Fridays (in 2023) means that it’s time for another CPO Rising Listicle. Each list will include a variety of procurement tips, trends, insights, research, lists, strategies, and/or recommendations designed to help procurement teams improve operations. We’ll also include a summary graphic for you to share with your team.
The vast majority of sourcing professionals know that having a clear and detailed view into a category of spend makes sourcing that category significantly easier and positively impacts results. But understanding the spend is only one part of the overall puzzle. Introducing category management has the potential to unlock more value. Here are five benefits of category management.
Five Benefits of Category Management
The management of specific categories of spend is valuable to a procurement department for several reasons:
- Cost Savings: By strategically managing specific categories of spend, procurement departments can identify and negotiate better pricing with suppliers, reducing the cost of goods and services. Better category management can result in significant cost savings for the organization.
- Improved Supplier Relationships: Focused category management can help procurement departments build stronger relationships with key suppliers, leading to better and more consistent communication and collaboration, and ultimately, to improved supplier performance and a more reliable supply chain.
- Better Data and Analytics: By managing more categories of spend utilizing a detailed framework or methodology, category managers will spend more time gathering and analyzing data on supplier pricing, lead times, and delivery performance, allowing for improved decision-making and cost savings opportunities.
- Risk Mitigation: By analyzing the supply chain for specific categories of spend, procurement teams can identify and mitigate potential risks, such as supply disruptions or price volatility, protecting the organization from significant impact.
- Increased Procurement Efficiency: Focused category management enables procurement departments to streamline processes, automate repetitive tasks, and allocate resources more effectively, resulting in increased efficiency and improved results.
Overall, the management of specific categories of spend provides procurement departments with valuable insights, cost savings opportunities, and improved efficiency, helping the organization make a bigger impact within the spend it is currently managing.
RELATED RESEARCH
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Tagged in: Category Management, CPO Rising Listicle, Lists, Risk Management, Sourcing, Spend Under Management, Strategic Sourcing, Strategy
