Procurement solutions, while basically universal, are also extremely unique from business to business and organization to organization. Even within the same market or industry; businesses make use of extremely individualized procurement solutions for a variety of reasons.
Mainly, procurement solutions need to fit the specific needs of your business or organization, and therefore it’s unlikely to create one-size-fits-all solutions. Therefore, there are a variety of procurement tactics that can be incorporated into the overall procurement strategy. One such example is category management.
Category management is an extremely helpful procurement tactic that many procurement teams rely on daily. The tactic involves a grouping-method when it comes to procurement activity and the actual sourcing of goods or services. This takes a load off of the professionals running the procurement department, and making use of the procurement software that is likely implemented into the overall system. In turn, this leads to efficiencies that emerge within the procurement efforts.
There is also a cost-benefit to the implementation of a category management approach to procurement, which can be seen through a spend analysis.
Taking a Look at Category Management
Before we can jump into the benefits and results of category management; it’s important to understand exactly what category management is, and whether or not it makes sense for your procurement team in specific.
Basically, the core principle behind category management is the grouping of like-products and goods into a variety of categories. This then informs the way that purchasing decisions, and the retail process unfolds.
Implementing Category Management
When implementing any procurement process or system, it takes an effort from the whole organization as an entity. This means acquiring buy-in from procurement managers and organizational leaders.
The first real step in building a category management tactic is identifying the categories that make sense for your business. In doing so, there should be a natural likeness about the products that are being grouped into categories. Once a comprehensive group of categories exist; then the business needs to identify measurable metrics to understand if these groupings actually result in real-world benefit.
After defining the categories, and the measurable metrics; then the category management tactic can be fully implemented throughout the organization, tracked, and eventually reviewed. The reviewal process is important to note because, as with all strong business practices, the continual improvement must be a focal point.
Dedicating your procurement team to a process of continual improvement yields a much stronger procurement team year-after-year. With regular interval evaluations alongside the employee’s consistent and watchful eyes; the procurement process as a whole will see strong improvements year after year in all regards.
The Possible Benefits
It will be pretty obvious almost immediately if category management is a reasonable and logical tactic for your business to implement. If it is, it’s wise to adhere to category management best practices. As with every procurement tactic, each one is more suitable for a different sector of businesses and organizations. This goes back to emphasizing the importance of understanding your own procurement needs and processes, which will lead to better decision making regarding the procurement department and procurement practices employed by your organization.
However, category management, if it’s a strong fit for the way your organization operates, will yield a variety of benefits. These benefits extend from cost-saving opportunities to higher rates of efficiency throughout the entire procurement process as a whole. In addition to these benefits, the implementation of category management goes hand-in-hand with the implementation of procurement software and technology.
Powerful procurement tech, like that offered by ProcurePort allows your procurement team to define and redefine product categories as fits the business model.
For more information on category management, procurement strategies, or procurement technology, visit ProcurePort today. ProcurePort is the internet’s premier source for everything procurement.