Tag: category management

Category Management Process

Developing an 8 Step Category Management Process for a Medical Devices Supplier in the US

The medical devices market in the US is expected to offer a wide range of opportunities for companies. However, companies need to integrate innovations, streamline their operations, and reduce costs to survive in the medical devices market. They also require category management process that would offer incremental category benefits and reduce costs.

The Business Problem

The client is one of the fastest growing medical devices companies in the United States with an annual revenue of over $5 billion. They were looking for opportunities to identify the typical levers that can be deployed to maximize the incremental value of the organization and support appropriate resourcing. However, the strong preference for a particular product category by buyers (doctors, nurses) was inhibiting the client’s capability to better understand the medical consumables category. The clinical difference and price difference were a few other reasons that were obstructing the organization’s growth prospects.

Improving the category management process is critical for companies to maximize the incremental value. Request a free proposal and access our service portfolio of category management solutions.

Solutions Offered and Client Journey

To compete with top companies and address concerns of stakeholders, the medical devices supplier decided to engage with SpendEdge. The team of analysts at SpendEdge conducted a continual analysis to keep the client ahead of trends, risks, demands and supply changes. They also gained in-depth insights into the demand structure for goods and services used by the company and recommended an 8 step category management process to avoid the wastage of money by the medical devices supplier. In addition, the experts also worked closely with suppliers to help the client continuously innovate and achieve better outcomes.

SpendEdge’s team focused on improving category management process and implementing cost down improvement initiatives to help the client  achieve high profit margins. They enhanced supplier performance management and explored alternative mechanisms to verify current pricing against alternative suppliers. This helped them to create an environment that delivered the lowest long-term cost structure.  The category managers further identified the lowest total cost procedures and centres of excellence for the  medical devices supplier and helped them achieve the same outcome at lower costs.

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Key Findings and Outcomes

Achieved Savings

The progression from the initial sourcing of the medical consumables category through various levels of category management helped the client to achieve savings of over 17% in a year. Furthermore, implementing an 8 step category management process helped the medical devices supplier to achieve an incremental cost reduction of 2-3 %. Also, the category management process ensured that savings are sustained and costs continue to reduce in the coming financial year.

Improved Visibility into Spending

The category management process enabled the medical devices supplier to establish a single point of contact within the organization and improved coordination. This helped the medical devices supplier to figure out the accuracy of the reported spend.  Want to gain detailed insights, request for more information.

8 Step Category Management Process

Category Management Process

The 8 step category management process is highly beneficial for firms and encompasses all important strategies. It helps businesses to establish their brand as a true leader in the category and differentiate from competitor companies.

Define Category: This step is the most crucial step as it defines the understanding of buyers. It identifies the criteria on which buyers make their decision while procuring medical devices.

Category Role: Role identifies the importance of the category to the buyers. There are nine commonly recognized categories in medical devices that can be identified according to their relevance in healthcare equipment.

Category Appraisal:  Analyzing how these medical devices perform across different healthcare units is the next step in 8 the step category management process. It includes pricing and placement assessment apart from the affordability factor.

Category Scorecard: It assesses patient data and identifies devices critical for their health. Scorecard also helps companies in setting up measurable targets in terms of sales, volume, margins.

Category Strategies:  Category strategies are outlined to meet the scorecard objectives. A framework suggesting for marketing is created and the supply of medical devices is ensured.

Category Tactics:  Tactics involve specific actions needed to achieve the desired outcomes from set category strategies. Category tactics ensure that strategies are put on the right track.

Plan Implementation: The success of this 8 step category management process depends on the implementation of category plan as per the laid objectives. The plan involves a systematic schedule to achieve the objectives.

Performance Assessment: This is an on-going process that analyses, measures, and reviews the results. It helps medical companies refocus and improve existing electronic, surgical, and medical equipment.



Spend Analysis : Assessing the Current Spend and Improving Supply Chain Efficiency for a Medical Devices Company – SpendEdge

Spend Analysis Solution Transforms Finance Operations and Reduces Operating Costs

About the Client 

The client is a leading medical devices company, specializing in the development of medical devices, laboratory instruments, and diagnostic products. The company supplies devices to hospitals, laboratories, and clinics worldwide. The company has ingrained its place as a leader in the medical devices market.

The Business Challenge 

The future looks sharp for the medical devices industry. With global economic growth, innovations and an aging population that has a growing need for healthcare, revenue for medical devices is poised for growth. However, in this turbulent environment, companies that can shift their supply chain priorities and better manage spend will be able to deliver significant value. Moreover, the rising need for supply management and strategic cost management have urged players in the medical devices manufacturing space to leverage the use of robust spend analysis solutions. Spend analysis solutions help companies in the medical devices manufacturing space to identify the potential opportunities and deliver actionable insights into the spend data to generate improved ROI. The spend analysis solutions also address concerns about the maverick spends across the supply chain and help achieve superior supplier relationship efficiently.

The client, a renowned medical devices company was facing challenges in reducing the cost across the supply chain and managing their tail spend. While public spending has become endemic, the client realized the need to drive more competitive pricing. Moreover, the client’s objective was to adopt spend analysis strategies to identify and optimize their spend areas. Additionally, the client needed to streamline their supply chain management and subsequently maximize profits by leveraging SpendEdge’s spend analysis solutions.


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Common Category Management Challenges and Ways to Overcome Them

Category management originated from the retail industry. This retailing and supply management concept involves breaking down the products purchased or sold by a retailer into discrete groups of similar or related products. Category management is a systematic approach to managing a set of products as a strategic business unit. However, recently, category management has been gaining ground outside the retail industry and is being widely used in several public and private sector companies. The motive behind it remains the same; products or services that have similar characteristics and similar supply markets are grouped together and treated as a discrete group. While category management has several known advantages, here our category management experts discuss some of the key challenges faced while implementing it.

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Top category management challenges

Getting Stakeholder participation

In several procurement organizations, the stakeholders are either unknown or they are not in close contact with the stakeholders. It is critical to ensure that the stakeholders understand the importance of the category management, which means that they have to put in some work as well. This transforms the stakeholders to active participants and will improve the results for the procurement organization. Without the support of your stakeholders, the results of the new way of working will be disappointing.

Workforce capability gaps

The transformation of an operational department to a more strategic department results in a chance for gaps in the workforce capabilities. This could be because the organization lacks the skills and capability to become the advisor of the business. This situation can overcome by providing specific training and coaching on the skills and capabilities that are needed trequest proposalo the company’s workforce. Furthermore, they can also be provided with coaching-on-the-job, where experts coach the buyers in the new way of working. For capabilities to be enhanced, a budget needs to be made for supporting the training costs for buyers.

Garnering support from management teams

The need for change often comes from the management team of a company. However, during the course of transformation, the same team may display a lack of engagement and operational support. This leads to a transformation that does not fully realize the benefits out of the category management. In order to gain the maximum benefit from category management, there needs to be full support from the management team throughout the transformation. The management team should be available to support with data analysis, value-chain/TCO-analysis, stakeholder meetings, and supplier negotiations.

The SpendEdge Advantage

Businesses can greatly benefit from adopting category management as one of its best practices in procurement. SpendEdge’s category management solutions have the capacity to add value in reducing supply chain risk as well as drive innovation in different supply chain categories. Our category management experts have proven expertise in helping organizations tap into opportunities in order to manage demand, have better cash flow management, and enforce greater compliance of standards from suppliers. Get in touch with us for tailor-made solutions to suit your business.

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Attaining $20 Million in Savings Annually for a Food Retail Industry Client – SpendEdge’s Category Management Engagement

Why Incorporate a Category Management Strategy?

A category management process helps in the in-depth analysis and assessment of the supply market. With the aid of a category management process, businesses can evaluate sourcing destinations, monitor supplier performance, and facilitate an overall effective category planning cycle. A category management process also helps organizations to leverage the demand across the enterprise to achieve maximum savings.

Moreover, a category management process is all about focusing on a broader scope and the complete lifecycle of the products and services involved. A category management strategy entails more comprehensive internal customer management with the goal of constructing solutions that support business objectives.

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Category Management: What Are the Key Elements to Underpin Success

What is category management?

Category management techniques are used by companies to optimize the oversight and allocation of resources by organizing related products and resources into logical groups. This makes it easier to effectively manage these resources. Category management strategies are aimed at providing customers with what they want, where they want it, and when they want it. In order to achieve this, products are grouped into categories according to how they are used, consumed or purchased.

Category management in procurement helps an organization retain a focus on the most important business categories, typically in terms of profits generated and/or resources used. Value-based categorization may be determined through ABC analysis. It can also help in strategic sourcing, an approach to supply chain management that helps leverage the company’s purchasing power and find the best possible values in the marketplace.

Essential elements for the success of category management

If done correctly, category management can deliver far-flung and immense value in procurement. However, implementing a successful category management strategy is easier said than done. The much far-reaching and broader scope of category management makes it imperative for enterprises to have the right foundational elements without which they will struggle to drive meaningful, long-term results:Contact US

Organizational design

Designing an effective and optimal procurement organization is a fundamental process that enables enterprises to meet their business and procurement needs. To achieve this, companies must consider a number of key factors including, ongoing category management program, CRM approach, centers of excellence (CoE), and tactical buy desks. Deploying shared service centers or procurement-led CoEs to assist with tactical spend activities is another option that can be considered. Most enterprises today even have a procurement BPO provider to support their tactical sourcing.

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