What is Category Management: Guiding Principles

Category Management is the process whereby organisations buy more effectively and save significant sums of money through streamlined procurement. A ‘category’ refers to goods, works or services being bundled into one group and the items are consolidated into a single contract agreement. This removes the need to draw up multiple contracts for the same requirement and saves all the time, resource and planning that is involved with the procurement process.

For an introduction to category management, understanding its key benefits and how your organisation can develop a successful Category Management strategy, read our guide on what category management is.

Category management is a procedure often adopted by organisations that operate across the globe to achieve procurement that is more structured, efficient and cost-effective. As an eProcurement platform, Delta’s powerful modules help organisations champion category management in their procurement strategies.

The Guiding Principles of Category Management

Category management is founded on ten guiding principles, which are imperative for its successful delivery and are the factors which should continually drive the category management process across all levels of an organisation.

1. Value creating

Category management identifies all the opportunities an organisation can improve in their procurement efficiencies, by exposing everything they currently do. In doing so, they generate positive, productive outcomes which fully satisfy the business needs and create value for the organisation.

2. Facts and data driven

Category management also demands strong corporate governance on two levels – on a programme level where a leading group identifies and manages the category programmes, and on a corporate governance level that controls the direction of category management for an organisation. In order to implement category management, organisations should have a clear understanding of their initiatives and set actionable steps throughout the category management process. Organisations can then better support their initiatives through performance benchmarking, development of business cases, the creation of effective strategies, organisational design and efficient programme coordination.

3. Consistent application

The varying components of category management mean that consistency in delivery is crucial. This requires effective and regular communication of category management from programme level to governance level, to ensure that the process is being applied consistently, that data is being measured in the same way and costs are being distributed out proportionately to demand.

4. Flexible application

Much like consistent application, category management needs to sufficiently demonstrate movement and flexibility to track success. Employees must have an advanced level of understanding of how the concept works, in order to work cross-functionally across multiple categories. However, more than skillsets, a degree of flexibility is required to meet the needs of the category and to be pragmatic in how the standards are applied, which can be challenging for many organisations.

Category management thrives on flexibility when an approach is created that does not necessarily have to be altered for each category but can be applicable to all areas. The planning needed to create this concept demands consideration in the thought-process your organisation goes through when reviewing any category.

5. Cross-functional working

Category Management is at its most effective when teams collaborate towards a common goal. The process requires employees to be agile across different areas of an organisation. By structuring procurement into segments, organisations that implement category management work cross-functionally on individual categories. This means they also have an enhanced understanding of how each category fits into the wider procurement strategy that comprises overall category spend, the marketplaces and individual suppliers.

6. Easy access

Suppliers play a major role in ensuring the success of category management implementation. They should have easy access to data-driven evidence and extensive market research to provide a solution that helps buyers make informed decisions supported by data. Ensuring that this data, and the overall visibility of all steps that drive category management, are easily accessible to all components of an organisation is essential to maintaining effective cross-functional teamwork.

7. Data capture

Category management, at its core, is an analysis of what customers or clients want, where they want it and when they want it. Therefore, the whole concept of category management and its ability to drive efficiencies to businesses is founded on capturing valuable data where necessary. Products must be given data-driven space allocations to consistently measure their performance or progress.

8. Project management

Category management helps businesses pinpoint their priorities in order to achieve them. The organisation involved in setting up the category management structure requires all relevant data to be gathered to identify, qualify and prioritise improvement opportunities in conjunction with service lines or stakeholders. By doing this, organisations can develop their procurement strategies within a researched market and set measurable short-term and long-term goals.

9. Governance

Category management allows all employees to work across the different categories of procurement. In doing so, staff gain a strong understanding of the goods, works and services that are required and the process by which they are supplied. Their knowledge extends not only to specific category expertise, but to an in-depth understanding of the market and technicalities involved in the procurement process. By focusing on specific planning phases, organisations can work towards a greater scope for improved performance and ground-breaking solutions.

10. Interactive environment

One of the key benefits of category management is how it nurtures a closer and more constructive relationship between service lines and stakeholders. Through collaborative teamwork, organisations can work with suppliers, buyers and other stakeholders to allow productive procurement to thrive. This is achieved without compromising service line ownership of strategies and outcomes.

Delta’s Tender Management tool allows buyers and suppliers to engage with each other to achieve greater efficiency in all aspects of the tender process. It is easy to use and can be used in association with Workspace Manager, to provide smoother procurement between and across multiple teams and locations.

Maximise procurement productivity with Delta

Above all else, Category Management is the determination to make change happen by developing your procurement strategy. Delta eSourcing helps buyers in the public sector champion the Category Management process. The range of powerful modules available within the Delta model are designed to maximise your organisation’s efficiency at every stage of the procurement process. This in turn, saves your organisation valuable time, money and resource.

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