Category Management In Procurement Definition

Category management in procurement is the strategic process of sourcing and managing spend across a company in order to achieve the best possible outcomes. It involves the identification, analysis, and selection of categories of spend that are most important to the company in terms of cost, quality, and risk.

Category management is a key part of effective procurement and can help companies save money, improve quality, and mitigate risk. When done well, it provides a structured approach to sourcing that can lead to better supplier relationships and improved negotiation leverage.

There are four main stages to category management:

1. Identification – understanding what you spend your money on and which areas are most important to the business. This stage also includes understanding any risks associated with certain categories.

2. Analysis – using data to understand spending patterns and trends, as well as supplier performance. This stage also includes segmenting suppliers based on their capabilities.

3. Selection – developing criteria for choosing suppliers and assessing them against those criteria. This stage also includes negotiating contracts with selected suppliers.

4. Management – monitoring supplier performance and ensuring compliance with contract terms. This stage also includes continuous improvement initiatives aimed at reducing costs or improving quality