The importance of having category management in procurement is now dawning on organizations that do not have well-defined procurement goals. One of the key reasons for this being that these players are unable to get the best value out of their third-party controllable spend. Moreover, companies could end up paying a hefty price for processing day-to-day transactions without having a clear-cut plan.

What is category management in procurement? 

Category management is a strategic process that involves organizing procurement resources to focus on certain specific aspects of spend. Category management heavily focuses on organizational spend. If leveraged effectively throughout the organization, the results can be significantly greater than traditional transactional-based procurement negotiations. Applying category management in procurement benefits companies by minimizing risk in the supply chain, reducing the cost of buying goods and services, and increasing the overall value from the supply base and gaining access to more innovation from suppliers.

Benefits of category management in procurement

Category management in procurement is of great strategic importance, and if applied effectively across the organization, the results can be significantly greater than traditional transactional-based purchasing and procurement negotiations. Let’s take at some of the strategic benefits of adopting category management in procurement:

Improved supplier performance

Having an efficient plan of category management in procurement will enable companies to work with suppliers in a better manner. Also, organizations can increase the speed between initial adoption and full implementation of the plan. Once new supplier contracts are initiated, category management in procurement provides a layer of continual strategy adjustment.

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