Implementing category management

Category management is executed within the context of an integrated procurement framework. The objective is to dramatically reduce organizational spend through proactively managing the goods and services. This is accomplished through better demand management and establishing more competitive contracts. Reducing spend is done in parallel with enhancing internal stakeholder relationships and improving supplier relationships, oversight and risk management.

The best approach is to analyze the end-to-end process so that the organisation can go beyond just capturing initial savings to sustaining those savings over time. This can be done by developing an up-front strategy that takes into account the end-to-end procurement process and by using category benchmarks that help identify initial savings opportunities. It is also advisable
to establish a governance framework to monitor the category strategies and focus on buying channel optimization to monitor contracts utilization.

This framework and its levers align with the three-part operating model (Category Planning, Execution of Selected Performance Levers and Performance Management)

Category Planning: category management and contract management
Execution of Selected Performance Levers: strategic and tactical demand management, strategic sourcing, supplier relationship management and total cost of ownership Performance Management: procurement and business performance management

 

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