3 Essentials of Procurement Based on Category Management

Supplier business models and procurement categories continue to evolve as fast as globalisation’s progress and advancements in technology. Hence, it makes good sense for category managers to establish a proactive approach to planning their categories by referring to actionable market intelligence. To achieve this, they need access to timely and comprehensive insights, which will enable them to develop and implement effective sourcing strategies. Likewise, they need to keep tabs on category developments to identify the early signs of risks and minimise disruptions to their supply chain. 

1. Hiring experts for help - Responsible procurement organisations understand the importance of intelligence mechanisms and category strategies that extend to indirect procurement categories such as HR, finance, IT, logistics, and their facilities. However, not all organisations may have enough manpower to deal with disruptions from those categories. In that case, hiring category intelligence specialists and consultants can help in monitoring those categories and enabling the company to understand each category and how it can affect the procurement process.

2. Category strategy development – Category managers should be able to understand the landscape of the supply market and create effective category plans. To achieve those objectives, they need access to secondary research sources and industry experts and seasoned analysts who can provide critical input on creating effective category strategies and applying the best practices specific to every category.

3. Category intelligence – After developing a category plan and defining a sourcing strategy, category managers must closely observe every variable that can affect the plan. They must observe variables such as the entry of new players, changes in pricing, macroeconomic changes, regulatory changes, technological developments, and consolidations occurring within the sector. It is recommended that category managers work with seasoned category management and intelligence specialists who can serve as an extension of their buying organisation. That way, they can free up resources and leave the monitoring and analysis to the experts. Seasoned category analysts can deliver actionable insights in the form of annual updates, periodic newsletters, and sector reports.