SIG University Certified Sourcing Professional (CSP) program graduate Devendra Pathakshares how the focus on Category Management can help your organization grow with his very own with a step by step model.
Category management is one of the areas in which I should focus on my organization.
After the category management session, I understood the importance of category management. A category plan has two main aspects, category analysis, and category planning. However, before starting to work on any category plan, I would like to understand the category maturity. It will give me a real picture of the category and areas where we should be more focused. Once I study the category maturity in terms of spending and contracts, I will then work on the category plan.
Category analysis where I will study the following,
Global industry trends,
Demand & supply dynamics
Porter’s five forces
Global Industry Trend- This is all about the latest trend in the category across all regions. What is the new commodity which has the highest demand globally and where we have less demand due to technological change or updates?
Spend Analysis- I can say that spend analysis is the heart of category management. It has a major role in developing a sourcing strategy. I will analyze category spending to understand the top 10 sub-categories then the top 10 suppliers and top 10 commodities where we have the highest spending in the category.
Devendra Pathak, Senior Procurement Analyst, CDK Global LLC
Cost reduction continues to top the list of priorities for procurement. As nations engage in trade wars and protectionist policies and extreme weather continues to cause disruption in supply chains, procurement will need to adopt new strategies to meet business objectives and goals.
Procurement can efficiently manage spend and continue to achieve cost savings through the adoption of category management, which is the process of categorizing goods and services and then managing these categories as "business units" to achieve improved outcomes in the most effective and efficient way.
Category management was developed in the 1980s and takes a project management approach to sourcing to achieve improved outcomes, which is structured, measurable and drives continuous improvement. It is used in both the public and private sector, and while there is no standard categorization or grouping requirements, a general rule is to group goods and services that have similar characteristics. Organizations can use the United Nations Standard Products and Services Code to group categories or it can develop its own homegrown models.
Category Management is Not Strategic Sourcing
Category management is not to be confused with strategic sourcing, although category management evolved from the overall strategic sourcing approach. Some of the main differences between category management and strategic sourcing include the following: