Improving Strategic Sourcing with Category Management
STRATEGIC SOURCING AND CATEGORY MANAGEMENT
OVERVIEW
Strategic Sourcing and Category Management
Relationship Between Strategic Sourcing and Category Management What is Category Management? Benefits of Category Management Processes A Virtuous Cycle Contact Us
THE RELATIONSHIP
AN INTRODUCTION Category management could be considered as the successor of strategic sourcing.
A key practice within the category management process, strategic sourcing is an institutional process that analyses and improves an organization's purchasing activities so as to use the consolidated purchasing power to find the best possible values in the marketplace and align their purchasing strategy to business goals.
WHAT IS CATEGORY MANAGEMENT? Category management is a strategic approach in which an organization separates its procured goods and services in various segments depending on their functions. Organizations can efficiently manage their spends and achieve cost saving by adopting category management. It is a way of boosting value for an organization that encompasses the idea of strategic sourcing. According to experts, category management is a rigorous, fact-based, and end-to-end process.
WITH CATEGORY MANAGEMENT, ORGANIZATIONS CAN DRIVE THEIR VALUE, GROWTH AND INNOVATION.
BENEFITS OF CATEGORY MANAGEMENT PROCESSES Accelerating the effectiveness of the sourcing function within the company
Cost-effective approach resulting in significant savings
Fewer number of risks in the supply chain processes
Improved relationships with stakeholders
Improvements in service standards, quality, availability, and value
Revelation of alternative sources of value & innovation from the supply base
HOW STRATEGIC SOURCING & CATEGORY MANAGEMENT FORM A VIRTUOUS CYCLE
The Virtuous Circle
Formulate the logical categories for businesses by bringing products and services of similar features under the same roof.
Assessing the plans and business strategies of organizations so that the policymakers are assured the categories are in line with the business goals.
Organizations must develop category benchmarks that will enable them to identify additional improvement opportunities.
Effecient category management techniques facilitate an effective and seamless transition of business processes
Big data and business analytics help to scrutinize an organization’s spending, market data and productivity against benchmarks.
Constant analysis of the pricing standards based on the national and international markets.
Companies should invest in the process of gathering information relating to supplier performance data.
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