Category Management within Australia

The below chart was created using Jigsaw Search’s new on-line salary guide. The candidate data is drawn directly from Jigsaw Search’s database, the most comprehensive data source of its type in the country. Meticulously maintained and updated every minute of the working week, the data contained within it is live and as up to date as possible, constantly changing as our candidate’s roles and pay structures change in line with market conditions.

The below chart (Ref 1.1) was constructed taking information across all industries including manufacturing, services and public sector for both Melbourne and Sydney (over 1500) and the procurement professionals within our database who hold the title Category Management (over 2500) with the objective to demonstrate salary variances and business priorities in category management between the two major cities of Australia.

The chart (Ref 1.1) displays data that will assist in addressing popular remuneration beliefs within the procurement profession of Australia, and more specifically for this report, Category Management.

Before we start to dissect the information presented I would first like to define the term Category Management.

Category Management is a strategic role that exists only within a mature procurement framework that has a large spend profile consisting of multiple and often complex portfolios such as marketing, engineering, travel and packaging. The term Category Management is not to be confused with Supplier Relationship Management (SRM) or Vendor Management as is often the case. Although Vendor Management and SRM can in some businesses be strategic in nature through supplier development strategies, they are more commonly transactional roles where the function concerns itself with contract delivery to the internal stakeholders and short term day to day issue resolution.

Category Management utilises the entire procurement framework for a given portfolio of spend. That includes understanding the business direction (corporate strategy) and understanding where procurement can add further benefits to compliment it. Category Management includes diagnosing the previous state of play for a particular portfolio of spend in terms of data, trends, stakeholder issues and desires and then formulating a customized strategy (make, buy, sell) coupled with a commercially robust process including commercial contracts/KPI developments (if required), SRM and Supplier Development strategies to aid real world delivery of the category strategy.

It is often deemed critical that category managers have both in-depth subject matter expertise of the managed portfolio coupled with strong commercial and process skills to deliver the highest outcomes to a business and gain the greatest levels of traction via stakeholder credibility.

Ref 1.1 Sydney Melbourne

What is the Current State of Category Management within Australia?

It is clear from the chart that businesses in Australia have embraced procurement and invested heavily in the function. There is clear representation for all spend portfolios across both Melbourne and Sydney which should assist in giving a clear understanding of the market and potentially where it is heading for Category Management.

A clearly defined pattern has emerged when the data is extrapolated and interpreted. The remuneration pattern displays Melbourne emerging as the front runner in the majority of categories, outperforming Sydney on over half of the assessed categories and with a significant positive variance across Travel, Engineering, 3PL and Marketing. The data assembled in Ref 1.2 displays the information in a format that facilitates easier dissemination incorporating the mean percentage increase variances held by Melbourne.

Ref 1.2

Category	Sydney	Melbourne
Travel	Mean TRP	6.84%+
Components	Mean TRP	5.74%+
Engineering	Mean TRP	1.56%+
3PL	Mean TRP	3.76%+
Marketing	Mean TRP	11.85%+
Capital Works	Mean TRP	1.44%+
Merchandise	Mean TRP	4.29%+
Technology	Mean TRP	2.11%+
Labour	Mean TRP	2.74%+
Prof Services	Mean TRP	0.65%+

Sydney came out stronger across Fleet, Facilities, Utilities, Transactions, Ingredients and Networks, with Packaging, Apparel and Print being equal.

The understanding within Jigsaw Search as to Melbourne having a higher remuneration than Sydney across complex category management comes down to number of factors we have attempted to outline below

Centralised Geographic

Melbourne is more centralised than Sydney and most Melbourne businesses including mining and manufacturing are heavily situated near the CBD. The result is Melbourne businesses have less leverage to exploit location as a driver when recruiting for category managers and salary has to take over as prime attraction and retainment strategy.

Sydney is far more fragmented with business spread across a wide geography. The CBD is more focused towards finance and services where the western suburbs and outskirts seems more focused to manufacturing and engineering.
This enables businesses to take advantage of employee’s desire to keep travel time to a minimum and capture micro markets within a 15 – 25 km radius of where they live.

Sydney is a Transient City

Although both Sydney and Melbourne have plenty to offer as locations, Sydney is the more popular choice for many professionals who are seeking lifestyle balance over career and reward. Many of the procurement professionals Jigsaw have placed in 2008 from the UK have been attracted to Sydney for the beaches and the climate. As a result of this their salary expectations are weighted accordingly and it is not uncommon for procurement professionals to drop salaries by 25% below the standard local rate in NSW to counter the push back of no local knowledge.

To note it is a given that Melbourne will also experiences talent from oversees and the same principles will apply in terms of salary dropping. Jigsaw data seems to indicate that NSW holds a higher volume.

Direct Against Indirect Categories

Melbourne has a higher proportion of businesses that lean towards manufacturing and engineering. Although the service sectors (in which Sydney has a large focus) have embraced procurement and have even greater capacity to deliver cost reductions it is the direct spend categories which are often seen as the more complex and critical to the business objectives (barrier to entry). It must also be noted that direct spend is possibly easier to measure in terms of true value to the organisation and delivery of $ reductions to the bottom line.

This may have a knock on effect to remuneration. Critical categories are less volatile in terms of compliance with internal stakeholders over the long term and key focus has to be placed on winning the business from the project owners to demonstrate the commercial benefits that procurement can ultimately offer.

Candidates who handle direct spend maybe less likely to move from position to position as businesses launch new projects, goods etc and the sense of challenge is always consistent with each new launch or development. This in turn rewards direct/project based category managers with long term loyalty packages and bonuses which indeed push the mean remuneration skyward for active markets.

Sydney has less peaks and troughs

Although category managers are rewarded a higher remuneration in Melbourne for most categories of spend, the more consistent remuneration comes from the Sydney market. The line in chart (Ref 1.1) demonstrates the variations in remuneration across different categories for Sydney is far less than the peaks and troughs of Melbourne.

It is also interesting to note the average remuneration for Sydney in Category Management is $138k including base + super + benefits. For Melbourne it is $128k including base + super + benefits.

This higher mean for Sydney is a result of a small portion of categories being rewarded by as much as 37%+ over Melbourne (See Utilities).

The Importance placed on Portfolios

Although it is impossible to conclude a mean remuneration has any indication on how businesses weight the value of a category and its impact on the business, it is still worth viewing the evidence as it makes an interesting case as to which area’s of spend will give greatest reward in the market and from which city to execute them.

Ref 1.3

Sydney Order of Remuneration	Melbourne Order of Remuneration
$ Lowest	$ Lowest
Travel	Software
Print	Print
Components	Transactions
Corp Services	Commodities
Apparel	Fleet
Engineering	Ingredients
Commodities	Travel
3PL	Utilities
Packaging	Networks
Ingredients	Components
Marketing	Engineering
Facilities	Packaging
Capital Works	Corp Services
MRO	3PL
Merchandise	Building Products
Fleet	Capital Works
Technology	Facilities
Networks	Technology
Labour	Merchandise
Software	MRO
Building Products	Labour
Prof Services	Marketing
Transactions	Prof Services
Utilities
$ Highest	$ Highest

Please note the information provided above is simply the findings within Jigsaw Search and our interpretation of the data. We leave it open to our customers to read into the figures provided.