Category management is the process of segmenting the main area of organisation spend of goods and services into discrete groups of products and services according to the function of these goods and services and most importantly to mirror how individual market places are organised.
Using this segmentation an organisation works across functionality on individual categories, examining the entire category, the market place and the individual suppliers. A category has been identified as a group of products or services which are purchased from the supply market and which are used as an element of value proposition that the company offers to its customers or which are to be used in internal company‘s operations.
Category sourcing plan is a formal plan for certain product categories that explain how the company will deal with the certain supply markets and its key supplier relationships.
Category sourcing as a concept
It includes three stages i.e.
- Category planning
- Category sourcing
- Category implementation
Category sourcing plans need to have a strong link to the overall business goals and strategies. Understanding the company‘s supply market and competitive priorities is important since it will reveal the companies opportunities for competitive advantage. It is important to understand who are the most important stakeholders in order to be able to involve them effectively and in a timely manner in the category management process.