In the end-to-end procurement process, category management is the first step prior to sourcing, contracting and operational buying. In essence, category strategy defines the follow-on steps and sets the direction for sourcing, contracting and operational buying activities.
A common misunderstanding is to equate category management with sourcing. This may be due to the fact that traditionally, there has been a strong emphasis on savings as the most important goal for procurement. To achieve savings, sourcing has played a major role. Category management considers various goals and objectives in addition to achieving savings, for example increasing sustainability or fostering innovation. In light of these goals, sourcing is not the only activity that can or even should be pursued by procurement. Depending on the nature of the category, the situation on the supply market and the company requirements, the team may want to consider activities such as innovation collaboration with suppliers, supply chain efficiency initiatives, supplier development or streamlining the buying process. Category strategy goes beyond achieving savings through sourcing, even if sourcing may be an important part of a strategy.
In SAP’s Intelligent Spend and Business Network solution portfolio, SAP Ariba Category Management is the solution for developing and monitoring category strategies. A prerequisite is the availability of clean, enriched, and classified spend data.
To bridge the gap between strategy and execution, SAP Ariba Category Management integrates with SAP Ariba Guided Sourcing. If sourcing has been defined as a category initiative, it can be executed in SAP Ariba Guided Sourcing. The event progress can be monitored in SAP Ariba Category Management. After the event is completed, the negotiated benefits are reported against the estimated benefits of the initiative.