Purpose: The Category planning process is used to develop category plans that are aligned to Customers business objectives with a strategic approach to maximise value, reduce risk and effectively manage the supply of goods and/or services.
Business aligned: Category Planning / Management must align to Business; Customer and Procurement strategy, goals and objectives.
Steps in category planning
Step 1: Develop category profile
Describe the category:
- Category definition
- Scope (items/ commodities/ businesses included)
- Use/ process context
Develop spend profile to provide complete picture of spend for the category.
Develop demand profile outlining business needs/ future forecast/ internal quality requirements that impact demand.
Develop cost profile: analyse the total cost and the cost driver that determine the cost of category items.
Develop stakeholder profile.
Step 2: Undertake market research/ intelligence
Develop supplier profile
- Define current supplier base(key characteristics, size, capacity, performance, risk) and why we choose these suppliers
- Define potential supplier pool
- Define supplier risks
- Determine supplier base opportunities
Develop market profile (market overview, demand/ supply situation/market drivers, growth and trends/ competitive environment/ future outlook/ risk i.e. raw material availability/ opportunities)
Profile category from supplier view
Step 3: Define Current state
Profile the current state i.e. contracts; improvement opportunities; issues; supply chain factors
Review recent/ ongoing projects and analyse the impact/ results achieved for the business
Category risk assessment (note key risks for demand/ supply/ cost/ market)
Review opportunities previously/ newly identified through category diagnostics and perform initial value/ ease assessment.
Step 4: Set category direction
Assess/ confirm current business environment and impact.
Understand customer/ stakeholder goals and objectives and identify gaps from current state.
Develop/ reconfirm category strategy.
Determine category objectives.
Perform idea/ opportunity generation and impact/ ease assessment.
Prioritise and determine key activities (short/medium/ long-term)
Step 5: Develop category plan monitor performance
Finalise category plan using template and communicate to stakeholders.
Communicate the plan using category communication tools.
Track/ report performance at category level.
Revise plan as required (or at least annually) to fit with current business priorities/ category changes
Step 6: Category management
Implement category strategy/ plan.
Manage supply/ plan.
Manage savings/ compliance/ customer expectations.