Top 4 Benefits of Category Management to Grow Your Business
Category management is a concept that is essential for businesses, which deal with retail and manage a plethora of items. It is a technique for companies to make an effective purchase and save a significant amount of money in procurement. But first, let’s understand what it is in layman terms. What is category management? Bundling […]READ MORE >>
Category management is a concept that is essential for businesses, which deal with retail and manage a plethora of items. It is a technique for companies to make an effective purchase and save a significant amount of money in procurement. But first, let’s understand what it is in layman terms.
What is category management?
Bundling of items in different categories is technically called category management. Let’s break category management into two parts: category and management. A category is generally a group of similar items that are bought by any company under a single deal. Management is all about the methods of procurement applied to make sure that the company maximizes its savings. Simplifying demand and taking a bigger contract is the key driver behind it. So, basically, the process of collecting and centralizing similar items into a single contract which makes procurement easy is known as category management.
According to the procurement experts at SpendEdge, “Strategic category management involves the process of developing a clear understanding of the organization’s core values and key objectives.”
Now, let’s discover the top benefits of category management that can help your business to grow.
Category management benefits
Healthier performance of suppliers
An effective and efficient category management plan can help your company to work with suppliers in a more effective manner and can fasten the time between the initiation and completion of the process. Category management, if done strategically, can help a new supplier or contract with layers of adjustments.
Category management is the sole responsibility of a category manager who looks after all the things related to a given contract or service like sourcing requirements, collecting bids, and negotiating contracts. This provides ample time for business people to concentrate on their work and deliver value-based services to satisfy client’s needs.
Better supplier relationships
Management of category provides an opportunity to establish contacts within the structure of the organization. This is facilitated by the coordination at the highest level and hence, the delegation of specific tasks takes place at the functional level. So, establishing and organizing effective communication in such a way usually helps in improving relationships between suppliers.
Better insights into spending
Usually, when a category is not owned by anyone, there is hardly anyone who can provide the required insights into the accuracy of expenditure because no one is acquainted with the contracts that are on the way. The full list of suppliers is unknown, and hence, the complete extent of spending is unknown too. It can facilitate the better understanding of spending on the existing as well as upcoming contracts.
Thus, category management can be defined as a process that runs parallelly and forms the base that can lead to the success of initiatives for strategic sourcing. But this is only possible when it is done efficiently and with all the required attention. It is required by the company to take effective steps to lay development and training program to improve skills for competent management of category.
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