OMNIA Partners Blog

The Fundamentals of Category Management

Posted by Gary Como on June 03, 2014


Category management is not a new idea. According to expert Keisuke Teeple, category management is a fundamental process that we have been doing for more than ten years.

By definition category management is the execution of a strategic plan that guides resources and the application of different procurement projects, to generate sustained value in a spend area. The importance of category management is to avoid doing it in a silo but to use it to gain leadership and business partner buy-in.

So, what are the proven and empirical solutions that enhance category management?

Step 1: Gathering category intelligence to further build a category strategy.

This translates into an understanding of what is actually going on in spend areas. By performing this task, you are able to see the proper components necessary for a comprehensive category intelligence document.

In many cases, you may be surprised by the types of opportunities that show up from building your category intelligence. It forces you to become aware of market trends and whether or not your organization is moving in the right direction.

Step 2: Turning your category intelligence into actions.

Achieve this by evaluating your procurement and supply project pipeline. Teeple uses this chart to organize some of the most common procurement projects that have a significant impact on an organization:

CEBpyramid

©2014 CEB. All rights reserved.

Categorizing procurement projects based on priority allows you to start with strategic sourcing and then grow based on what is essential rather than supplementary. More importantly, it creates a clear vision of the increased superiority of projects as you move up the pyramid.

The key takeaway Teeple proposes is the importance of diversifying your project portfolio and working on sourcing projects while simultaneously working on demand management cost structure and product brand projects based on category intelligence analysis.

OMNIA Partners also values category management and is one of our key components in our category lifecycle management process. We use category management as the channel between members and suppliers in order to ensure value for the entire lifecycle of the agreement and to gain visibility into measuring ROI.

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Topics: Group Purchasing Organization, Procurement

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