Specific Category Management Information

The most vital resources and numbers needed by professionals employed as Category Managers might be recorded millions of times, e.g. spend by supplier, category, small business unit etc. — there is also a good example of this mapped out further down. Suprisingly perhaps when most people begin to search for this sort of data, it can be difficult to find. At the same time, it’s absence is unquestionably recognized and lamented by the Category Managers that must engage in ‘Spreadsheet Detective’ so they can manually close the information gap!

This document attempts to find another level of category info which is unique and not found any place else to the best of our knowledge. This 2nd tier data is of a granular variety and definately will vary substantially between categories particularly when the most simple questions have not already been addressed. The time and effort to obtain this information however is definitely worthwhile as the information obtained may be of a very high value.

In most cases this results in more informed negotiations on prices, improved cost control, greater capture of company innovation and also identifies additional opportunities for value improvement.

Category Management Knowledge comes in a number of different ways

The Top 10 distinct types of data desired by Category Managers:

1 Breakdown the Cost: Cost breakdown or PPCA action determines the primary cost elements that are generally incurred by the supplier providing a product or service. Every suppliers price is broken down into its major constituents for instance, the price of raw materials as well as travel etc. To get a second viewpoint, please consider checking out: geobotany izcvolqepycqwhpsc uncorrectly. Once this is completed it’s much easier to assess suppliers against one another. Price breakdowns always build greater understanding of fundamental price drivers such as technical specifications, manufacturing methods plus service delivery operations for example.

2 Understanding Technical specifications: Segmenting spend down into different categories and sub-categories is usually enough when estimating prospective cost savings. However, while identifying opportunities during the creation of a category strategy, it is recommended to analyse spend in more detail. A great deal of analysis is needed to do this. It must go into the tiniest details of a constituent part of a product or a service as these can be the most important drivers driving the cost price. This information will make it possible for detailed Value Analysis activities to be carried out. Do not overlook the smallest details of your products or services, it could be one of the keys to the next chance to help reduce cost.

3 End Product Linkage: To understand exactly what products link to other products (or services) used by end consumers the suppliers sub-categories need to be matched with the end product. On the list of plus sides of this for the supplier is that they are considerably nearer to the thinking of the customer. This could be convincing while discussing a better cost price.

4 Benchmarking and Unit Value: Breaking up costs down to the single unit assists you to determine a benchmark value. Spend is simply divided up by a variable which is appropriate such as height or customer opinions. In this manner several suppliers can be evaluated against one another and difference acknowledged. Cost reduction occurs when beneficial habits are recognised and then shared while negative practices are got rid off or re-engineered. One example well worth sharing is where the total cost for every retail store of marketing spend led to regional accents being used in television advertisements.

5 The Value of Operations Data: The purchase of a substitute product or service that directly compares with the last one is simple to validate with regard to price differences. On the other hand, where the alternative has a different anticipated overall performance, the verification of any cost variation may appear far more challenging. Studying the overall cost of ownership can be accomplished by using operations data which as well as verifying pricing variations may also realise additional business opportunities. A example of these added benefits includes situations such as where a electric battery is identified as lasting longer when compared to the previous one or where a newer ingredient increases shelf-life by 20% more.

Modelling Knowledge in Procurement

In every case category managers will want to start thinking about which value levers could present completely new opportunities for the purpose of getting additional benefits and what kinds of ‘Procurement Ready’ knowledge will help discover and then quantify these business opportunities.

Supply Chain Footprints:

Plotting your company’s suppliers on a map to indicate their location is the 1st step to perform whilst generating a footprint. The next thing is to map further levels of the supply chain and affiliated production locations. This knowledge of suppliers and manufacturing addresses in the supply chain makes it possible for supply risk (e.g. assurance of supply), reputation risk ( e.g. vendors CSR practices) and commercial risks (e.g. switching costs) to be identified and then managed.

6 Revenue & Profitability Overlays: By looking at end product revenue and earnings overlays you’ll be able to detect target areas where purchasing activity will be used to help support and / or enhance existing levels of income and profit. The focus will now be on the consolidated costs of finished products or services. Cross-functional teams may then do the job collaboratively to either establish possible cost reduction opportunities or support the peace of mind of higher revenue sales. By working in this way, cross category possibilities may also be identified which might not have already been identified by following a individual category targeted method of operating.

7 The Suppliers View on Data This is structured qualitative feed back coming from suppliers and internal stakeholders concerning the current state of a relationship. It identifies instances of weakness and also possible areas for development in working relationship quality. It assists you to identify how significant the organisation is as a customer to the supplier. Typical topics covered include things like: Are the strategies aligned? Is the relationship with the supplier functioning well? How well are the organisation’s business demands being delivered through the business relationship? Have any potential opportunities not been identified? With these details at your disposal and plainly linked to the relevant categories, improvement opportunities can be made visible, included in category strategies and implemented.

8. Overlaying Market Data: Bypassing essential sector data including futures trading prices would clearly be a error. Monitoring all changes in very important areas such as these is important for both cost reduction opportunities and for the good of the suppliers profitability.

9 Consumption Profile This can be beneficial to have an understanding of when the business has an end customer demand profile that’s not flat, but can vary throughout the year. This empathic approach with suppliers helps your SRM (Supplier Relationship Management) as their needs are better understood and also prepared for.

Next Steps and Insights:

You’ll find information worth looking at on this topic by Future Purchasing Procurement Consultants UK. on their site.

Using a high quality “Procurement Ready” base of knowledge, creating a solid category strategy is easier and quicker. The likelihood of successful transformation programmes are improved as a result. A ‘Procurement Ready’ base of knowledge is one of the differentiators between Category Management Leaders and Followers and makes a contribution to the 46% additional savings which Frontrunners enjoy compared to Followers.

If you want to start using a “Procurement Ready” base of knowledge it is recommended that a consistent model is developed and then properly trained to make sure a vocabulary is established throughout the procurement team.

The most forward thinking businesses have champions of this process whose job it is to make certain the procurement knowledge database is always up-to-date — releasing category managers to concentrate on building more effective category strategies, a lot quicker.

Probably the most effective way we have seen “Procurement Ready” knowledge bases get produced and developed is when Procurement prioritises the desire for this proficiency and establishes a plan to acheive it.

Making category management a key commercial competence of modern procurement departments is a high priority.

Both public and private sector companies must supply procurement kpi’s efficiently and accurately. Following the process above will bring about an organisations step change in providing value. A procurement consultant will be helpful in saving time, energy and money whilst beginning this type of journey and is strongly recommended..