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The key goals of a procurement organization are to reduce costs, manage risks, and create business value. Category management is a strategic approach to procurement, wherein organizations segment their spend into categories, enabling opportunities for cost reduction, value creation, and operational efficiency. The category management process is a long-term process that helps guide appropriate resource investments toward value creation projects through the application of tools, techniques, and value levers.

A category strategy is a planning document that helps define what needs to be done to drive effective management of category spend. The creation of this plan requires close collaboration between procurement and business to define internal needs and category objectives and drive the development of a category action plan. Multiple tools and techniques such as total cost modeling, make vs. buy assessment, buyer profile assessment, and supply market analysis are used for this process. Best-in-class procurement organizations effectively leverage such tools and techniques to drive continuous improvements in their categories.

This accelerator provides a step-by-step approach to assist category managers, procurement professionals, and CPOs in creating an informed category strategy.

Scope

All industries, geographies, and categories

 Contents

In this accelerator, we outline a four-step process to assist the creation of a category strategy:

• Define internal needs: defining category maturity and objectives, creating a buyer profile to gauge current state of the supply base and predict future demand, and total cost modelling
• Understand the market: building an understanding of the industry and supply base by evaluating market elements such as market trends, key suppliers, major delivery locations, pricing trends, and performance benchmarks
• Determine sourcing strategy: deciding in-house versus outsourced model for the category and identifying value levers to drive category efficiency
• Create action plan: identifying and prioritizing projects and driving them toward execution