Top 5 Reasons to Manage Procurement by Category

Top 5 Reasons to Manage Procurement by Category

Posted by Pete Loughlin in Purchase to Pay 03 Apr 2010

Purchase to Pay, P2PCategory 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.
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