A suitable category structure is a prerequisite for category management and strategic procurement. Learn more on how to create a category structure for your business in this article.
1. Analyze the current state
Use your spend data to evaluate the current situation for the various categories. Questions you should try to answer are size of spend (value and volume), contract lengths, suppliers and your importance as customer for these suppliers. In many cases, it is also useful to make an assessment of how important the category is to your business and the complexity in the applicable supplier market.
2. Perform risk assessments
List the most critical risks that you and your team identify in the category, and create a risk matrix by scoring the identified risks based on probability and significance.
3. Identify alternative suppliers
Get up to speed on the current market situation by identifying alternative suppliers, their location and product/service offering. Remember to comment on any important information for the relevant suppliers.
Decide on the appropriate actions you and your team will take. Create a plan by sequencing the actions in the short, medium and long term. The plan should also include responsibilities throughout the team.
6. Summarize the strategy
Document the strategy on a "one-pager" where specific goals are detailed, e.g savings target, number of suppliers, contract lengths and market complexity.
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