Top 5 Reasons to Manage Procurement by Category
Category management is nothing new. Retailers have used category management your years as a means of synergizing their marketing efforts on entire product groups rather than individual brands. In recent years this practice has been adopted in procurement also.
There are 5 main areas of benefit in this approach:
- Savings: Category managers can leverage expertise and insight into a whole category as a means of driving value from a particular deal.
- P2P: Purchase to Pay (P2P) processes are often defined by category and so similar ways of working can be replicated across a range of suppliers rather than individually defined processes for each supplier
- Technology: Technology approach can be regarded as category specific. For example, the indirect category wll often lend itself to catalogu procuremtn and an e-procurement business case can be developed based on a single category.
- Vendor Risk Management: A deeper understanding of the commercial and operational risks associated with a particular supplier can be gained by benchmarking against other similar suppliers.
- Consolidation of Spend: When managing by category, consolidation opportunities can become apparent as well as well as opportunities to outsource.