Category management is a strategic procurement approach that organizes resources to focus on specific spending categories. This allows category managers to conduct in-depth market analysis and leverage procurement decisions across the organization. The 10-step process for effective category management includes segmenting spend, forming cross-functional category teams, analyzing demand and supply, developing sourcing strategies, selecting suppliers, identifying cost-saving opportunities, creating a category plan, managing contracts and suppliers, and periodically reviewing performance.

1. Procurement Planning & Category
Management process
Inspired by CIPS effective category management course
Mapped by: Mohamed Azzam,
LinkedIn profile: https://www.linkedin.com/in/mohamed-azzam-70033a47

2. Category Management
Category management ... where the entire category is managed as a unit ...
is one of the ways COLLABORATION is used in supply chains today. (Dunne et al. 2010)
(
Category segmentation requires organizations to work Cross-functionally on
individual categories & examine the entire category spend, the marketplaces &
individual supplier. (O'Brien, 2009)

3. Category Management
 Category Management is a strategic approach which organizes procurement resources
to focus on specific areas of spends.
 This enables category managers to focus their time & conduct in depth market analysis
to fully leverage their procurement decisions on behalf of the whole organization.
The results can be significantly greater than
traditional transactional based purchasing methods

4. 10 steps process
for effective
Category
Management
in procurement
Classify purchasing items into market sectors and develop category trees1) Segment Spend
• Tools: Items classification and coding systems
Establish Cross-functional category teams & board2) Category Teams
• Tools: Organizational development and Team Building
Forecast & analyze internal demand for purchasing items in each category3) Demand Analysis
• Tools: Pareto Analysis, MRP, and procurement budget
Analyze the external supply market4) Supply Analysis
• Tools: STEEPLE, Porter’s 5 forces, Portfolio matrix “Kraljic”, and Supplier Perception Matrix
Evaluate & decide sourcing strategies for each category
5) Sourcing Strategies
• Sourcing Strategies examples: Sourcing option “single, dual, multiple”, Local or international sourcing, make-or-buy
decision, Kraljic strategies, and purchasing methodsSelect supplier that best fit the business needs, & seek strategic partnering
6) Supplier selection
• Tools: Supply base optimization & market sourcing (e.g. supplier search and trade exhibitions)
Cost saving/ improvement initiatives with focus on high impact & quick-wins7) Identify & Prioritize
Opportunities
• Tools: Setting SMART procurement objectives and Priority matrices
Finalize the Category Plan & obtain category board approval8) Category Plan
• Tools: CIPS Category plan template and consultancy
Purchasing execution and management of Contracts & Supplier Performance9) Contracts & Supplier
Management
• Tools: category cross-functional teams and ERP systems
1. Periodical Review & Continuous Improvement of the category plan.10) Review & Improvement
•Tools: Cross-functional feedback sessions, business evaluation reports and KPIs measurement
By: Mohamed Azzam