As part of our Expert Insight series, Supply Chain Nation recently sat down with Gordon Wade, managing partner and director of best practices for the Category Management Association, to discuss the category management discipline, and in particular, the category management maturity curve as defined in CMA’s paper—Category Management Mastery: The Key to Growth!
SCN: In your paper, you discussed a five-stage maturity curve as a way for companies to measure how they are doing in this discipline. Where do you feel the majority of companies are at on this curve, and why do you think this is so?
Wade: Companies are at various places on the five key attributes that comprise category management competence. For example, some companies have enormous amounts of data, but aren’t very good at analytics. Some companies have a few well-trained people, but their processes are not very good. So if you think of the maturity curve as measured across the five attributes, some companies are quite advanced in one of the attributes, but may be relatively weak on another attribute. However, on the whole companies tend to march ahead in reasonable lockstep across the five attributes such that companies that are pretty good at data tend to be reasonably good at analytics. So I would say that most large companies are at the third to fourth stage, on average.
SCN: What key steps should companies take to move forward on the maturity curve?
Wade: The first thing they need to do is to understand where they are on each of the attributes. The C-suite usually isn’t very knowledgeable about category management because they did not come up through the discipline. So they need to understand what the attributes are and ascertain where they are on each of these attributes. In the paper, we provide a catalog of characteristics under each of the major attributes. They can look at an attribute, such as analytics, and see there are 4-5 characteristics of analytics maturity. They then can ask their people—can we do this? Do we have this software? Are we really here on the maturity curve on this attribute or not? Thus, the first thing the C-suite has to do is a self-analysis of the attributes and characteristics so they can find out where they are, and can begin to develop a program that will help them improve in any area where they are not precisely where they would like to be on the maturity curve.
SCN: A major requirement for Category Management success is collaboration between manufacturers and retailers, but that has been hard to achieve. Is that changing?
Wade: There is much more collaboration today than there was. A company I founded created category management in the early 1990s working with the industry committee known as ECR, efficient consumer response, a committee of retailers, manufacturers, wholesalers and brokers. When we started, collaboration was an enormous problem. There were very low levels of trust—retailers and manufacturers did not trust one another. They saw any discussions as sort of a wrestling match over a 100 cent dollar—if I get 51 cents, you get 49 cents.
One of the major achievements of category management was to cause those manufacturers and retailers to step back and look at their common consumer—the shopper. The manufacturer could say that shopper belongs to me—they are looking for my brand. And the retailer could say, wait a minute, that shopper belongs to me—she is in my store. But the fact is the shopper belongs to both of them. What category management said was stop worrying about yourself and start focusing on bringing better value to that shopper. If you do, you will grow that 100 cent dollar to a 110 cent dollar and there will be more for both of you. That message of engendering cooperation was the single most important thing that category management did. Without doing that, there would be no category management.
SCN: You indicate there is a lack of Category Management expertise in many companies which hinders their ability to advance this discipline. Since your paper came out, have you seen an uptick in interest in training or your certification programs? Where do you think this is heading?
Wade: I wouldn’t want to attribute an uptick in training and certification purely to the paper which we – the CMA – wrote. I think that would be overly generous to me and the CMA. But the fact of the matter is that there is a significant uptick in interest in training and certification. We are seeing a lot of companies signing up for certification—in some cases small companies are certifying four people and large companies are certifying as many as 30 people—who all go through a battery of training modules. The CMA does not offer training. We are a certification agency. As an analogy, Harvard law school teaches law. To get a legal license you have to pass the board exams in the state where you want to practice. We are like the legal board that establishes the certification standards. Universities or training companies train people to our standards. We tell them what they have to pass in order to be certified and they develop the training programs designed to meet those standards. Right now about 90-95 percent of the third party category management training capacity in the United States trains to CMA’s certification standards.
We are seeing continuing growth in the number of companies that are signing up, and within companies, the number of people taking training on the way to getting certified on one of three levels—category analyst, category manager, or category advisor. There are specific competencies that people must demonstrate at each of these levels which are tied to specific training regimens. This is helpful when evaluating candidates to understand what kind of training they have received. It‘s an objective measure where we can say this person has passed these 10 courses which lead to these 10 competencies.
SCN: Where do you think innovation in Category Management will come from in the near future?
Wade: I think the most important area is in data and analytics. We will be combining the structured data that comes from loyalty cards, household panels and Nielson/IRI data with the unstructured data that comes from social media. We will see growth in combining the structured and unstructured data to develop analytics that will:
a) Allow us to understand pockets of demand that exist within certain ethnic groups or age groups that will enable a better utilization of the supply chain such that the right products are in the right stores, and
b) Will lead to product innovation that will be helpful to the industry.
So the next wave of innovation will be driven, in my judgment, by the combination of these disparate data sources that will be enhanced by predictive analytics.
Click here to read the full Category Management Mastery report.