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The most essential information and details essential for people employed to work as Category Managers could possibly be recorded millions of times, for example, supplier spend, category spend and also individual business unit spend -- there is also a decent example mapped out below. For the reason that we have pointed out, this data is typically not as readily available as might be preferred. Category management experts can be found pulling their hair out struggling along with overworked and also under prepared files of numerous different sorts to find the data they need to complete a full picture of the categories state of affairs.

Right now we're turning the attention to a second tier connected with category data that's not ever been documented or codified as far as we're informed. This secondary level information is of a granular variety and definately will vary substantially between categories particularly where even the most basic questions have not already been addressed. The effort to extract this kind of data however is worthwhile as the data gained can be of a extremely high value.

The main value of putting in the additional effort is found whenever negotiating with suppliers because the data gained will give important insight to costs and determine the opportunity to pursue a reduction and / or add value sufficient to provide a transformation to the relationship with the supplier also making management of them more painless.

Top 10 ways Purchasing Teams utilize category information

We've identified Ten types of Tier Two category specific information:

1 Cost Breakdowns: Purchase Price Cost Analysis (PPCA - another term for “cost breakdown” is the process of pinpointing the most important factors that make up any particular cost from the provider for their service (or product). Be taught more about srm by browsing our commanding website. Each suppliers price is categorised into its main constituents for instance the price of raw materials as well as transport and the like. After that is finished it's easier to compare suppliers against each other. Cost breakdowns of course build improved knowledge of underlying cost drivers which includes technical specifications, production processes and service delivery operations for example.

2 Specification Mapping: Segmenting spend in to different categories and even sub-categories will be enough whenever estimating potential cost savings. However, when identifying potential opportunities during the development of a category strategy, it's important to analyse spend in great detail. This requires the examination of the specific part numbers and / or services bought, determining the technical specs and/or effectiveness behind them and linking these to the relevant costs and amounts. This level of detail will enable in depth Value Analysis activities to be succesfully done. Learn further on our affiliated site - Click here: category management consulting. Discover new info on our favorite related article by navigating to procurement consulting. For example, this could be linked to the performance specification for part numbers of electronic components, departure schedules for defined air travel sectors, or the addresses of high street network branches receiving security system reactive support.

3. End Product Linkage: This calls for an understanding about which sub-categories supplied by the supplier are utilized in which end products provided to consumers and then making this visible to the supplier. On the list of plus sides of this for your supplier is that they are much closer to the thinking of the consumer. In the event people claim to learn further on wholesale procurement consultant, there are many resources you should think about pursuing. This can be persuasive when discussing an improved cost price.

4 Benchmarking and Unit Value: Breaking up costs right down to the individual unit helps establish a benchmark value. Spend is divided up by a variable that's relevant such as height or customer feedback. Using this method different suppliers can be assessed against each other and differences acknowledged. The next task is to ascertain the reasons for the differences, eliminate all poor practices and share the best practices that may result in lower costs across the organisation. One example of this method used by us, was the analysis of unitised total FM costs in every m2 throughout eighty depots for a British coach business.

5 Operations Data Overlay: The purchase of a substitute product or service that directly compares with the preceding one is straightforward to validate when it comes to cost differences. Yet, where the alternate has a different expected performance, the verification associated with a cost variation could be more problematic. Reviewing the overall cost of ownership is achievable by using operations data which in addition to verifying cost variations might also realise additional business opportunities. Examples of these benefits includes circumstances such as in which a electric battery is identified as lasting for a longer time than the previous one or when a all new additive improves shelf-life by 20% extra.

Modelling Knowledge in Procurement

Possessing a standardised approach to Procurement data assists you whenever discovering and consequently quantifying the opportunity. Determining which value levers to pull is an essential skill for many category managers to find a cost reduction opportunity.

The Supply Chain Footprint:

This requires mapping 1st level suppliers and also finding the geographic regions from where they supply your organisation. One step beyond this is to map the location of small-scale suppliers and most importantly where merchandise involved in the chain originate. Pinpointing all these locations ensures that key supply chain risks can be monitored this includes guarantee of supply; reputation and naturally, commercial costs.

6. Revenue & Profitability Overlays: Finding areas where procurement teams can improve cost prices and/or revenue over the course of category reviews is required practice. The main focus will now be on the consolidated costs of completed products or services. During this period individuals from various other departments are generally crucial in helping to validate opportunities to reduce cost. One of the best advantages however when working across all of the categories is the fact that more opportunities are exposed to the category buying people.

7. Supplier Perception Data: This is structured qualitative feed back from suppliers and also internal stakeholders regarding the current state of a relationship. It identifies instances of weakness and potential areas for development when it comes to working relationship quality. The additional benefit of learning how essential the organization is to the supplier may also be identified. Frequent themes covered may include: How well do the strategic agendas of both parties align? Is the business relationship with the supplier functioning well? How well are the organisation’s business needs being delivered through the business relationship? Have any business opportunities not been acknowledged? Taking this feed back and accepting it is not necessarily always easy however category managers will find it helpful whilst talking about strategies.

8 Overlaying Market Data: Market information that include energy costs, materials prices, chemical costs, labour costs etc. need to be made available to appropriate purchasing team members. Monitoring any changes in important areas such as these is really important for both price reduction opportunities as well as for the good of the suppliers sales and profits.

9. Consumption Profile This is helpful to have an understanding of if the organisation has got an end customer demand profile which isn't flat, and varies during the year. This kind of empathic approach with suppliers supports your SRM (Supplier Relationship Management) as their requirements are better understood and prepared for.

Next Steps and Insights:

You might at this point want to take a look at the Knowledge Hub run by Future Purchasing Procurement Consultants UK. which has a wealth of help and advice.

The top category managers will definitely develop a strategy based on a sound procurement understanding. They'll make it happen with less difficulty plus the approach is straightforward for them. The prospect of successful transformation programmes are raised as a result. A ‘Procurement Ready’ base of knowledge is among the differentiators between Category Management Frontrunners and Followers and makes a contribution to the 46% additional cost savings which Leaders enjoy compared to Followers.

Ensuring that every one of the category managers follow the exact same method is a must and so the process must be planned out to ensure uniformity.

A further enhancement we have witnessed, from the leading organizations, is to build a specialised function within the procurement team that specialises in creating this data -- liberating category managers to concentrate on building better category strategies, more quickly.

The most effective way we have seen “Procurement Ready” knowledge bases be produced and developed is where Procurement prioritises the need for this kind of proficiency and establishes a plan to make it happen.

Ignoring Category Management in present day procurement departments isn't an option and should be prioritised.

Both public and private sector companies should supply procurement kpi’s efficiently and accurately. Implementing a ‘Procurement Ready’ strategy is a key building block to deliver great value more quickly. Choosing the best procurement consultant that will help you through the process is often the most effective way to go and staying away from the many stumbling blocks out there..
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