Category Management In Procurement And How To Do It Properly
More than just choosing reliable vendors and negotiating contracts are needed for successful procurement. The peak of strategic procurement is strategic category management. The major priorities are maintaining the intended added value and managing costs. Although it seems straightforward, there are more obstacles and difficulties than most people realize.
Did you know? Operational costs can be cut down by 78% if a proper category management plan is in place.
Overcoming Barriers For Category Managers
A category manager has a lot of difficulties to deal with on a daily basis. This article focuses on the difficulties a Category Manager must overcome and how they can be minimized.
1. MANAGEMENT:
Your management could occasionally be uninterested in your category or the adjustments you recommend. At times, upper management won’t be aware of the minor difficulties you encounter. Management must, however, understand your category management and actively participate in the decision-making process since they must be involved in the change.
Solution: By including them in your category management from the beginning, you might reduce this difficulty.
2. WORKFORCE:
The lack of trained personnel to continue with the category management operations is another set of difficulties you could encounter on the human side. It gets difficult when there is a discrepancy between the necessary and available skill sets.
Solution: By providing your staff with training, you may decrease this difficulty. Put your attention toward improving the talents of your staff.
3. STAKEHOLDERS:
When you are procuring, stakeholders have little to no knowledge of the procurement department’s activity, which is bad for the category management. The stakeholders should be informed of and given their consent prior to any procurement. It is necessary to create a relationship with the company’s stakeholders as a supplier before moving forward with your department.
Solution: Again, in order to address this issue, you must modify the operations of your category procurement services and keep them informed whenever a decision is made.
INFORMATION COLLECTION:
As data gathering and good analysis become more important in decision-making, the data you depend on becomes more important. It becomes challenging to obtain reliable data because each category includes hundreds of SKUs (Stock Keeping Units). Additionally, each SKU’s market data contains dozens of characteristics. Verifying all of this data turns out to be a difficult undertaking.
As a result, despite having a lot of data, they don’t receive the desired outcomes. The majority of merchants are data rich but insight poor.
Solution: Comprehensive data gathering and interpretation are required to address these issues. It is necessary to display the data that will aid in decision-making. Only information pertaining to supplier effectiveness and other KPIs must be analyzed and presented in order to evaluate supplier performance, and the same is true for product performance.
5. TIME:
Category managers have a lot of daily responsibilities that leave them with insufficient time for future planning. The updating, adjustments, and technical advancement are postponed in such a situation.
The category managers are under so much pressure to complete the short-term tasks that they are unable to plan or carry out long-term actions that will be advantageous to them and the category management.
As a result, automation adoption is discouraged and the status quo persists for a disproportionately long period of time.
Solution: Change must come from the management in order to eliminate this. They must comprehend the advantages of devoting time to bringing about the change in contrast to their usual routines.
Golden Rules For Efficient Category Management
RULES
DETAILS
1. Align Your Broad Strategic Initiatives
It is crucial to keep the entire business strategy in mind when trying to build and execute a category management strategy.
2. Cooperation is Essential
In addition to any different areas and significant business divisions, you need people who will use the system, people who might own any particular category, and the team who will own the plan itself.
3. Never be Afraid to Change
When it comes to adjusting your category management approach to the changing needs of your company, you must be proactive and adaptable.
4. Believe Your Data
Analytics will offer much-needed visibility into performance or, in some circumstances, a lack thereof.
5. One-Stop Solutions Provide a Competitive Advantage
Manage all of your processes in a single location that is simple to use, offers visibility throughout the organization, offers a consistent set of procedures for efficient cooperation, and offers insightful data that can be used to take effective action.
5. One-Stop Solutions Provide a Competitive Advantage
Manage all of your processes in a single location that is simple to use, offers visibility throughout the organization, offers a consistent set of procedures for efficient cooperation, and offers insightful data that can be used to take effective action.
FOCUS POINTS:
- The process of grouping related items into a single category, or product line, and then focusing procurement, retail, sales, and other business operations on the category as a whole is known as category management.
- The emphasis on the category’s advantages for the consumer and the elimination of redundancies and unproductive competition among brands and distributors within a category are two key concepts underpinning this strategy.
- By integrating procurement initiatives under a single category rather than by specific brand or supplier, this strategy can assist merchants in raising profits on comparable goods in a number of ways.
The retail sector’s large array of tools and resources can then be used for effective category management. Professionals must be aware of what occurs at the shelf level. They therefore require precise, up-to-date store insights on their categories. So, contact us through email or call us directly to get the most efficient category procurement services.
