![]() This may lead to a change in specifications, and also can change the scope of work or finding a new supply base and new vendors. Improvement: The market intelligence gained from the market analysis is applied.Market analysis: How does the supply market look for each category, does it fit the customer needs?.Spend analysis: How much spending is going to each category and its sub-categories?.Definition: What should the different categories and sub-categories be?.There are many ways to develop a category strategy, but here are some questions and points to consider. Hagel also notes that the foundation for business modelling is absent and the use of data in decision makings and strategic planning is not part of a defined process. Reza believes that the role should be split into a domain expert role with the aim of managing stakeholder relationships, as well as a purchasing manager role focused on the new generation of added value procurement services. Some senior procurement executives such as Fortune 100 CPO Reza Hagel believe that the current category manager role as we know it should be spit-up. an IT category manager should have a degree in computing so as to help make purchasing decisions by justifying the need for the purchase to internal stakeholders to make sure they are getting the right product assortments. This requires them to have a background in the category being handled, e.g. ![]() This person is charged with strategic sourcing, creating a category plan, and providing oversight in the category.Ĭategory managers handle supply chain relationships for their category role. Professional services, IT or logistical support. This is a specialized procurement role in which the person handles a specific category of goods or services e.g. Some of the categories on which organizations typically spend include: In other words, where the organization segments its spending on bought-in goods and services, the segmentation arranges goods and services in discrete groups depending on the functions of these goods and services. What is Category Management?Ĭategory management can be defined as a strategic approach to procurement. For those organizations that have not initiated category management programs, then, you’re missing out. ![]() In addition to this, organizations that have initiated category management programs show a median turnaround time of eight hours versus a median 15 hours for purchase order processing. To do this effectively, then, organizations must use category management.Īccording to APQC’s Open Standards Benchmarking about category management within procurement: studies show that organizations that have initiated category management programs have a median supplier lead time of only six days compared to 14 days. Whether it is procurement for business continuity, like inventory purchasing, or procurement for business support, such as IT, an organization must have a strategic and clear procurement process, or spending can get out of control. In any organization, procurement is one of the main departments that touches and manages organizational spend.
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