Category management is a strategic approach to manage company purchases and related spend for better business outcomes. By grouping purchases into categories or buckets that share similar characteristics and or suppliers, companies can take a more holistic view of their spend and plan strategies to optimize costs, quality, and the supply base. Through category management, companies can identify similar needs and requirements across their production units and business functions, aggregate demand, and use their purchasing power to gain better prices from suppliers. This leads to improved cost savings and profitability for the company as a whole.
There are various benefits that can be achieved with purchasing category management. These relate to optimizing spend and supply base for the company as well as driving value for the business. Benefits also include improved risk management, harmonized supplier relationship management, and process efficiencies. Category management promotes the need for continuous learning across category teams and stakeholders.
For information on how category management helps companies manage their purchases strategically, hit play on the video.