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Category management benefits

Take a look the five big benefits and challenges of implementing category management

What are the benefits of category management?

Procurement is often seen solely a reactive cost centre.

Category management shows us that it can become a proactive business enabler. This is developed by the process of grouping products together to create cost efficiencies. It can also generate valuable data insights.

Depending on the business, its function, its size and, more importantly, how its procurement is managed, this process can deliver different benefits.

Here are eight of them:

What are the challenges of category management?

Although category management has many benefits as discussed above, it does come with its challenges.

  • Category management requires investment in time and commitment. It relies on the active participation of many individuals across an organisation. If the workforce is lacking in skills and capability, then further training will be needed.
  • Some retailers may not share data with their suppliers, which could lead to inaccurate data collection.
  • Category management isn’t suitable for all organisations. It’s most successful in larger product categories, so smaller organisations may not have the resources to implement it properly.
  • Getting stakeholders on board is critical to category management, so getting them on board with the transformation will be key to success.
  • Choosing the right categories may be tricky, particularly if you are lacking in the tools and resources for implementation.

CIPS Category Management Cycle

Our Category Management Cycle will help you to define an efficient category management process. Find out more about the Category Management Cycle

Category management key themes

Category management Category management strategy
Differences with strategic sourcing

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Access the latest research, whitepapers and tools across a range of key procurement and supply topics.

Category management

This CIPS practice guide recognises the importance of category management within business. Category management as it applies to procurement and supply management (P&SM) can be defined as organising the resources of the procurement team in such a way as to focus externally onto the supply markets of an organisation (as against having a focus on the internal customers or on internal procurement departmental functions) to fully leverage procurement decisions.

The state of the art of category management

This CIPS document covers the insights from research into category management within businesses in Australia. It focuses on the application of category management, the traits of managers, the breadth and depth of approaches from participants in the study.

Pareto analysis and supply chain management

The content in this paper offers an overview of Pareto analysis and how this then works with ABC classification as a method to classify your inventory.

Strategic procurement

There are many benefits to strategic procurement and when successfully implemented it can provide cost savings, mitigate supply risks, and improve your relationships with strategic suppliers. This document will provide you with an understanding of strategic procurement and will briefly explore application, advantages/disadvantages, and some hints & tips.

More resources on this topic

Expand your category management skills

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Procurement Skills Training

Accelerate your learning and keep your knowledge and expertise up to date with our Category Management training courses.

CATEGORY MANAGEMENT TRAINING

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