Framework of Category Planning Process

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 sourcing.
Manage contracts.
Manage suppliers.
Manage savings/ compliance/ customer expectations.

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