Prime Advantage Blog

Conquering Category Management

Mike McDonald on Nov 12, 2015 7:30:00 AM

Anytime you’re facing a complex task, a great way to tackle the undertaking is by breaking the behemoth into pieces you can wrap your arms around. For example, if you're attempting to de-clutter the house, start with one room like the kitchen and then move onto the next area once that one is finished. Categorizing also allows you to see each portion of a bigger picture more clearly. Once you see how the dots connect, you'll be able to realize additional efficiencies and cut out any redundancies.

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Category management makes operations run significantly smoother. When you stroll down the aisles of your local grocery store, you don't usually come across milk in the same aisle as the cat food. It just wouldn't make much sense -- customers would have trouble locating the items on their lists, stocking levels would be a mess and it would be hard to determine which products were truly performing the best.  

Categorizing is equally beneficial in the procurement arena. When you breakdown your materials expenditures into categories, you can better untangle what's working and what might need some alteration. If you're liberally spending to keep churning out your product, category management allows you to really get deep in the weeds to see what's lurking. You might discover pests that need to be exterminated from the category. Or, you might find gems you didn't know you possessed that can be extended within the category or applied to others. Classifying will help you determine the right mix of which suppliers need to be switched, consolidated or amplified.  

But as Procurement Leaders surmises in Where Category Management Falls Down (And How It Gets Up Again), categorizing in procurement does not occur without its challenges. Getting your business to buy-in can be a hurdle, but if you can convincingly convey its merits, employees will get behind a means to get leaner and take advantage of cost savings. Communicating your market knowledge across departments, locations and other parts of the world if you're international is vital to keep the initiative humming. Sometimes tough decisions have to be made between maintaining certain supplier relationships and doing your job to the fullest. But if you can overcome these trials, you'll soon be finding yourself firmly placed in the Superstar Procurer category.

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Topics: Procurement

Mike McDonald

Posted by Mike McDonald

Mike is the Executive Vice President of Business Development for Prime Advantage, a Chicago based Group Purchasing Organization for mid-market manufacturers. Responsibilities include managing business development, marketing, and the GPO's Healthcare Cost Containment program. He’s been a featured speaker, published author, and recognized award winner within the supply chain community.

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