Category Management

What is Category Management?

When searching for specific areas of spends, the amount of information available can be overwhelming. Category management is a specialised system used to organise various procurement resources based on the specific area of spending. Within these resources, you can easily access category-specific white papers and reports. Below, we are going to explore the benefits of using a category management system as well as the categories and commodities you can find within this resource. 

What Are the Benefits of Using a Category Management System?

According to the procurement experts at SpendEdge, “Strategic category management involves the process of developing a clear understanding of the organisation’s core values and key objectives.”

Category management is a process that forms the base, which can ultimately lead to the success of strategic sourcing initiatives. However, this is only made possible when executed efficiently and diligently. The company will also need to take the effective measures to lay the foundations for development and training programs to improve the skills of those involved to reap the benefits of a category management system.

Healthier Supplier Performance

By implementing an effective and efficient category management plan a company will be able to work with suppliers to get the job done more quickly. A strategically thought out category management plan can assist with a new supplier or contract when dealing with layers of adjustments.

Client Satisfaction Guaranteed

A category manager is someone who looks after all the things related to a given contract or service such as sourcing requirements, collecting bids, and negotiating contracts. This allows the other employees within the business to focus on their specific work to deliver quality services to satisfy the client’s needs.

Enhance Your Relationships with Suppliers

Establish better relationships and gain more contact within an organisation. This is achieved by coordination at the highest level within an organisation. Understand that the delegation of specific tasks takes place at the functional level. Therefore, by establishing and organising an effective communication strategy in this way an organisation will effectively improve their relationships between suppliers.

Higher Quality Insights into Spending

Typically, when a category is not owned by anyone or new to the industry there is not a lot of insight into the accuracy of expenditure due to lack of experience with said category and its contracts. If the full supplier list is unknown, the complete spending is unknown. Category management can help by providing a better understanding of spending on existing and upcoming contracts.

Category Management and Commodities at a Glance

At CIPS (Charted Institute of Procurement & Supply) you can view up to date info and reports with just a click.

The following categories and commodities can be found as well as category specific white papers and reports:

Buying Commercial and Professional Services

Public and private organizations are spending large amounts of their budget purchasing professional services.

Professional services such as:

  • Legal
  • Public relations
  • Consultancy
  • Professional Services
  • Recruitment

Energy and Water

With energy cost spending at an all-time high among organizations and the push for a lower carbon economy, there are new challenges as well as opportunities for professionals in the procurement industry.

This resource provides access to a range of industry specific knowledge including expert guidance, market insights and data reports

Chemicals

Under this category you can learn more about purchasing chemical commodities such as:

  • Agrochemicals
  • Chemical Commodities

Construction and Engineering

Investing in new construction or refurbishment projects within an enterprise is a significant decision to come to in this economy. However, this decision should ultimately be done in order to enhance the effective of the business overall. These organizations will need access to best practice in briefing and procurement/ supply management skills including:

  • Apres (produces guidance on responsible sourcing for the construction industry)
  • Construction

Facilities

Public and private organizations are outsourcing their facilities management to third parties more often these days, while simultaneously increasing the range of services covered by the function, creating a variety of new challenges as well as opportunities for procurement professionals everywhere.

Find out more information on buying functions for services including:

  • Facilities Management
  • Laundry / Uniform
  • MRO
  • Maintenance, Repair, and Operational Supplies (MRO)
  • Security
  • Waste Management
  • Catering Services
  • The British Institute of Facilities Management (BIFM)

Financial Services

Here you can learn more about buying of financial services, including insurance and technological support of;

  • Insurance
  • Purchases / Credit Cards

IT and Telecoms

When the IT department is successful at improving efficiency throughout the organization, the savings can start to add up fast.

In addition, running at peak efficiency can assist in acting as a catalyst for other benefits and transformation programs within the organisation. Learn more about buying IT and Telecoms Services, including project management CIPS Knowledge Base.

Logistics / Freight

There is a lot to consider when dealing with the broad spectrum of services under the freight and transport category. Discover more about the logistics and freight procurement by viewing the resources found CIPS Knowledge Base.

Marketing Procurement

Find out more about buying marketing procurement, including print, events and digital media CIPS Knowledge Base.

Metals & Mining

Learn more about the Metals and Mining Industry and the associated procurement practices therein CIPS Knowledge Base.

Outsourced Services

Most support services are natural candidates for outsourcing. Cleaning, catering and IT services, to name but three, have their own subtleties and sometimes their own jargon. But a common procedure, backed by robust contracts and service-level agreements (SLAs), can be used to ensure effective service delivery. Find out more about outsourcing services CIPS Knowledge Base.

Public Sector Services

The composition of the public sector varies across the globe, but in most countries it includes services such as the military, police, public transport and highways, education, along with healthcare and those employed by the government, like elected officials. Find out more about public sector services CIPS Knowledge Base.

Travel

Research has shown that, in many organisations, travel expenditure is the second to third largest item considered a controllable expense. Simply put; when business is down, travel spending is the first to go in many instances. Find out more about procuring travel services CIPS Knowledge Base.

Final Thoughts

Category management is a great way to view accurate spending information within specific areas of interest. Now you can access everything you need to know all in one place. Overall, this strategy is a great way to enhance an organisation’s overall efficiency and profitability in just a short amount of time.

Other Resources: WhitePaper