Many research firms have identified best practices for category management; here are eight from firms such as Aberdeen, AMR Research, and Gartner. These eight represent characteristics of high performing category managers:
1. Category Analysis – Definition of total spend for the company in last 3 – 5 years, projected spend for next 5 years; regions spend is sourced; number of suppliers (strategic and long tail identified); and why the category is significant to the business.
2. Business Position relative to Category – Competitive advantage or disadvantage the category brings to the business (revenue stream, demand/supply positioning, and the market).
3. Supplier Market Intelligence – number of suppliers in the market; supplier segmentation within the category; capabilities of each supplier in the past, current and future; supplier’s strategic direction for the next 5 – 10 years (based on your business requirements); supplier’s financial viability; performance; inventory positioning and abilities; business continuity plans; total contracts with your company and others; supplier’s products; markets served; competitor portions of business; innovative processes and patents; and collaboration strategy.
4. Customer Requirements – customer needs such as demand, sustainability, innovation, market, pricing, margins, etc.
5. Business Plan – company revenue plan tied to each category; number of suppliers needed to carry out the plan; investment strategy in the supply base and inventory to meet the objectives.
6. Supplier Strategies and Plans – innovation, financial, technology and business roadmaps for next 5 – 10 years (based on your business requirements).
7. External Benchmarks – market growth; percent of market share; opportunity to capitalise on the future: average percentage of savings per category of spends, etc.
8. Critical Visibility Elements – the nuances that make a category unique such as transportation lanes; print paper and presses; packaging types, cardboard, presses, and volume; and metals rolled, stamped, sheet or fabricated.
Without resources focused on the nuances of critical large spend categories, money can be left on the table.