Why your business needs you to be great at category management | by Mark Hubbard

Mark Hubbard.jpgResearch undertaken by Future Purchasing into the returns of category management provide compelling reasons for firming up your competence in this area. Category management is a critical lever to deliver improved procurement – and business performance. And our investigation reveals that if you’re great at category management, you will contribute an estimated 15% to your business performance.

This number comes from analysis carried out by our partners at Henley Management College, and indicates a strong correlation between improved business performance and businesses who describe themselves as leaders in category management. In part, this comes from the ability of those leaders to deliver greater benefits thorough excellent application of category management, and to apply the approach in further areas. This increase in return and scope allows for a far higher level of contribution than “follower businesses”.

Category management principles

To get to this higher level of penetration and delivery, the leaders are great at the top 19 category management practices. Our survey identifies “40 areas of category management skills and expertise”, and by gleaning insight from the leaders’ answers, we can see which are the areas that have the most effect.

In part, and contributing to the overall business performance gains, is the ability to activate and take advantage of high performing cross functional teams who exhibit great internal collaboration. Being able to work across the organisation, developing more holistic approaches, and being able to identify and address a wider range of business issues to incorporate into category strategies all add to the effectiveness of the leaders.

In turn, this collaborative approach allows category teams to access more and different areas of value, getting well beyond the price experienced by the business, into areas such as innovation contribution, market expansion, fundamental cost structures and underlying customer value add.

Taken together, the spread of value delivered allows leaders to provide increased revenues, reduced risks in a broad range of areas as well as the expected reduced costs.

Future Purchasing works to help businesses become leaders in category management and we can help you on the journey to deliver 15% contribution to your business. Download a copy of our self-help guide on "Building your business case to transform procurement performance”.

Mark Hubbard is a director at Future Purchasing - www.futurepurchasing.com

FP Value Level Model