Are Deadbeat Categories Holding You Back?

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”
– William Arthur Ward

Ever feel like you’re stuck running in circles, spending too much time on tasks that don’t move the needle? Ever have a moment where you think that, no matter the effort you put in, you just aren’t getting the value returns you’re looking for?

You might be stuck with a ‘deadbeat category’. 

It’s not always easy to understand if and when this happens, but sometimes there just isn’t anywhere else you can take a category. It could be diminishing returns on sourcing activities, or it could be that, all of a sudden, what was once a vibrant and interesting area of work becomes a single source exercise with no opportunity to grow a relationship.

But imagine if you could see when this happened and shift your focus, dedicating your time to innovative, high-impact initiatives instead of endlessly plugging away at low-value tasks. Sounds refreshing, right? We might just have the tips for you.

What is a ‘Deadbeat Category’?

Deadbeat categories are those that, while necessary to maintain, do not contribute substantially to the company’s growth or strategic objectives, despite requiring ongoing attention and resources. These categories often involve repetitive tasks and lack any strategic importance. Think of them as the chores of the corporate world – necessary but hardly exciting. 

When companies identify these areas, they encourage teams to focus on more high-value projects, ensuring that resources are used efficiently and effectively. Leading companies are now encouraging their teams to focus on higher-value projects that drive innovation and strategic growth.
By identifying and automating deadbeat categories, these businesses can reallocate resources to initiatives that provide a competitive edge and long-term benefits.

Spot the Signs of a Deadbeat Category

Identifying a deadbeat category is crucial for ensuring your team stays focused on projects that drive substantial value. Here are some signs to help you spot them:

1. Frequent Sourcing with No Additional Value

You might notice that specific categories are repeatedly sourced but offer no new benefits or improvements. It’s the Procurement equivalent of spinning your wheels – lots of effort but no progress. 

For example, imagine you are managing an office supplies category in a large corporation. Despite frequently sourcing new vendors and suppliers, you notice that no additional value is being added. Your team spends countless hours comparing prices for commodities like pens, paper, and staplers, yet the cost savings are minimal and do not justify the effort. It’s becoming clear that this category has reached a point of diminishing returns, offering little room for further value extraction. 

This procurement team is experiencing the following:

• No significant cost savings were achieved despite frequent sourcing.
• Time-consuming processes with minimal impact.
• Continuous effort does not justify the minor returns.

2. Full Automation and Frictionless Processes

If a category operates smoothly without any human intervention, it’s often already optimised to its full potential. Categories like routine IT hardware purchases that are managed entirely through e-procurement systems, requiring minimal input from your team, can be categorised this way.

3. Exhausted Value Extraction

When every possible advantage has been squeezed out of a category, it may no longer be worth your time. This is evident in highly commoditised categories like basic raw materials (e.g. steel), where negotiations and innovations have plateaued, and further efforts yield diminishing returns.

What Can You Do with a Deadbeat Category?

Start by evaluating existing workflows. Map out all the steps involved in your current procurement processes. Identify any bottlenecks or manual tasks that consume time without adding significant value. This will help you pinpoint areas ripe for automation. 

Next, implement tools and technologies. Platforms that support procurement automation can handle routine tasks like order processing, invoice matching, and data entry. Look for solutions that integrate seamlessly with your existing systems to minimise disruption. 

Once new tools are in place, it’s time to optimise efficiency. Set clear goals and KPIs to measure the impact of these technologies on your workflows. Continuously refine processes based on feedback and performance data to ensure you get the most out of your automation efforts. 

Remember, the ultimate aim is to free up resources. By automating deadbeat categories, you enable your team to focus on more strategic activities. This boosts morale and drives higher-value contributions to your organisation’s goals.

For our procurement team stuck with routine office supplies, consider locking in standardised pricing and creating an electronic catalogue. This would allow internal staff to use a self-service model to buy directly from the supplier, freeing up the procurement team to focus on strategic initiatives.

Exploring New Opportunities

After pinpointing deadbeat categories and initiating plans to allocate resources more effectively, what higher-value projects can teams focus on instead? Follow these three steps to identify more satisfying and high-yielding areas of your business.

1. Strategic Sourcing Initiatives:

The first step in focusing on the higher-yielding categories is to transition from a transactional procurement culture to a strategic sourcing culture. This involves deep dives into data analytics, market research, and supplier benchmarking to uncover opportunities for cost savings and efficiency improvements.

2. Supplier Relationship Management: 

Developing mutually beneficial partnerships with key suppliers adds value beyond immediate cost reductions. Invest time building long-term relationships, driving innovation, and ensuring better risk management.

3. Category Innovation and Growth: 

Explore new ways to innovate within existing categories. This could involve introducing new technologies, seeking alternative materials, or exploring new market segments. These efforts can lead to enhanced performance and competitive advantage.

Your Career Game-changer

And there you have it! Knowing how to identify and manage deadbeat categories can be a game-changer for your career. With these insights, you’re not just shuffling papers; you’re steering your team towards high-impact, thrilling projects. It’s not about working harder but smarter.