation 3-5 year Procurement Vision and Roadmap Clear Org Roles, Aggressive Yet Achievable Targets CM Process, Tools and Templates Established Category Roadmaps, Multi-year Project Portfolio Assess CM Capabilities, CM Competency Plans CM Foundations Training, eLearning, Exercises Category Coaching, Application Workshops Intentional Comm & Change Mgmt (ongoing) Build Foundation 3-5 year Procurement Vision and Roadmap Clear Org Roles, Aggressive Yet Achievable Targets CM Process, Tools and Templates Established Category Roadmaps, Multi-year Project Portfolio Assess CM Capabilities, CM Competency Plans CM Foundations Training, eLearning, Exercises Category Coaching, Application Workshops Intentional Comm & Change Mgmt (ongoing) Failure to Scale Failure to Sustain Time Failure to Launch

Category management success factors Transforming procurement to a category management-based approach impacts all of the dimensions of Procurement, from direction setting through processes and enablers. Dimensions of Procurement Effectiveness Category Management Factors Vision & Strategy Multi-year Vision and Organization Structure Linkage with business planning cycles Prioritized Category Roadmap established Category Plan Review process Governance and cross functional Category Councils Communication & Change Management Plan Direction Setting Organization & Culture Governance Stakeholder Engagement and Participation Best practice Process, Tools, Templates Project Portfolio Management and Compliance End-to-end Lifecycle Integration Supplier Performance and Risk Management Category Management Work Processes Sourcing Contracts Supplier Mgmt P2P Competencies and Performance Capability Assessment and Performance Metrics Training, Coaching and Targeted Skill Development Data, Analytics, Market Intelligence Enablers Knowledge Management Align Technology to Strategy and Process Enablers Market Intelligence Data Technology

EXAMPLE: high level Procurement Roadmap Toward Future CM Vision Year 1 Establish Foundation Year 2 Accelerate & Consistently Apply Year 3 Year 4 Scale & Globally Optimize Future Vision “Best-In-Class” Category Management 5-Year Roadmap to reach Best-In-Class Category Management Vision Category Management is engrained in culture Clear and proven framework, tools Many Category Managers are category experts, drive thought leadership Incremental value consistently delivered Broad adoption and culture forming Refined processes and tools at category level Annual CM Training and Application Workshops Incr. Value Delivered Stakeholders shifting from customers to partners Refresh and refine processes and tools CM 301 Training and Application Workshops Incr. Value Delivered Adoption of discipline gaining momentum Core processes & tools established and tested CM 201 Training and Application Workshops Incr. Value Delivered Launch Category Management Discipline Build core methodology, processes, and tools CM 101 Training and Application Workshops Incr. Value Delivered Define and communicate details within each area to set expectations and define success for each step.

Operating in a category management mindset Establishing Category Management Methods and Tools enables a consistent delivered experience to the business. Internal Assessment External Assessment Strategy & Planning Internal Assessment Activities Who are the stakeholders? What does the business require? What is the scope of the category? What have we spent previously? Where do we think we will spend? How mature is the category? What is the category maturity goal? Tools and Templates Internal Assessment Questions Stakeholder Map Category Map Spend Analysis Systems & Tools Business Requirements Maturity Model External Assessment Activities What are the key value drivers? What is the supply base dynamic? Who has the power in the market? What is the risk profile? What is contract profile & strategy? Who are top suppliers? What are relevant benchmarks? Tools and Templates External Assessment Questions Category Trend Report Porter’s Five Forces SWOT Analysis Contract Summary Supplier Performance Strategy and Planning Activities What are the strategic options? What is a clear category vision? What is the full opportunity range? What is the portfolio of activities? What is the business case? Can you tell a compelling story? Do you have a multi-year Plan? Tools and Templates Strategy and Planning Questions Category Positioning (Kraljic/Supplier View) Strategic Option Review Opportunity Assessment Tools Category Plan Template Phase 1 -- The first step in developing a category plan is to understand category details, with an internal focus. Phase 2 -- The next phase takes an external perspective in developing a thorough understanding of the relevant market information, trends and dynamics. Phase 3 -- The Strategy & Planning phase defines the future state, including SMART objectives, the strategic options to achieve those objectives, and the information and documents required to initiate the implementation phase. Ongoing Stakeholder Engagement and Continuous Improvement

Category manager competencies Developing methods and tools is not enough; team members need to have proper training and support to meet the new expectations and objectives placed upon them. Identify stakeholders and develop a communication plan Establish and participate in Category Councils to manage against plan Participate in annual planning process Deliver high-quality, written and approved strategies Analyze data and market intelligence; draw conclusions Project manage the strategy creation process Stakeholder Management Documented Strategies CM Skills Planning & Portfolio Development Vision & Governance Facilitate identification of a prioritized, actionable portfolio Conduct appropriate opportunity assessment steps Provide planning visibility toward business and procurement objectives Produce a clear, documented Vision, supported by specific strategies Demonstrate journey progression and maturity; establish a roadmap Identify metrics and drive governance through process and performance measurement Strengths and areas of opportunity will vary across each Category Manager. Practical application coaching is key.

Simplifying the category manager competencies Adopting a Category Management approach can be overwhelming to newly branded Category Managers; simplifying the new role into a few critical imperatives may reduce concerns and confusion. Be with stakeholders Intimately know their business needs (AQSCIR) Establish true alignment Sell YOUR vision Bring new, meaningful opportunities to the table Plant seeds with Stakeholders Your category knowledge will grow with time, and your credibility with stakeholders… KNOW YOUR STAKEHOLDERS 1 Get dirty with the data Get to true insights Be curious Be intentional Be “in the market” Network with category peers Understand your suppliers Knowledge grows with time – but should not delay execution… UNDERSTAND YOUR CATEGORIES 2 Take a portfolio approach Know your targets Eliminate extraneous work Don’t let perfection keep you from starting Leverage all available resources Sustain the value Have a sense of urgency, with a bias towards execution DELIVER RESULTS 3

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