Tag: Category Management Process

category management

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

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.

Want to know how an effective category management strategy can help you to redesign product supply strategies and minimize costs? Request a proposal and access our category management procurement solution portfolio for free.

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.

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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.

To know more about the benefits of developing a category management strategy, request for more information from our analysts.

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Is a Category Management Strategy Crucial for Retailers to Reap Monetary Benefits?

SpendEdge, a leading provider of category market intelligence solutions, has announced the completion of their latest presentation on how category management strategy can help retailers reap monetary benefits. The article offers detailed insights into the benefits of category management reaped by our clients. The article also highlights how category management strategies can help retailers to identify key value categories, increase category sales volume, and reduce organizational spend.

Calculating Price Awareness Score by Deploying an Effective Category Management Strategy

With increasing complexities in the retail-CPG industry, it has become crucial for companies to analyze their category management strategies. One of our clients, a leading CPG company in Europe, was facing difficulties in achieving their desired category growth. They wanted to identify key value categories (KVCs) and key value items (KVIs) to optimize pricing and improve profitability. While analyzing product categories, they also wanted to increase their sales volume.

The category management services offered by our experts helped the client to develop a robust category management strategy and identify 50 KVCs that accounted for more than 50% of the client’s total sales. Additionally, the improved category management process helped the client to analyze transaction data, determine the frequency of purchase, calculate the price awareness score, and improve profit margins by 11%.

Proactively Managing the Procurement Expenditure to Reduce Organizational Spend

Improving brand awareness and driving business growth has always been a challenge for companies in the food and beverage category. A renowned food and beverage brand was facing increasing pressure to reduce costs in the wake of a declining economic landscape. They wanted to centralize all their sourcing and procurement operations to gauge new procurement cost management opportunities.

To help the client address such challenges, our experts developed a robust category management strategy to fully leverage their purchasing decisions by focusing on the external supply market. They focused on buying-channel optimization to monitor contract utilization and compliance. This helped the client to proactively manage the procurement expenditure and reduce organizational spend.

Achieving Savings of $6 Million for a Fashion Retail Firm

The fashion retail industry poses a plethora of challenges for category managers when it comes to driving profitability through different categories. The client, an American multinational retail-clothing firm decided to leverage our expertise to address declining profit margins. They wanted a structured approach to manage different categories and distinct areas of expenditure.

During the course of this engagement, our category management specialists tailored a comprehensive research methodology to remodel their procurement services. They conducted an in-depth market analysis to help the client strengthen stakeholder relationships and achieve savings of $6 million over a period of one year.

About SpendEdge

SpendEdge delivers robust, real-time category management solutions to help sourcing and procurement professionals to manage supply chain. Our innovative category management solutions help enterprises to transform the structural capabilities of businesses and improve execution efficiency. Our state-of-the-art category management solutions also help enterprises to transform structural capabilities, improve execution efficiency, and achieve better cost savings. We provide businesses with actionable insights and techniques to improve their category management capabilities.

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category management strategy

Calculating Price Awareness Score and Ranking SKUs for a CPG Company with the Help of a Category Management Strategy

CPG Industry Overview

Increasing complexity in the retail-CPG industry has compelled many companies to take a closer look at their category management strategies. Retailers and CPG companies are seeking higher levels of insights to devise category management strategy to effectively reach consumers who have more choices than ever before in terms of channels, stores, and products to choose from. However, it is not easy since CPG product categories are experiencing falling prices and little to no growth. Stagnating mass market, fragmented niches of growth, cross-channel shopping, and the continued rise of discounters are a few more challenges impacting their market dominance.

Business Challenges Faced

The client, a leading CPG company in Europe that creates wholesome foods and offers them in over 150 countries, was facing predicaments in developing strategies to drive category growth. They wanted to optimize pricing and improve profitability while identifying infrequently bought products. They also wanted to identify key value categories (KVCs) and key value items (KVIs) but lacked a category management strategy for doing it. The client, therefore approached SpendEdge to help them increase sales volume by analyzing product categories.

Want to know how an effective category management strategy can help you identify KVCs and KVIs? Request a free proposal to formulate a category management strategy and we will get back to you within two working days.

Our Research Approach

To help the client identify key value categories, the experts at SpendEdge developed a robust category management strategy. The strategy helped the client to identify 50 KVCs that accounted for more than 50% of the client’s total sales. The team then analyzed key value items within these categories to ensure that the final of KVIs covered a broad and representative set of categories. The team also offered category pricing solution to help different stores to adjust prices depending on the competitive environment

The tailor-made category management strategy helped the client to analyze transaction or loyalty-card data and determine the products that often appear in baskets alongside other price-sensitive items. Based on the frequency of purchase and share of category sales for items in the KVCs, the client calculated price awareness score. The scores helped the client to rank the SKUs within their categories.

Wondering how category management strategy can help you rank the SKUs by calculating price awareness scores?

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Engagement Outcome

The category management strategy helped the client to identify KVIs that accounted for 10%-15% of sales in the category.  This empowered the category managers to benchmark their assortment and prices against those of discounters and improve profit margins by 11%.

Leveraging category management services is crucial for companies to drive category sales and improve the category management process. Subscribe now to access accurate category and pricing insights from procurement experts. 

Best Practices to Develop an Effective Category Management Strategy

  • Determine product categories by bringing together products or services that have the same features.
  • Ensure that the categories are aligned to business goals.
  • Develop category benchmarks to identify improvement opportunities.
  • Perform price analysis while monitoring of trends in the category.

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category management best practices

Category Management Best Practices You Will Need in 2019

Most retailers do not have an effective category management strategy. They are worried about the amount of work it will take to review inventory and refresh product mixes by category. Whatever be the reason, it’s high time for big and small retailers to adopt category management best practices to boost category sales and ensure profitability in the long term.

Retailers need to know that category management isn’t a one-size-fits-all approach. They have to make use of available data to make better decisions regarding optimum range, merchandising, and price and promotion of product categories.  If they fail to understand categories, the cash flow will be badly impacted. Therefore, we have listed the category management best practices to help companies address customer objectives in a better way.

Want to know how category management best practices can help you increase category sales and improve cash flow? Request a free proposal to access our complete category market intelligence solution portfolio for free.

Category Management Best Practices that You Should Know

Category management best practices #1: Trust your distributors

Distributors are of great help when it comes to improving category management. They possess information about the products that are performing well in the market and can create planograms based on existing sales. This will help businesses to adopt a systematic, disciplined approach to managing a product category as a strategic business unit. Also, if a certain product category doesn’t meet customer expectations, it can be identified beforehand.

Category management best practices #2: Put numbers on shelf tags

Putting numbers on shelf tags will help you track each product’s sales velocity. This will allow easy identification of best sellers and help you ensure the availability of those SKUs in stock. Additionally, assigning number-one to a top-selling item (a product that sells 4-times a week), number-two to an item that sells three times week will help in monitoring category sales. You can review these numbers in every six months as sales velocity of product changes with changing seasons and trends.

Wondering how you can gain value from distributors and ensure the availability of products?

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Category management best practices #3: Consolidate data

Consumers, today, have plenty of options to meet their needs. Retailers who can utilize data effectively to understand the needs of their customers have better chances of retaining shoppers and increasing sales. Identify products that are most important to shoppers and have the most price sensitivity to the best customers. This will help you understand whether your category management process is efficient enough to meet consumer needs or not. 

Consolidating data is crucial for companies to improve category planning. Request a free demo to start your 7-day free trial now!

Category management best practices #4: Automate processes

The market changes rapidly and sometimes in a very short period. A sudden weather event or influencer tweets can change the market dynamics, putting procurement category managers in a position where they will have to need to react swiftly. Automating different parts of category management will allow managers to analyze product categories, categorize spend and calculate cost related to those products in no time. Such automated reports will improve decision making and help in prioritizing categories that are most important to look at, focusing on resources and labor in the right places. 

Category management best practices#5: Low price is not the key

Often retailers chase pricing against the competition. However, this is not required all the time. Leverage data to and identify customers groups and price the product right. You don’t have to compete with the bigwigs on every price – you just need to be more targeted. This will help you invest margins in better places and achieve substantial gains.

To know more about category management best practices, request more information here!


You May Also Like: 

  1. An Introduction to Category Management
  2. Category Management Helps a Food and Beverage Firm Achieve Significant Cost Savings by Proactively Managing the Procurement Expenditure

 

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.

Wondering how a category management process can help companies to strengthen their position in the medical devices market?

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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.

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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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Food Retail Industry Overview

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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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