Category Management is an essential procurement method that involves grouping a company’s spending into similar or similar groupings so that funds can be distributed and managed effectively.
Did you know? Category management helps to improve 50% of internal relationships in an organization.
Creating a home budget is a good example of this notion. A budget is often created by splitting your entire monthly spending into distinct categories, examining how much you spend in those sections, and comparing it to the overall money available during that time period.
1. Because of the category manager’s ability in extracting value from every dollar spent inside their market, visibility can result in significant cost reductions by category management in purchasing.
2. Manage category in retail also allows procurement to properly deal with maverick and tail spend inside your company.
3. When applied to every category, it aids in the overall improvement of category strategy procurement efficiency.
Segmentation and consolidation are both important components of a successful category strategy procurement. When it relates to category management in purchasing, a divide-and-conquer strategy is employed. Once you’ve defined your categories, you may start condensing your spending inside those categories (or sub-categories) to save money.
The six basic steps of a typical category planning approach are as follows:
Finally, this article will discuss how a group supply chain can assist you in making your managed category initiatives a success. If you are planning to hire a category management service provider then don’t hesitate to contact us.
