Question
It is required to make a selection of an example of a category of procurement or a product, service or works that are bought by an organisation for creating a plan category
This also include plan of implementation, challenges faced and strategies for their mitigation.
Executive Summary
Category planning has been identified as a critical process in the modern organisation since it guides aligning organisation strategies with customers’ business objectives. This is intended to achieve a maximised value, reduce risks and manage the supply of goods and/or services. In this report, Oracle’s category plan was developed, with the category selected being office materials. To develop the category plan, internal data was sourced with different tools, including the Kraljic matrix, CIPS Model of category management, Porter’s 5 forces, 4Ts model, Mendelow stakeholder mapping, and SWOT analysis tools have been used. Also, by evaluating cost analysis and savings, quality, and benchmarking, category planning has been established to contribute to value maximisation, reduced risks, and successful supplier chain management. Similarly, several challenges have been identified in this report to impact a successful category plan implementation. The identified challenges are associated with a lack of rational decision making informed by data and facts, depending on traditional procurement competency and the standardised category plan in Oracle in the identified spend category. Best practices in the mitigation of these challenges have been established.
Informed by the findings of this report, the recommendations generated for Oracle in their category of spend include;
- To come up with a strategic supplier relationship management by modernising their procurement and supply competencies
- Successfully establish an efficient sourcing strategy in their different procurement categories rather than adopting a standard category plan arrangement
- To ensure they consistently make their category plan to be up-to-date informed by changing needs in the organisation spend category
- To make sure decisions on their category plan in their organisation is factual and based on existing data
- To offer opportunities for their procurement teams for capacity development and L&D opportunities for improving their ability to manage the modern category plan
Table of Contents
1.1 Oracle Organisation Background. 3
1.2 Selected Category of Spend. 3
2.1 Kraljic Portfolio Matrix 6
2.1.1 Suppliers Positioning. 7
2.1.2 Suppliers View on Customer Account 8
2.1.3 Supplier Preferencing. 8
3.0 Market Structure Analysis 9
4.0 Total Cost of Ownership (Cost analysis & Cost Savings) 11
4.1.1 Porter’s 5 Forces Analysis. 12
5.0 Category Plan Implementation, Challenges Faced and Solutions. 15
5.1 Customer-centric Organisation Arrangement 15
5.2 Developing a Functional Supplier Trust 16
5.3 Evaluation and monitoring of Success of Category Plan. 16
5.4 Definition of categories, Improvement and Enhancement 17
6.0 Conclusion and Recommendations 17
Appendix 1: Oracle Categories of Spend. 22
1.0 Introduction
1.1 Oracle Organisation Background
Oracle Corporation is an American Founded Multinational dealing with software, mainly selling database software and technologies, systems, and management of databases. In Oracle (2020), it is identified as at the second quarter of 2020, and Oracle was ranked as the global second-largest software company in terms of its revenues generated and overall market value. The most popular software and systems which have put the organisation in the global leader in the sector include Enterprise Resource Planning (ERP), Human Capital Management (HCM), Customer Relationship Management (CRM), and Supply Chain Management (SCM). One of their most significant global subsidiaries is based in the UK. The UK subsidiary of Oracle operations is based on active collaboration with trusted experts and advisors to build, sell, and offer value-added services for Oracle technologies.
To achieve their strategic objectives, Oracle corporation has a Procurement and Supply Management (PSM) department whose operations are managed through Oracle iSupplier Portal (Isp). In this platform, all suppliers are offered a standard web browser for accessing direct management of any transaction made from the company’s orders. Through this, they can attract both small and large suppliers, which ensures they leverage creativity, high-quality products, and services.
1.2 Selected Category of Spend
In this report, office materials have been selected as the spend category. The procurement of office materials amounts to more than $6 million. Notably, due to the UK Oracle corporation subsidiary’s access, the learner works as a Procurement Officer to inform on this selection. For the UK Oracle subsidiary to retain its competitiveness, sourcing high-quality office materials are critical. The UK Oracle corporation procures these office materials include desk furniture, writing materials, computers and desktops, and iPads. Owing to the nature of sensitivity of the Oracle corporation practices in the software sector, the procurement and supplier selection is instrumental. Any inappropriate selection is unacceptable and cost-intensive. A good example is a case highlighted in FCW (2020), which involved an Oracle procurement case with Joint Enterprise Defence Infrastructure (JEDI). The case was presented with a company’s claim lacking a clear category plan favoring AWS contrary to other providers.
2.0 Category Planning
As evidenced in the CIPS Model of Category Management (CIPS, 2013), category planning involves developing category plans aligned with customer’s business objectives. The strategic approach maximizes their value, reduces risks, and effectively manages the supply of goods and services. For developing a category plan, the CIPS model identify figure 1 steps to be followed;
Figure 1: CIPS Model Category Plan Phases
As explained in CIPS (2020), successful category management ensures that stronger supplier relationships are established to increase the overall cross-stakeholder benefit and increase bottom-line profitability. Based on this, it is appropriate to conduct stakeholder analysis using Mendelow internal stakeholder mapping (Bernstein et al., 2020). This is as shown in figure 2;
Figure 2: Mendelow Matrix Stakeholder Analysis
In creating a category plan, different stakeholders would play a critical role in its development. Their influence and interest include;
Low-Influence, Low-Interest– competitors, L&D team, and customers of oracle have low interest and influence on category plan development. Nevertheless, their demands will be essential to guide the process development.
High-influence, Low-interest– The finance department, legal team, and UK regulators have a high-influence on the category plan development. This is since they determine the budgetary allocation, the need to adhere to regulations and government legislations.
High-Influence, High-Interest– The end-users, experts, and advisors working collaboratively with Oracle corporation will have a significant influence and interest on category plan; hence are vital players.
Low-influence, High-Interest– The management and administration in Oracle corporation have a low influence but a significant interest in the category plan developed. They must be kept informed since they are involved in giving the organisation a direction evidenced by their strategic objectives.
2.1 Kraljic Portfolio Matrix
As evidenced in figure 1 category plan steps, for identifying the fitting approach for Oracle, Kraljic Portfolio Matrix is applicable. The portfolio analysis tool is suitable to determine procurement objectives, value addition, contract strategy, supplier relationship, and used tools/techniques. Narsimhan and Prasad (2016) noted that Kraljic analysis’s application ensures that the supply chain vulnerability is solved with their buying power maximised.
Figure 2: Kraljic Analysis
Source: CIPS (2020a)
As illustrated in figure 2, the spend category (office materials) are categorised as leverage items. In the UK context, office materials suppliers are multiple hence stiff competition among the suppliers. Therefore, this product has a low supply risk. In this case, Oracle ensures that they leverage high-level likelihood and incentives for negotiating in terms of the cost-savings results (Caniels & Gelderman, 2005). The most appropriate strategy is for the Oracle category plan to establish strategic partnerships with different suppliers, contrary to their current independent procurement approach.
2.1.1 Suppliers Positioning
As noted in Kraljic analysis (see figure 2), office materials are positioned at the quadrant’s leverage items. Hence, their supplier positioning can be noted as being in the lower supply chain but with high relevance in guiding the organisation profitability. Further, office materials procurement is defined with a high-level expenditure, multiple alternatives available, and high-level suppliers. Hence, a category plan is supposed to make sure the customer purchasing power is enhanced by standardisation and generation of relevant purchase retirements. The suppliers, costs, and subcategories of office materials for Oracle is as illustrated in table 1;
| Office Materials subcategories | Suppliers in UK | Costs (USA Dollars) |
| Desk furniture | Rosewood furniture manufacturers limited
Furniture Elegance Office chairs UK |
1000-5000 |
| Writing materials | Manuscript pen company
Fountain pen specialists Aston and James |
500-2000 |
| Computers | Aria PC
IT-Supplier.co.uk UK Computer Group Limited |
2000-10000 |
| Desktops | Scan UK
IT-Supplier.co.uk UK Computer Group Limited |
5000-20000 |
| iPads | Apple (UK) | 2000-7000 |
| Business machines | Hunt office UK
ABS (Asset Business Supplies) Smythe |
4000-8000 |
Table 1: Office Materials Costs and Suppliers
2.1.2 Suppliers View on Customer Account
Oracle category plan is informed that a strong relationship with the suppliers positively impacts the delivery of customer value in trust, collaboration, and innovativeness. This can be best be described by using Pareto Analysis 80/20 rule (CIPS, 2021). The 20% can be identified as the office materials required to generate 80% of the customers’ demands. Also, the Pareto analysis informs that the supplier relationship must be improved for the 80% to be achieved for the category plan process. This is through reducing the entire supply chain wastage and the financial resources savings. According to IndustryWeek (2017), the suppliers view is defined by the fact that office materials are leverage items in the Kraljic Analysis matrix.
2.1.3 Supplier Preferencing
This report entails the category planning and implementation process for Sibanye Stillwater first aid category of spend. It also involves an evaluation of the challenges and potential solutions to the issues affecting the implementation process.
The category plan is drawn from the CIPD category management cycle that comprises of six steps (Figure 5). The plan commences by identifying the needs and ends with the evaluation and improvements. Key consideration factors in the process and implementation are risk management, aligning the plan with the organisation needs, and market research. Several tools and models are applied in this regard, including the Kraljic matrix, supplier preference model, SWOT, and Porter’s five forces. The planning further involves classifying the suppliers, identifying the potential ones, and maintaining a profound relationship. Several models have been applied in the category plan and implementation, which are vital in the decision making process. For instance, Porter’s five forces identify the suppliers’ power as average due to their number and the presence of innovation.
Five recommendations to address the implementation challenges include;
- Implementing ICT: This involves applying technology in various activities, including communication.
- Employee learning and development programs: This involves equipping the employees with the right skills and competencies.
- Adopting an effective change management model: This entails adopting the change management frameworks, such as Kotter and Lewin.
- Building relationships: This entails working on the internal and external relationships with the stakeholders.
- Applying research and market analysis for the decision-making: This involves the consideration of various tools and frameworks for market evaluation and making informed decisions
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