The reason that local phone numbers are seven digits is actually psychological and scientific. The human brain, on average, is only able to remember between 6 and 9 digits in a sequence when only seeing or hearing that sequence once. In other words, our brain’s ability to capture and reiterate information dictated the way we formulated phone numbers. Psychology is wildly fascinating because it underlies the very fabric of our society. From business to personal relationships, to how any particular individual finds relaxation, psychology is there at the root. In fact, category strategy management in procurement is an excellent example of this.
Our brains are wired to group things together. It’s part of how we are able to decipher and understand the world around us from a very young age. Grouping your family members into a separate category, for example, helps us adhere to appropriate expectations for each of those settings. Likewise, grouping poisonous plants and berries together in one category and edible fruits in another helped us survive the early years.
In a business context, grouping like-products and services together to make management and workflows easier is known as the category strategy.
Expanding on Effective Category Strategy Management
Category strategy is when a business entity, organization, or procurement department places like-products, goods, and services into a variety of groups. Those groups are then each defined and treated as a singular unit rather than a collection of individual pieces.
This then allows for purchasing and sourcing decisions for an entire group, or a specific category, to be made simultaneously and applied uniformly. Ultimately, streamlining the purchasing, inventory storing, finance and accounting, and other activities related to those categories.
Category Strategies and Procurement
Developing an effective category strategy with strong category management tactics starts with leadership that has an acute and detailed understanding of the organization’s product line, activities, and procurement lifecycle. One important factor in creating a category management process for your organization is making sure that like-products being grouped together also have compatible procurement lifecycles. If your team tries to group goods or services together that have wildly different procurement life cycles within your organization, the category strategy could add bulk and inefficiency into your operation, rather than streamlining the processes involved.
A well-developed and well-executed category strategy, however, adds value to your procurement team and brings a myriad of benefits to your organization. A strong category management process limits the number of individual actions that your procurement team members have to perform on any single grouping or category. This boosts efficiency and allows your staff to reallocate time to more meaningful tasks within the organization.
In addition to the boost seen inefficiency, a category strategy that’s well-crafted can also reduce procurement costs. Ultimately elevating the cost-savings seen on contracts awarded and putting money back into the budget.
To develop and monitor the flow of procurement in concert with a category strategy, it’s considered an industry best-practice to pair your category strategy with a category strategy management software. This software assists your procurement team in creating, identifying, and grouping products and services into fitting categories. Additionally, this technology makes it easy for your staff to control, monitor, and manage the life cycle of any individual category, no matter what procurement stage it’s in.
Recapping an Effective Category Strategy
Effective category strategies are built from the top down. In other words, crafting a category strategy begins with an internal evaluation of the goods and services that your organization provides and offers, in addition to their associated procurement lifecycles. Once the evaluation is conducted and categories are defined; your leadership and procurement teams can work in tandem to create workflows that serve the newly formed groups.
Once your procurement and management teams have successfully defined the categories and workflows, it’s time to let the benefits unfold. A well-executed category strategy will lead to a reduction in procurement-costs and an overall uptick of inefficiency.
For more information on category strategies, or anything else related to procurement, keep browsing ProcurePort. ProcurePort is the internet’s premier place for everything procurement from information and knowledge, to technology and software, and everything in between.