How Do Companies Increase ROI and Improve the Supply Chain?
Category management is a multi-faceted approach for analyzing the supply chain and focusing on key spend areas that drive business results. The ultimate goal of a category management approach is to eliminate fragmented buying and achieve sustainable savings (and performance improvements) across a company’s spend profile.
In our experience, effectively employing category management can save an organization from 5% to 25% of total spend, depending on the specific product or service and current internal and market conditions.
The key steps in a category management approach are shown in the graphic below and can best be described as a fact-based “chain” of analyses, strategies, and decisions.
Effective category management depends on bringing together the right cross-functional team (supply chain and key subject matter experts who are closest to each category) and following a process that completes the necessary analyses, defines the right strategies, and executes the competitive solicitation and negotiation process in a manner that achieves desired outcomes.
What approach are you employing to procure goods and services, and do you have the capabilities to adopt a category management approach?
To learn more about leading practices in category management, please contact us.
This is the seventh topic in a series focused on the top 10 problematic areas facing utility supply chain managers today.
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