Strategic sourcing is one of the most important aspects of any business, regardless of its field of operation. Essentially, it’s a procurement process that’s meant to constantly improve and adjust a company’s purchasing activities. There are many ways to improve strategic sourcing, whether that’s through streamlining certain processes or performing better research. Efficiency is the key to strategic sourcing and the key to operating a successful business. It takes a significant amount of research to build a reliable sourcing plan. It takes even more effort to enhance it beyond that. One of the best ways to enhance strategic sourcing is with a category management process.
What Is Category Management?
At its core, category management is a method of improving value. It includes strategic sourcing but is also so much more. Each business and category management platform is going to have different groups that are specific to their needs. Typically, a business defines a category as a group of services or products that are similar in function or nature. Through an analysis system, each purchase is sorted into these categories. Often, each category will have a specific category manager that oversees their specific group, developing and executing its various operations. Because all purchases fit under a group, companies can easily see where their spending is. Additionally, they can watch exactly where each category is used within their company.
Additional Benefits of Category Management
There are numerous benefits to using a well-designed category management system. Namely, it allows companies to eliminate redundancies while also improving efficiency. Category management allows for:
- Easily identifying core spending areas
- Collectively developing effective spending practices and expertise
- Organizing your company’s efforts in an understandable way
- Providing additional solutions for acquisition, supply, and demand
Together, these benefits reduce needless spending, improve workflows, and save time. Category management also changes the relationship between buyer and supplier. In many businesses, buyers and suppliers are at odds because they’re each trying to make the most money. However, with category management, it becomes a collaborative process with information sharing and joint business building.
Who Uses It and Where Is It Most Effective?
There are hundreds of thousands of companies that use category management systems all over the world. Originally, it was a concept that grocery stores used to better manage their products. It has since spread to almost every industry. Even federal governments use forms of category management. It’s an incredibly effective and powerful system.
Creating a Category Management System
Despite its effectiveness, the process of shifting to using category management can be difficult. This is where online sourcing marketplaces come in. You’ll be able to work directly with a procurement category manager to create a line plane, range plan, and category management process that will fit your business’s needs. Plus, they specialize in building a category plan for procurement that saves businesses time and money. Through the online marketplace, you’ll also be able to connect to suppliers or buyers and build a rapport to ensure future successful relationships.
The Bottom Line
At the end of the day, category management and strategic sourcing are complicated. It can be tough to try and work through it on your own. That’s why it’s so beneficial to speak with experts who understand how to build a category management process. Your business’ success should come first, and that can come through enhancing strategic sourcing with category management. For additional information, contact a member of the TradeBeyond team and let us show you how it can work for you and your business.