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.

Category Intelligence in Procurement – What Is It and What You Need To Know

Category intelligence solutions are crucial to procurement departments. They deal with actionable market intelligence for key procurement categories to help category managers make better category strategies. Likewise, category intelligence can help the managers identify the best practices that allow the business keep to up with the ever-changing category landscape. This way, you can rely on comprehensive and critical information that can ensure the sustainability of the supply chain, improve supplier relationships, and track the changes in procurement categories.

Suppliers and procurement categories must be able to keep up with technological advancements, globalisation, and other developments that can affect the supply chain. Hence, it is crucial for category managers to approach category planning in a pro-active manner, basing crucial decisions on actionable market intelligence. Timely and comprehensive insights are valuable to category managers as these enable to them to develop effective strategies for sourcing. Moreover, these professionals must be constantly updated on category developments to determine early warning signs of risks and reduce disruptions in the supply chain.

A category intelligence solutions provider maintains a secondary research database with thousands of online sources. Together with expert opinion and the ability to obtain on-ground insights, an experienced analyst team can help category managers track trends, determine the best practices, and come up with bespoke market reports regarding category leads. This way, category managers can develop a category strategy and save time in the process.

Seasoned analysts and industry experts will assist category managers in determining and understanding the supply market and create effective category plans. Likewise, they can help identify new and niche suppliers and market trends to help them plan in advance. Category managers may learn category-specific best practices from category management specialists, too, and this will be helpful if they are looking to expand or improve their procurement practice.

Understanding the Concept and Benefits of Category Market Intelligence

Category market intelligence refers to all actionable information that helps companies to take better procurement decisions.

Any enterprise that deals in the purchase or sale of goods at any level – whether as a manufacturer or dealer or retailer – must be fully aware of the items they have to procure. A detailed knowledge of the product category, vendors, key trends, national regulations, regional, socio-economic geo-political news,etc. is essential for the Chief Procurement Officer (CPO) to take effective decisions.

This market information is a key requirement for businesses to place orders for and trade in the correct products. For instance, knowing what to order today to sell tomorrow means the CPO and his team have to predict market trends and find the OEM businesses that sell the product and are willing and able to send it to the region where the item will be sold without any unnecessary inventory build-ups.

Sounds complicated, right?

Unlike other market data that often look complex but seldom are, category market intelligence is quite complicated. Knowing how to interpret the information generated from a variety of sources is perhaps as important as using it to run the business. Though most large corporations have employed in-house teams to derive actionable intelligence, smaller firms have opted for experts who have extensive knowledge of markets and are able to provide this practical data.

Here are a few benefits that indicate why category market intelligence has become so critical today:

•    Filtered actionable insights: As highlighted, the amount of information that companies have to wade through to order products is overwhelming to say the least. It helps to have a small amount of filtered data that focuses on the key points and gives practical, actionable insights. 

•    Identify trends: Market trends are an important aspect of being able to sell products. Knowing what will be acceptable to buyers will make it easier to sell the products. Lack of such data will result in an inventory of outdated goods and will obviously increase costs. 

•    Plan the future better: Companies can plan their operations much better with category market intelligence. Having detailed information on vendors, product delivery timelines, distributors, etc. help businesses to keep a track of future operations. Moreover, data on future delivery flows helps the management to strategize better with targeted procurement strategies.

•    Respond quickly: More often than not, reacting rapidly to market demands is necessary to run a profitable enterprise. Category market intelligence proves invaluable here as businesses can take advantage of emerging opportunities and react swiftly to fill a demand gap.

•    Reliable supply-line planning: Finding the right vendor is as important as selling the product. A supplier who can provide the required quality of product within the necessary timeframe is invaluable to running a profitable enterprise. Category market intelligence helps identify such vendors and allows businesses to benefit from the resulting efficiencies.