Strong category management can help a business or organisation make the most out of even the smallest spend, including tea and coffee provisions.
Perhaps there is no better analogy, said Toni Peters, head of category management at Westminster City Council, for the importance of stakeholder engagement when implementing business change.
“There’s a lot of things [in category management] that are process driven,” said Peters, speaking at the Local Government Procurement Expo in London today. “But when you’re working with people and end users, it’s never ever a science, it’s always an art.”
When working at Network Rail, Peters experienced first hand how category management could influence even small spend.
“I worked in an office with 17 floors. Every floor makes its own tea and coffee, every floor orders its own tea and coffee,” she said.
Not all the floors used the same amount of milk, and some ended up purchasing more on P-cards. Kettles take time and energy to boil, cups are thrown away, and on the top floor there is a “posh coffee making machine” that employees would travel to from other floors for a “premium coffee”.
“What we see here is duplication of effort… we’re seeing 17 invoices coming into the business every week for milk. Multiple deliveries from the stationery catalogue for tea and coffee supplies and multiple waste.”
Peters calculated a cup of tea cost the organisation 17p. If every one of the 350,000 employees had an average of three cups of tea a day, “We’re looking at a spend of around £17,000 a day,” she said.
Like all category management projects, the first step is to consider what the objectives are. If it was simply to cut costs the obvious solution would be to stop providing tea, but that would not meet customer satisfaction objectives, said Peters. “People want their tea or coffee, and it’s a very, very emotive topic.
“Stakeholder engagement and end user engagement user becomes really, really important.”
The solution was not a drastic end-to-end change, but a series of small improvements.
The caterer that ran the canteen on the first floor – which happened to sell tea for 4p a cup – became involved in the distribution of milk on an as-needed basis that ended the need for P-card purchases and invoicing of the milkman. The caterer also started providing tea and coffee, which reduced costs because they had better economies of scale.
The office installed milk machines that were refilled with bagged milk, reducing waste, and hot taps were installed, reducing employee time spent making tea.
“Finally, and much to the disgust of our senior management, we took away the premium coffee machine on the seventeenth floor,” said Peters, because everyone deserves the same standard of tea and coffee.