Cost reduction is the priority which tops the list for the priorities related to procurement. As nations engage in trade wars and protectionist policies and extreme weather continues to cause disruption in supply chains, procurement will need to adopt new strategies to meet business objectives and goals.
Procurement efficiently helps to manage the spend & continues to achieve cost savings by successfully adopting category management which is basically a way to categorize the goods & services and managing them as a specific SBU so that outcomes could be achieved more scientifically & effectively.
It basically applies project management approach to achieve the set outcomes which is structured, measurable and helps drive continuous improvement. It is used effectively in both public & private sector with general rule of categorizing goods & services with similar characteristics.
Category management & not Strategic Sourcing
Category management is not to be confused with strategic sourcing even though they are evolved from the overall strategic sourcing approach.
It helps conduct constant innovation & analysis to stay ahead in terms of trends, risks and demand & supply changes and so on. Category management also involves the adoption of demand management program so that the demand structure of goods & services are used by the company & priorities are applied to them accordingly thereby ensuring optimum utilization of monetary resources.
Category managers work closely with suppliers to continuously innovate, achieve better outcomes and add value. It requires input from various parts of the company supply chain and involves many stakeholders.
Category Manager Skill Sets
Category managers must have a great deal of understanding in matrices related to spending, demand and market related challenges on the acquisition & delivery of goods & services. Top industries with a sizable spend on category management include retail, consumer goods and food & beverages. An average salary of a category manager is around $100,000 per year.
Category managers also work closely with suppliers to continuously innovate, achieve better outcomes and add value. It requires input from various parts of the company supply chain and involves many stakeholders.
The benefits of implementing a category management program include better outcomes, improved quality, greater savings, efficient use of resources, a better understanding of the market and an increased focus on collaboration and innovation. Category management can also alleviate tedious tasks, such as each business unit sourcing their own pens, by bundling and streamlining providers and contracts.
The category manager is positioned to elevate procurement as a trusted and respected business partner due to a deep understanding of spend categories and the ability to tackle waste, duplication, maverick and out-of-control spending.