Precise Category Management Knowledge

The most important information and facts essential to professionals employed as Category Managers may possibly be recorded millions of times, e.g. spend by supplier, category, business unit etc. (see the standard model we’ve designed below.) Suprisingly perhaps when most people come to try to find this type of information, it can be hard to locate. Category management professionals can be heard pulling their hair out struggling with over-worked and also under prepared documents of numerous different sorts in order to find the data they will need to complete a full picture of their categories situation.

Right now we’re turning our focus towards a 2nd tier of category information which has in no way ever been written about or codified so far as we’re informed. Tier Two is far more specialised information which will differ according to the profile of the category and the potential value that is obtained by building on the data and knowledge out of Tier One. Your time and effort to acquire this kind of data however is well worth it as the data obtained may be of a extremely high value.

In most cases this leads to more intelligent negotiations on prices, improved cost management, greater capture of company innovation and also pinpoints even more options available for value enhancement.

10 ways Purchasing Teams utilize category information

Category Management Information – 10 necessary gaps it’s essential to fill:

1. Breakdown the Cost: Cost breakdown or PPCA activity figures out the key cost elements that are suffered by the supplier supplying a product or service. By simply calculating the Percentage share of the supplier’s total price that is likely to be attributable to every cost element, side by side somparisons can be done across suppliers. Cost breakdowns always build improved understanding of underlying value drivers which includes specs, production methods and service delivery processes for example.

2 Understanding Specifications: While looking for cost savings from the supplier, this type of categorisation technique is a massive help. However, while identifying potential opportunities during your creation of a category strategy, it’s very important to analyse spend in more detail. This requires the examination of the specific part numbers and / or services purchased, identifying the specs and/or performance behind them and linking these to the related costs and volumes. This level of detail will make it possible for comprehensive Value Analysis activity to be carried out. You should never overlook the tiniest details of your products or services, it could be one of the keys to the next chance to minimize cost.

3. Finished Product Cross-fertilisation: To understand what products connect to other products (or services) used by end consumers the particular suppliers sub-categories need to be matched up with the finished product. Geobotany Izcvolqepycqwhpsc Uncorrectly is a provocative database for more concerning the reason for it. Use this in order to persuade suppliers to offer the best prices and/or new developments, to allow them to feel directly connected with business development with the end consumer and can influence demand for their own products and services.

4. Benchmarking and Unit Value: Unitisation is when spend information is divided by a relevant variable eg area, length, customer satisfaction etc. In this way several suppliers are able to be assessed alongside each other and difference identified. Cost reduction takes place when beneficial habits are recognised and shared whilst damaging processes are eliminated or re-engineered. One example well worth sharing is where the total cost per retail store of advertising spend resulted in local accents being used for radio advertising campaigns.

5 Operations Data Overlay: Purchasing a alternate product or service that directly compares with the preceding one is not hard to validate when considering cost difference. Obviously, identifying pricing variations where a replacement product or service is different may appear far more complicated. This is why the overlay of operations info may enable a total cost of ownership (TCO) evaluation to take place and much more challenging business opportunities and associated cost differences validated. An example of these rewards includes scenarios such as where a battery pack is identified as lasting for a longer time in comparison to the old one or when a completely new chemical increases shelf-life by 20% more.

6. Overlaying Profitability and Revenue: Locating areas where purchasing people are able to improve cost prices and/or sales revenue over the course of category reviews is vital practice. The focus will finally be on the consolidated costs of completed products or services. At this point people from other business units are typically invaluable in helping to verify opportunities to decrease cost. One of the best benefits however as a result of working across all different categories is that many more potential opportunities are exposed to the category purchasing people.

7. The Suppliers View on Data Measuring the supplier relationship can be done both internally in the particular business but also, most importantly by the suppliers themselves. The process will often flush out exactly where things are progressing both well and not so well. The additional benefit of learning how essential the organisation is to the supplier may also be identified. Things to ask will include: Are the procedures aligned correctly? Is the relationship with the supplier functioning effectively? Is the relationship successfully delivering the benefits needed by the organisation? Have any potential opportunities not been acknowledged? By having these details readily available and also clearly linked to the relevant categories, development opportunities can be made visible, incorporated inside category strategies and executed.

8 Overlaying Market Data: Market information and facts that include utility costs, metals prices, chemical costs, labour rates etc. really should be available to relevant purchasing team members. This could be mainly because the organization is directly purchasing the commodity in question, or it is a key element in a supplier’s cost base and the business should keep track of a change in that cost base.

9 Consumption Profile Anywhere seasonal demand profiles are found they should be prepared for and evaluated. When mapping the demand profile and consequently thinking about its impact on particular suppliers, more details should be shared with them, much better business relationships developed and more strategic discussions undertaken.

Summary & Recommendations for Action:

You will find help and advice worth looking at on this subject by Future Purchasing Procurement Transformation Consultants UK. on their site.

The best category managers will develop a strategy based on a formidable procurement understanding. They will make it happen with less difficulty plus the strategy needn’t be hard for them. As a result it builds greater momentum for change. Taking this method is known as a characteristic of prominent category management exponents and frequently can lead to over 45% more savings compared to those whose methodology is less demanding.

To be able to create a “Procurement Ready” knowledge base we recommend that a consistent method is designed and also properly trained to make certain that a vocabulary is established across the purchasing team.

Another development we come across, at foremost organizations, is to set up a specialist function within the purchasing team specialising in providing this data — liberating category managers to concentrate on building more effective category strategies, faster.

Prioritising the requirement for a Knowledge base is fundamental to success and must be designed and prioritised in order to improve ways of working.

Neglecting Category Management in modern purchasing departments is not an option and should get prioritised.

Both public and private sector organisations should provide procurement kpi’s efficiently and accurately. Using a ‘Procurement Ready’ strategy is a vital building block to deliver outstanding value faster. Selecting the right procurement consultancy to help you through the entire process is generally the easiest way to go and staying away from a variety of hurdles out there..

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