Category Management Process
Engagement overview: The client, a market leader in the electronics industry, primarily operating in India, wanted to develop a structured approach for the procurement of goods and services. As such, they wanted to implement the best techniques and tools to develop a strategic category management process. To successfully develop a category management process, the electronics company approached SpendEdge to leverage its expertise in category management.
The electronics industry in India is witnessing significant growth owing to the high demand for consumer electronic products. Hence, leading retailers in the electronics industry in India are looking at category management to help them reduce spend and boost returns. The client was encountering challenges in enhancing the efficiency of their procurement plan and, therefore, wanted to devise an effective category management process.
Summary of the category management process:
How did SpendEdge Help the Client?
The client joined hands with our experts to develop a category management process that would help them enhance procurement efficiency. We developed a comprehensive approach that responds to the long-term procurement trends within the market.
While there are a number of ways in which category management can be implemented, there is an ongoing debate on the number of steps involved in a category management process – some say six, while others peg it at four, at SpendEdge, we follow a three-step approach.
- Step 1: Initiation
The initiation phase revolves around the creation of a category management plan, based on which the category management process will be developed. This initial phase of the category management process is a pre-requite and forms the foundation of every category management strategy.
- Step 2: Strategy creation
The next phase revolves around the development of a precise category strategy. Once the categories are assessed, it is essential to devise effective strategies that help deliver the category’s role. An external review of the electronics industry in India was carried out to identify key factors affecting the market.
- Step 3: Strategy implementation
The final step in category management deals with strategy implementation, it includes – evaluating the strategy plan, determining ROI, and assessing the impact of the process on the supply chain efficiency. However, the implementation of a dedicated category management process requires dedicated resources.
Benefits of the Engagement:
The three-step category management process enabled the client to gauge the performance of each category against their category management plan. Also, with the help of SpendEdge’s category management solutions, the client was able to study the global scenario of the electronics industry in India.
Importance of category management process
In today’s technologically progressive world, one can rely on high-end software for category management. However, the positioning and values of a brand are reflected through their capability to make strategic decisions that are in line with their business needs. Moreover, the internal alignment around the role of a category turns out to be very helpful in understanding the consumer behavior towards the different categories. The steps involved in a category management process may seem resource intensive, but when rightly done it can reduce wasteful spending and help brands compete more effectively.
An effective category management process forms the basis of a robust category management system. It empowers organizations to devise effective strategies to enhance business value. If your organization is on the lookout for an objective way to promote category growth and procurement efficiency, category management is the ideal approach to identify alternative and feasible ways to enhance category growth.
The electronics industry in India is witnessing massive growth, as a result of which, the supply market challenges faced by the industry players are expected to multiply over the next few years. The burgeoning nature of such challenges necessitates the development of a category management process. This acts as an instrumental method for improving brand value while overturning the inertia that often sets in when businesses get confined to specific industry ethics.
A must-read case study for strategy experts and decision makers looking to understand the importance of category management
The growth in popularity of online shopping through retailers means fast moving consumer goods industry players must adapt their marketing and sales strategy to incorporate this technology. In the past, fast moving consumer goods industry players relied on securing shelf space at eye-level or perhaps placing products at the till. However, this is no longer the case with online retailers. For instance, consumers who would purchase goods as a habit in-store may not purchase online as they are not prompted in the same manner. Additionally, as there is a delay between purchase and delivery, the instant gratification factor is no longer present. Moreover, the growth of online retailers also results in increased buying power. This is expected to put additional pressure on suppliers to reduce the cost of fast moving consumer goods even further.
- The client: A leading fast moving consumer goods industry player
- Area of Engagement: Category Management
The client – is an American multinational personal care firm that produces mostly paper-based consumer products. The company is headquartered in Texas, U.S and possesses an annual income of over US$ 20 Billion. The client wanted to discover the actions and roles that suppliers can take as category captains and how these practices could be applied in retailers’ store environment.
Category Management in Procurement
Benefits: Applying category management in procuring benefits organizations by providing an approach to reduce the cost of buying products and services, increase overall value from the supply base, reduce risk in the supply chain, and gain access to more innovation from suppliers. Category Management is a strategic approach that focuses on a majority of organizational spends. If enforced successfully throughout an entire organization, results can be significantly superior than traditional transactional-based procuring negotiations.
Summary of our category management process
The category management process experts at SpendEdge customized a comprehensive research method, which delivered valuable insights on market requirements, technological advancements, geographical target regions, and future enhancement possibilities. Furthermore, the experts also compiled information across a wide array of exclusive sources to help the fast moving consumer goods industry player devise an efficient consumer response (ECR) framework, especially on its demand-side practices.
Solution Benefits and Business Impact
With the help of SpendEdge’s category management engagement, the fast moving consumer goods industry player summarized key findings into a revised research framework as well as theoretical and managerial implications that should apply both in the case in question as well as in other supplier-retailer work around category management best practices. This further helped the client assort, allocate space, and better make use of promotions.
Future of the Fast Moving Consumer Goods Industry
2018 is shaping up to be a year of inconsistencies in the fast moving consumer goods market. Healthy junk food is emerging as a snack food inclination. However, consumers are also re-discovering tolerance via a counter-trend called sweet revenge that celebrates all that is sweet.