Category management, when implemented correctly, can significantly enhance procurement’s contribution to overall enterprise performance. However, the mere renaming of strategic buyers as category managers does not equate to practicing category management. The role of a category manager is distinct from that of a buyer, focusing on strategy and long-term development of both supply and demand.
The Role of the Category Manager
Ideally, sourcing events and negotiations should be performed by a buyer, while the category manager decides on what and how to source, participates in the sourcing event design, and makes award decisions. Their involvement should not extend to sourcing event execution or day-to-day operational issues. Unfortunately, many category managers are often caught up in operational issues, leaving little time for strategic level tasks.
Beyond the Kraljic Matrix
If companies are using a category management strategy model, it tends to be the Kraljic Matrix. While the Kraljic Matrix is a valuable tool focusing on the supply side and managing the buyer-supplier power balance, category management must also consider the demand side and overall business objectives. The strategy will vary depending on whether the focus is on developing new innovative products and services or maximizing the profit margin of a product in a mature market.
Integrating Category Management into Procurement
A major challenge is the disconnect between category strategies or plans and the actual day-to-day work. Successful companies in implementing category management incorporate both supply and demand sides, collaborate across the organization, and ensure that category strategies align with business objectives. They also integrate category management into the procurement organization and its processes.
Emerging Solutions for Category Management
Until recently, there has been a lack of solutions to support category management. However, specialists like akirolabs have emerged to address this issue, and some larger suite providers have released modules to complement their suites. These solutions range from analytics dashboards to full-fledged strategy development. The future of category management lies in leveraging these tools to enhance strategic decision-making in procurement.
