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Precise Category Management Data
03-19-2016, 06:54 PM,
Big Grin  Precise Category Management Data
We have frequently considered the fundamental info and knowledge to which Category Managers have to have access. examples include, supplier spend, category spend as well as individual business enterprise unit spend (see the standard model we have created further down.) As we have pointed out, this data is often not as readily available as might be preferred. Having said that, it’s absence is undoubtedly recognized and lamented by the Category Managers that have to engage in ‘Spreadsheet Detective’ in an effort to manually close the information gap!

This short article tries to identify another type of category information that is different and not found any place else to the best of our knowledge. This kind of 2nd level information is of a granular kind and may differ considerably between categories particularly where even the most basic queries haven't already been answered. This gives undeniably advanced information and category strategies which will fully connect with the organization.

The main importance of putting in the additional efforts are gained whenever negotiating with suppliers because the data obtained will give beneficial insight to costs as well as determine the opportunity to go after a reduction or add value sufficient to provide a transformation to the relationship with the supplier also making management of them a lot easier.

10 ways Procurement People really benefit from category data

Category Management Knowledge - Ten essential gaps it's essential to fill:

1 Cost Breakdowns: Cost breakdown or PPCA activity determines the key cost factors that are generally suffered by the supplier giving you a service or product. By simply estimating the % split of the supplier’s price that is likely to be attributable to each and every cost element, side by side somparisons can be done across suppliers. Obviously, this process potentially avoids making assumptions and helps to understand not only what makes up any specific cost as well as what drives it. For example, wherever logistics could be a high % of the total cost price then a increase in petrol prices will probably affect the total price.

2 Understanding Specs: Segmenting spend down into different categories and even sub-categories is usually enough when calculating probable cost savings. A part of the category strategy ought to go into significantly greater detail in order to find cost reduction opportunities and this ought to be planned as part of the whole process. A lot of analysis is necessary to do this. It has to go in to the tiniest detail of the constituent part of a product or a service because these could be the main drivers driving the cost price. This information will make it possible for comprehensive Value Analysis activity to be completed. For example, this could be linked to the performance specification for part numbers of electronic components, departure schedules for defined flight sectors, or even the addresses of high street network branches receiving security system reactive support.

3. End Product Linkage: This requires an understanding of which sub-categories supplied by a supplier are being used in which end products provided to customers and then making this accessible to the supplier. This can be used in order to persuade suppliers to provide the best pricing and/or innovation, so they feel directly connected with business development with the end consumer and can have an impact on demand for their own products and services.

4 Unitisation & Benchmarking: Unitisation is when spend information is divided by a appropriate variable such as area, length, customer satisfaction etc. This allows benchmarking across diverse suppliers or areas of an organisation, so variations in general performance are often identified. The next thing is to look for the reasons for the variances, eliminate any poor practices and promote the best practices which usually contribute to lower prices across the organization. If you are concerned by marketing, you will probably choose to compare about category management training. An example worth sharing is where the total cost per retail outlet of advertising spend led to regional accents being used in radio adverts.

5. The Value of Operations Data: Pricing differences between substitute products or services which are exactly the same as the very first item are usually simple to assess. On the other hand, where a alternative has got a very different expected general performance, the validation of any pricing variation could be more problematic. Studying the overall cost of ownership can be done with the aid of operations data files which as well as validating pricing variations may also realise more business opportunities. For example, these kind of total cost opportunity scenarios can happen if a new compound is used that's two times as beneficial as the original one, or where the new oil filtration system for a motor vehicle is claimed to last x kilometers longer before replacing, compared with the current filtration system.

6. Overlaying Profitability and Revenue: By evaluating end product revenue and also productivity overlays you are able to identify particular target areas where purchasing activities will be used to sustain or boost existing levels of sales revenue and profit. Instead of focusing on the buying price of specific part numbers or sub-categories, the cost of these are generally grouped together around a customer end product or service. During this period individuals from other business units are generally crucial in helping to verify opportunities to help reduce cost. One of the best benefits however when working across all different categories is that additional opportunities are exposed to the category purchasing teams.

7. The Suppliers View on Data Measuring a supplier relationship can be carried out both internally in the particular business but also, most importantly by the suppliers theirselves. It detects areas of weakness and potential areas for improvement when it comes to relationship quality. The added benefit of learning how necessary the organisation is to the supplier may also be identified. Questions to ask will include: How well do the strategic agendas of the two of you align? How successfully does the relationship work? How well are the organisation’s commercial requirements currently being delivered through the business relationship? Have any business opportunities not been acknowledged? With this information easy to get at and plainly linked to the appropriate categories, development opportunities can be made visible, included in category strategies and implemented.

8 Overlaying Market Data: Industry information such as utility prices, metals costs, chemical prices, labor rates etc. really needs to be made available to appropriate purchasing team members. Keeping track of all changes in essential areas like these is really important both for price reduction opportunities and also for the good of the suppliers sales and profits.

9 The Profile of Consumption: Where seasonal demand profiles are found they need to be prepared for and analysed. This empathic methodology with suppliers will help your SRM (Supplier Relationship Management) as their particular demands are better understood and also planned for.

Next Steps and Insights:

You will find resources worth referring to about this topic by Future Purchasing Procurement Consultancy. on their site.

The best category managers will definitely create a strategy based on a sound procurement knowledge. Discover further on our favorite partner website - Hit this web page: Procurement Category Management Revealed. They will get it done with less difficulty plus the strategy needn't be hard for them. This in turn generates increased momentum for procurement transformation. A ‘Procurement Ready’ knowledge base is one of the differentiators between Category Management Business leaders and Followers and contributes to the 46% extra cost savings which Frontrunners enjoy versus Followers.

To be able to implement a “Procurement Ready” knowledge base we recommend that a consistent method is produced and also trained to make sure a vocabulary is established throughout the purchasing team.

The most forward thinking businesses have champions of this technique whose role it is to ensure that the procurement knowledge database is constantly up to date - liberating category managers to concentrate on building more effective category strategies, faster.

Prioritising the need for a Knowledge base is fundamental to success and must be designed and prioritised in order to transform ways of working.

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

Both public and private sector organizations must deliver procurement kpi’s efficiently and accurately. Following the method above will bring about an organisations step change in giving value. Procurement Category Management Revealed Just is a refreshing database for extra info about the purpose of this activity. Getting a procurement consultancy that can help you through the entire process is generally the easiest way to go and staying away from a variety of stumbling blocks out there..

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