CASE STUDY

Developing a Consumer-Oriented Category Management Strategy and Achieving Over $80 Million for a Food Manufacturer

Sep 10, 2019

Food Industry Overview

The introduction of big retailers in the food industry is expected to increase pressure on business models. Growth of new online and home delivery shopping models will inflict collateral damage on the smaller and regional manufacturers. With reducing profit margins, food companies will now have to identify ways to reduce costs while maintaining competitive differentiation. For this, they must focus on popular product categories that can drive sales and ensure the efficiency of their processes.  

Business Challenges Faced

The client, a leading food company in North America supplied several food categories, including frozen snacks, dinners and generated an annual revenue of over $10 billion in the last financial year. Through an effective category management strategy, they wanted to uncover additional opportunities and develop product supply strategies and tactics to cut costs effectively. However, developing an effective category management strategy required a data-driven, fact-based, analysis-intensive process. The client, therefore, decided to leverage SpendEdge’s expertise to gain a broader perspective of the complete process and break from current paradigms.

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Our Research Approach

The experts at SpendEdge worked through the eight-step category management approach. This helped the client to gain comprehensive insights regarding different aspects such as spend, demand, and competitors impacting the fresh food industry. They also gained detailed insights into customers’ buying habits and improved their decision-making process. In the next step, synergies across departments were created to enhance both consumer value and business results. Much emphasis was laid on implementing activity-based costing to better manage costs with minimal resources.

The category management strategy coupled with activity-based costing facilitated the client to strengthen the relationship between suppliers and distributors and gain better results. The improved category management process streamlined the marketing and product supply strategies and empowered the client to defend category sales while improving the cash flow. Also, the new category management procurement tactics driven by shopper insights enhanced shopper marketing experience. Additionally, a better understanding of customers’ needs and category-specific insights empowered the client to tackle competitive pressure effectively.

Engagement Outcome

The proprietary activity-based costing and category procurement solution helped the client to develop a consumer-oriented category business plan and achieve over $80 million in revenues. The insights on suppliers’ landscape and their organizational capability further helped the client to fasten the time between the initiation and completion of the process.

Developing a category management strategy is crucial for companies in the food category to develop a consumer-oriented category business plan. Subscribe now to enjoy free access to our web-based platform.

Benefits of Devising a Category Management Strategy

  • Helps companies to work with suppliers in an efficient manner.
  • Delivers value-based services to address customers’ needs.
  • Provides accurate spend insights on the existing as well as upcoming contracts.
  • Facilitates coordination at the highest level and improves relationships between suppliers.

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