Many companies have a division of categories for buyers and even carry out rotation strategies with the aim of promoting dynamism and democratization of knowledge. In this way, they do not generate dependencies in the event of partial or permanent absences. 

This model is very far from true Category Management, which is nothing more than the search for generating maximum value through a structured model, through differential analysis and a unique treatment of the category.

Getting a purchasing team with Category Management can take years, but the benefits are surely enhanced. In the evolution curves of the purchasing process, Category Management is normally evident from a level of maturity in which, in addition to knowledge of the supplier market and the beginning of supplier development, there is an integration of the supplier in the generation of value.

3 stages for Category Management

1. Understanding

This phase aims to obtain the greatest possible knowledge of the category, based on 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 records/documentation must be left that will be the basis for making decisions later.

It is very important to generate a formality and treat this process as a specific project, clearly determining objective, scope, work schedule, involved with the 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 the cataloging and cleaning of the masters, the search for the coding standards specific to the category, the registration of events with the chronology of occurrence internal and external, such as: list of suppliers, framework contracts, problems quality, mergers, identification of monopolies or oligopolies, participation in the local or international market, subsidiaries, alliances, among others.

One of the most powerful inputs in this axis is the Spend Analysis, which is a very extensive chapter that will be left for later analysis. Additionally, it is important to build a Kraljic Matrix of Category suppliers where absolutely all of them can be mapped, without exception, depending on their complexity in management and their impact on the business.

Regarding the market environment for suppliers of the category, knowledge of sector trends, seasonality, logistical difficulties, geographical locations, consumption drivers , capacity, among others, is important. The perfect complement in this part is Porter’s 5 Forces Analysis where we can see bargaining power, threat and rivalry.

2. Analysis

After arduous work of understanding, it is very important to organize the information and be able to determine which are the key aspects for generating value. 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 preparation, review, approval and version management processes. At this stage it is key to define what is achievable in the short term, in order to show results after 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 actions of those involved within the company; Here strategies can be deduced such as the development of a small supplier to turn it into a strategic one, decentralize the purchase, generate productive processes within the company to replace the product, import raw materials, deliver the maquila to the supplier, carry out reverse auctions, among others. others. The possibilities here are endless, but with all the support of information from the previous exercises, it is a much simpler task and decision making becomes a matter of procedure because all the cards are exposed.

The construction path is fascinating, the buyer’s involvement in this project generates commitments with the company and ultimately the value addition is superlative, let this be a motivation to start step by step to achieve true Category Management!