Effective category management is key for improving procurement efficiency, enabling a business to stay ahead of trends, market risks and any changes in the supply chain. By grouping products, services or items we help clients to focus on specific areas of spend in order to maximise their value and optimise return on investment.
By leveraging in-depth analysis and insight, successful category management takes the procurement process beyond the purchase of individual goods to create a longer-term strategy that drives performance and economies of scale. With a complete understanding of the supply chain, the market, products and suppliers, we segment spend into different categories, identifying opportunities for consolidation and focus and supporting organisational change that manages risk, enhances flexibility and drives business-wide growth.
Once the categories have been determined, our category management process includes the following stages to deliver maximum benefits for clients:
Before making any changes, we seek to understand the current procurement process and its governance. This step requires establishing Steering Committee (SteerCo) communication and the project governance process. Baseline and savings calculations are then agreed and defined, and risk areas are identified.
Data capture & analysis
The next step is an in-depth analysis of the company’s data. This process involves consolidating, cleansing, transforming and categorising the data, capturing KPIs and information on supplier relationships, and reviewing current strategies and contracts. Research into the relevant markets is then completed and supplier information gathered to enable an understanding of cost base and capabilities.
Effective category management requires buy-in from all critical stakeholders across the business. Once those with the relevant responsibilities are identified, they can provide support with capturing the specification requirements and establishing forward demand.
Strategy development is a critical stage of category management where we articulate the business needs of each category and align them with supplier capability and performance. A full review of options is then carried out before strategies are agreed with the key stakeholders and a prioritised savings plan is then defined.
Source and select suppliers
To complete the full sourcing and supplier selection process, the market is tested, suppliers are engaged and terms with incumbents are negotiated. Quick wins and tactical negotiations are sought to deliver the best outcomes most efficiently.
At this stage, the final calculation of 3rd party benefits and SteerCo sign-off are completed. New processes, principles, and governance guidelines for procurement and finance are established and insights within the digital platform are embedded to enable teams to be self-sufficient.
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The benefits of best practice
Taking a data-led approach and harnessing our in-depth consulting experience and digital capability, we provide our clients with long-lasting, measurable outcomes from their procurement processes, which support the organisation’s profitability, growth and market competitiveness. Successful category management delivers a range of benefits for the company, both in the near and long term, including:
Increased efficiency and cost reduction
An effective category management strategy enables companies to optimise their work with suppliers and create greater efficiency between the initiation and conclusion of their processes, leading to faster speed to market and increased cost reductions.
Improved risk management and resilience
Attributing responsibility to a category ensures the required insights into the expenditure can be provided and the management of suppliers is effective. This allows the company to be more aware of potential risks and to put in place strategies for increased resilience.
Better quality outcomes and increased innovation
Robust category management ensures the best possible resources and suppliers are utilised, enhancing the quality of the company’s delivery. Furthermore, working with forward-thinking specialists in their field allows for greater innovation and company growth.
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