Many companies have a division of categories for buyers and even have rotation strategies in order to promote dynamism and democratization of knowledge. In this way, they do not generate dependencies in case of partial or definitive absences.
This model is far removed from true Category Management, which is nothing more than the search for maximum value generation through a structured model, by means of a differential analysis and a unique treatment of the category.
Building a purchasing team with Category Management may take years, but the benefits are certainly enhanced. In the evolution curves of the purchasing process, Category Management is usually evidenced from a level of maturity in which, in addition to the knowledge of the supplier market and the beginning of supplier development, there is supplier integration in the generation of value.
3 stages for Category Management
1. Understanding
This phase aims to obtain as much knowledge as possible of the category, starting from the knowledge of the information available within the company as well as the environment. Both aspects can be executed in parallel, but they must have a fixed dedication in the buyer's daily workday and a record/documentation must be left, which will be the basis for later decision making.
It is very important to generate a formality and treat this process as a specific project, clearly determining objective, scope, work schedule, involved parties with their respective roles and responsibilities; basically, this part generates commitment for both the buyer and the managers and provides the necessary tools.
Here there are very important opportunities such as cataloging and cleaning of the masters, the search for coding standards specific to the category, the recording of events with the chronology of internal and external occurrence, such as: list of suppliers, framework contracts, quality problems, mergers, identification of monopolies or oligopolies, participation in the local or international market, subsidiaries, alliances, among others.
One of the most powerful inputs to this axis is the Spend Analysis, which is a very extensive chapter that will be left for further analysis. Additionally, it is important to build a Kraljic Matrix of suppliers of the Category where absolutely all of them can be mapped, without exception, depending on their complexity in management and their impact on the business.
In terms of the category's supplier market environment, the following is important knowledge of sector trends, seasonality, logistical difficulties, geographical locations, consumption drivers, etc.capacity, capacity, among others. The perfect complement in this part is the Porter's 5 Forces Analysis where we can see the bargaining power, threat and rivalry.
2. Analysis
After a hard work of understanding, it is very important to organize the information and be able to determine which are the key aspects for value generation. In this axis it is very important to build deliverables such as a SWOT of the category, business drivers, TCO (Total Cost Ownership) and risk matrices, with their respective action plans, controls and heat maps. On paper it is quite easy to list these activities, however, they require elaboration, review, approval and version management processes. At this stage it is key to define achievable in the short term, in order to show a significant effort in terms of dedication of hours.
3. Strategy generation
In this axis, and taking into account that these are sequential tasks, there is already enough information to propose real actions on the category, on the suppliers and on the performance of those involved within the company; here strategies such as the development of a small supplier to make it strategic, decentralize purchasing, generate production processes within the company to replace the product, import raw materials, deliver the maquila to the supplier, conduct reverse auctions, among others, can be derived. The possibilities here are endless, but with all the information support from the previous exercises, it is a much simpler task and decision making becomes a matter of procedure because all the cards are laid out.
The construction path is fascinating, the involvement of the buyer in this project generates commitments with the company and ultimately the value addition is superlative, let this be a motivation to start the step by step to achieve true Category Management!
