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:

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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SpendEdge Webinar on 6th and 7th Sept – Integrating Procurement and Corporate Travel Management

The procurement and travel departments have adopted an integrated approach and are directing their efforts towards strategic, efficient, and cost-effective corporate travel management programs.

The need to bring together disparate teams, stakeholders, and customers is a result of the globalization wave that transcends geographical boundaries; thereby, giving impetus to corporate travel management. The sky-rocketing travel costs have made it inevitable for companies to develop highly effective, customizable, and profitable travel program solutions for the buyers. The constant need to achieve cost efficiency and adopt a strategic decision-making approach has eliminated the silo-based approach within the organizations. As a result, businesses have started consolidating their travel programs with a single travel management company (TMC), which not only ensures higher ROI but also enhances the organization’s overall travel program.

Things To Keep In Mind for Procurement And Travel Departments

In any organization, the procurement and travel department must give priority to travellers’ safety and booking habits, while complying with the company’s policies and framework. The procurement department and category managers must understand the difference between procuring materials from a supplier and procuring travel management services from a TMC. Big data and analytics give the travel managers access to more information related to travellers’ booking behavior, etc. New technology platforms such as blockchain allows organizations to adopt centralized payment solutions; thereby, reducing the processing time and increasing process efficiencies.

Conducted by SpendEdge’s sourcing experts, this webinar will deal with the following key considerations –

Analyzing the current scenario of collaboration between the procurement and travel department in a typical organization
Studying the changing engagement models in the industry
Assessing the use of big data and analytics as a key influencer of the corporate travel management market
Exploring the role of blockchain technology as a distribution platform for corporate travel management
How the supplier landscape is consolidating to provide unified travel management and expense services?

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Top Three Procurement Challenges for the Interactive Kiosk Market

Interactive kiosk has been helping businesses enhance their customer service experience. They do so by disseminating vital information, promoting the product, and extending the service without human intervention. Such kiosks help a company save workforce costs, expand service area, and decrease the service time. Although interactive kiosks can help enhance customer experience, it does come with significant associated costs and other procurement challenges.

Here are some of the procurement challenges facing the interactive kiosk market:

#1 – High Total Cost of Ownership

The procurement cost for the ownership of a kiosk may seem very low on the surface. However, buyers fail to account for the cost of ownership such as installation cost, rent, internet cost, customer support cost, storage and distribution cost, and decommissioning cost. To tackle such procurement challenges, category managers are looking for multi-stage bidding processes or searching for suppliers offering turnkey solutions.

#2 – Technological Obsolescence

The deployment of an interactive kiosk requires a significant outlay of capital, making it a long-term investment. Technological advancements could be embraced by software updates and minor hardware tweaks, but mostly it calls for complete infrastructure overhaul, which might not be feasible. The advent of 3D printers, tablet kiosks, and personalized smart vending machines are the biggest procurement challenges to be considered in the interactive kiosk market.

#3 – Compliance with Regulations

Increasing regulations and manufacturing standards have significantly increased the procurement costs for buyers. For instance, interactive kiosks must comply with ADA regulations that require such kiosks to be accessible to people on wheelchairs, raising the designing and area cost. Organizations should be in close touch with the suppliers to learn about their innovations and products in the pipeline to tackle this problem.

It is evident that there is much more than just the hardware and software to be considered before the procurement of interactive kiosks. Read more about procurement challenges and mitigation strategies along with supply market landscape, pricing, and procurement insights in SpendEdge’s upcoming procurement report on the global interactive kiosk market.

View our latest procurement report on the interactive kiosk market to know more about the benefits of HR software and its impact on an organization’s profitability.

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Analyzing the Aftermarket Services in the Chemical Procurement Market

The latest procurement market intelligence study by SpendEdge on the aftermarket services helps a leading manufacturer of fertilizers and chemicals products assess the aftermarket services for rotating equipment and supplier landscape.

Aftermarket services – market at a glance

Many manufacturers are utilizing aftermarket services to cater to the changing client requirements and develop strong service capability. With increasing competition in the global market, strategic changes in the value chain systems, and the introduction of new product lines aftermarket services will ensure seamless service deliveries and outline effective marketing strategies. The procurement market intelligence engagement offered by SpendEdge includes insights on the category essentials, supplier landscape, supply market, and the latest cost drivers and its impact levels. The procurement market study helps a leading chemical manufacturer assess the aftermarket services for rotating equipment, especially for compressors, and helps category managers develop effective procuring strategies. Identifying the leading aftermarket suppliers and tracking latest developments in the market will help companies gain valuable information on growth opportunities.

Companies are adopting a proactive and customer-centric business models to expand their consumer base and increase their profitability. Keeping the end-users happy will benefit the branding strategy of the organization and will improve the existing clientele. Expanding delivery channels, value-added service requests, use of smartphones and digital technology, and faster services are some of the methods companies are relying on to build efficient service delivery systems.

Digitalization in the chemical industry

Chemical manufacturers are leveraging technological innovations to gain a competitive advantage in the global market. Digitalization improves the productivity, efficacy, operational capabilities, and manufacturing processes in the chemical industry. Suppliers of the aftermarket services are offering innovative technologies like sensors, advanced diagnostic devices, and 3D printing machines that are revolutionizing the industry. Additionally, the introduction of artificial intelligence (AI) will improve the performance metrics of various suppliers in the global market.

Regulatory compliance

The establishment of stringent laws and regulations is raising the requirement of special services that tackle the complexities of the new laws and ensure compliance. All aspects of manufacturing, labeling, handling, storage, and shipping have legal implications, and it is important for companies to abide by the laws to sustain in the market. Suppliers offer cloud-based solutions that update regulations on a real-time basis and helps companies access solutions faster.

What solutions SpendEdge offer to businesses

The team of procurement experts at SpendEdge provide a market intelligence study that helps clients understand how the market would grow in the short and long-term, validate the market size, and develop opportunity model for the industry. Some solutions offered are listed below:

Offer qualitative and quantitative assessments followed by data analysis and category-specific insights development
Help the client understand the aftermarket services for rotating equipment
Develop effective strategies for market expansion by estimating the current market size, market segments, latest market trends, drivers, and challenges faced by major category managers
Analyze the global market landscape by evaluating the key suppliers, their operational capabilities, recent mergers and acquisitions, service footprint or capabilities, and the key geographies
Provide the pricing and costing overview for aftermarket services, including an overview of pricing models and benefits comparison

Read our complete case study titled – Procurement Market Intelligence Study on Aftermarket Services

Other case studies you might be interested in:

For any queries, reach us at – hello@spendedge.com

Insights into the Should-Cost Analysis of Tank Cleaning Services

The expense involved in cleaning tanks is a rather vague area to venture into. And therefore, companies are looking for avenues through which they can gain an accurate and in-depth analysis of the market. This analysis is not only to get a clear picture on the leading suppliers, but also to figure out the most optimal resources and hidden ‘cost out’ opportunities embedded in the endeavor. One of the best ways in which this goal can be achieved is by resorting to should-cost analysis (should costing).

Role of should-cost analysis in tank cleaning services

Category managers would agree how unlike strategic sourcing, should costing begins with an internal assessment of the potential costs involved in the project. Through the process of benchmarking, value analysis, tear down, and strategic sourcing, should costing provides an optimized strategy to improve product value and boost profit margins.

Though there is a popular conception that should costing is a rather complex process, the fact remains that it is one of the best procurement practices available at present. As it takes every minute cost into picture, the cost model provided by should costing is far more accurate than other methodologies.

When it comes to tanks, the major procurement pain points which have been noticed by our procurement specialists are:

Gaining actionable insights into best cleaning methods
Assessing average cleaning cost per cubic foot of solids in the tank
Eliminating the chances of ambiguous billing

Thus, by taking applicable economic and physical attributes into consideration, should-cost analysis predicts the cost involved in a system or a product.

Tank cleaning services and the SpendEdge advantage

Tank cleaning services is an integral cost component for many companies. Getting a realistic picture on its potential cost to the company is one of the primary steps towards building a foolproof financial strategy. The procurement team at SpendEdge can build a comprehensive should-cost model by blending primary and secondary data, and backing it with data analysis. This model clearly chalks out the primary costs involved in the cleaning process, along with detailed assessment of region specific labor costs. The model is customized depending on the varying cost components and different locations that are taken into consideration.

To know more about should-cost analysis

Medical Devices Manufacturer Reduces Supply Chain Risk Through Real-time Risk Monitoring

Business Challenge: Lack of visibility into the performance of critical suppliers

A leading medical devices manufacturer was facing issues with real-time tracking and monitoring of the performance levels of its critical suppliers. They were majorly concerned about their suppliers from the APAC region and wanted to have clarity on their activities and possible risk associated.

Situation: The client wanted to establish a mechanism to track the performance and risk associated with its suppliers on a real-time basis

The client wanted to establish a mechanism that could provide them real-time insights and visibility on the activities and performance of their critical suppliers. They face facing challenges with tracking news on suppliers spread across the globe, especially the ones located in the APAC region.

Approach: We deployed a real-time risk tracking and monitoring mechanism to help category managers of the client stay updated on the supplier performances

We developed a portal based mechanism that allowed the category managers to access news, announcements, and performance of their critical suppliers on a real-time basis. We tracked information on both listed and private companies that eased the work of category managers significantly. We also tracked the financial performance of the suppliers on a regular basis and raised alerts in case of potential disruptions, hence enabling the category managers to devise mitigation strategies on time.

Impact: Client was able to gain real-time access and alerts on supplier performances and take timely decision

The client was able to gain detailed clarity on the on-going activities of its critical suppliers and stay updated on the potential risks associated with the key suppliers. By this, they were able to avoid any potential disruption in the supply chain, preserve profits and reduce any potential issues with customer satisfaction.

Automotive Spare Parts Manufacturer Tracks Risks Associated with Key Suppliers on a Real-time Basis

Business Challenge: Lack of visibility of performance of key suppliers

One of our leading clients, a reputed automotive spare parts manufacturer was looking for a solution that could help them track their suppliers on a real-time basis and understand the risk levels associated with each supplier.

Situation: The client wanted to implement an early warning system that could help them foresee potential supplier specific risks

The automotive spare parts client had run into a few situations where they lacked visibility on the performance of suppliers, which led to supply chain disruption eventually resulting in issues with customer satisfaction. They wanted to implement an early warning system that could enable them foresee potential threats and implement appropriate mitigation strategies across the supply chain.

Approach: Built a web-based supplier risk assessment platform that provided on-going insights on key suppliers

We developed and implemented an on-going supplier risk monitoring solution that helped the category managers and buyers of the client to keep track of the activities of the supplier and foresee potential risks associated with them. The results were delivered through a web-based platform and hence the insights were made available for the stakeholders on a real-time basis. Risk alerts on suppliers were made available on a daily basis, allowing the client to stay updated on performance and risk levels for all critical suppliers.

Impact: Our web-based supplier risk assessment platform helped category managers stay on top of supplier stability and make timely decisions

The web-based platform provided easy access to real-time insights on critical suppliers, their current activities, impact of changing business and political landscape on the suppliers etc. The platform also provided alerts on the stability of suppliers and notifications on which suppliers are likely to face stability issues in the near future. The automotive spare parts client was able to effectively manage its supply base and avoided any potential supply chain disruption, thus ensuring customer satisfaction.