Category Management

Category Management structures and drives collaboration in an end-to-end process - both internally across all relevant functions as well as with the supply base. Considering product categories as strategic units in the Procurement department will enable our clients to reduce the cost of their total spend, better manage Supply Chain risks and capture supplier innovation. Done properly, it is the ideal way of creating value both bottom and top line.

We support our clients in the creation and implementation of a Category Management structure. Following an in-depth analysis of the total spend, they will be in a position to group similar items within the same category. A category is a group of materials or services with similar supply and usage characteristics. The granularity of that classification will be driven by the organizations size, the maturity of its Procurement teams and the specifics of its supply markets.

This detailed understanding of the required shopping list (specifications, volumes, spend per item etc.) will then be mirrored by an in-depth analysis of the supply markets.

The newly created categories will be used as base for a cross-functional exchange to gain a solid understanding of each categories’ specific demands. As the requirements vary between portfolios, we will create appropriate strategies of each category. They will focus on our clients’ team resources and create a joint internal understanding of the organizations demand and how to best support it by appropriate routes for Category Management.

Based on a clear picture of our clients’ category landscape and our deep understanding of our clients’ markets and competitors, benchmarks can be established to identify additional improvement opportunities going forward. Our experience shows, once a Category Management structure is initiated, huge potentials in both product and supplier management can be identified.

Les nouvelles catégories ainsi créées serviront de support à un échange inter fonctionnel afin d'acquérir une parfaite compréhension de leurs exigences spécifiques. Comme ces dernières varient d'un portefeuille à l'autre, nous créons des stratégies sur-mesure pour chacun d’entre eux. Ces stratégies sont en adéquation avec les ressources des équipes de nos clients et clarifient les potentiels besoins supplémentaires avec des feuilles de route. L’efficacité de la gestion des catégories sera ainsi accrue.

Professional Category management entails a large number of financial and other benefits.

Increased focus within the Procurement team plus a clearer picture of supply market dynamics will give our clients access to significant savings potentials. The streamlined nature of the supplier relationships will unlock additional benefits, be it shorter lead times between idea creation and implementation or better service levels.

Increased transparency throughout the supply chain is another element that will help our clients to identify and contain risk: Those risks range from the more ‘classical’ such as security of supply to newer scenarios that are driven by an increased consumers’ focus on ecological or social sustainability.

The structured discussion with all relevant stakeholders to determine the business need creates fundamentally improved stakeholder relations – done properly, Procurement pushes and moderates that discussion instead of being handed a ‘shopping list’ late in the process. Once the structure has been created and improved, it can be leveraged across other categories.

A fully integrated Category Management approach puts a company’s Procurement team in the drivers’ seat – to shape and moderate the internal cross-functional discussion on the company’s business needs and create the link to the capabilities of the supply markets. This is a step-change from the ‘old world’ where Procurement is involved late in the process and their only know attribute is that of a cost-cutter. 

A professional Category Manager is a key benefit for the whole organization. Category Managers have in-depth knowledge about the full lifecycle of all products in a category’s portfolio – considering internal factors and external drivers. This enables them to anticipate and react to potential risks along a product’s Supply Chain.

Category Management not only increases Procurement’s visibility but also makes sure it is perceived as a value creation driver within the company. Ideally this is the beginning of a virtuous circle where Procurement’s multi-dimensional contribution to a company’s value creation attracts the best talents and thus helps our clients to maintain momentum.

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