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We all have often considered the fundamental info and knowledge to which Category Managers require access. for example, supplier spend, category spend as well as individual business enterprise unit spend (see the standard model that we have developed in the following paragraphs.) Suprisingly perhaps when people come to try to find this sort of information, it can be hard to find. In spite of this, it’s absence is unquestionably recognized and reported by the Category Managers that have to play the game ‘Spreadsheet Detective’ so they can manually close the information gap! At present we are turning our attention towards a 2nd level regarding category data which has in no way found itself documented or codified as far as we've been informed. Tier Two is a lot more specialised data that will vary depending on the profile of the category and the potential value which is obtained by simply building on the facts and knowledge out of Tier 1. This provides genuinely ground breaking knowledge and category strategies that will fully connect with the business. In most cases this can lead to far more intelligent negotiations, much better cost management, more capture of company innovation and identifies additional opportunities to get value growth. Different types of Tier 2 Category Specific Information The Best Ten different types of information desired by Category Managers1. Breakdown the CostPurchase Price Cost Analysis (PPCA - a different name for “cost breakdown” is considered the process associated with pinpointing the primary factors that comprise every distinct cost from the supplier for their service (or product). By estimating the split of the supplier’s total price that is going to be attributable to each and every cost element, side by side somparisons can be done across suppliers. If people claim to learn more about here, there are heaps of resources you can pursue. Of course, using this method potentially helps prevent making assumptions and helps to recognise not only what makes up any particular cost but also what drives it. As an example, wherever logistics is a really high percentage of the overall cost price then a rise in petroleum prices will definitely impact on the total price. 2 Specification MappingWhile looking for cost savings from the supplier, this kind of categorisation method is a major help. However, whenever discovering opportunities during the creation of a category strategy, it is important to review spend in greater detail. To check up more, we know people check-out webaddress. This involves the examination of the specific part numbers and / or services purchased, determining the technical specs and/or performance behind them and connecting all of them to the related prices and volumes. When completed, analysis of the results to establish value can be done. For instance, this could be linked to the performance specification for part numbers of electrical components, departure schedules for identified flight sectors, or the addresses of high street network branches receiving alarm system reactive support. 3. Finished Product Cross-fertilisationThis requires an understanding of which sub-categories provided by a supplier are being used in which finished products provided to consumers and making this visible to the supplier. On the list of plus sides of this for the supplier is that they are much nearer to the thinking of the consumer. This is often persuasive while negotiating a better cost price. 4. Benchmarking and Unit ValueBreaking up costs down to the individual unit will help set a benchmark value. Spend is divided with a variable that's relevant such as height or customer opinions. This allows benchmarking across varied suppliers or parts of a company, to ensure variations in general performance can be identified. The next step is to search for the causes of the variations, get rid of any poor practices and then share the excellent practices that contribute to lower costs throughout the organization. A good example of this method used by us, was the analysis of unitised total FM costs per square metre across 80 depots for a British bus company. 5 Operations Data OverlayCost differences between replacement products or services that are identical to the original item are almost always straightforward to measure. Yet, where the substitute has got a very different expected performance, the verification of any price difference may appear far more problematic. This is why the overlay of operations information may well enable a total cost of ownership (TCO) evaluation to take place and even more sophisticated opportunities and associated cost differences verified. For instance, these total cost opportunity situations can happen where a different compound is used that's two times as productive as the last one, or where a latest motor oil filter for a vehicle is claimed to last x kilometers longer before renewal, compared to the current filtration system. 6. Learn more about tumbshots by navigating to our striking encyclopedia. Overlaying Profitability and RevenueBy analyzing end product revenue and profitability overlays you'll be able to identify target areas where purchasing activity will be used to sustain and / or boost current levels of revenue and profit margin. Rather than being focused on the cost of unique part numbers or sub-categories, the price of these are typically grouped together around a consumer end product or service. Cross-functional teams are able to work collaboratively either to determine potential cost reduction opportunities or retain the assurance of higher revenue sales. One of the best benefits however as a result of working across all different categories is the fact that more opportunities are exposed to the category buying people. 7 Supplier Perception DataMeasuring a supplier relationship can be performed both internally in the company but also, most importantly by the suppliers theirselves. Carrying this out can flush out where things are going both well and not so well. The added benefit of learning how essential the organization is to the supplier may also be discovered. Standard themes covered includeHow well do the strategic agendas of all parties align? Is the relationship with the supplier working effectively? Is the relationship properly supplying the benefits necessary for the organisation? What improvement business opportunities are readily available? By having this info readily available and also clearly linked to the relevant categories, development business opportunities can be made visible, integrated inside category strategies and executed. 8. Market Data OverlayMarket place data that include energy costs, materials prices, chemical prices, labor costs etc. should be made available to appropriate procurement team members. Monitoring all changes in vital areas like these is crucial both for cost reduction opportunities as well as for the good of the suppliers sales and profits. 9. The Profile of ConsumptionAnywhere seasonal demand profiles exist they should be prepared for and analysed. This kind of empathic methodology with suppliers aids your SRM (Supplier Relationship Management) as their needs are better understood and also prepared for. Summary & Recommendations for ActionThere's help and advice worth looking at on this topic by Future Purchasing UK Procurement Consultancy. on their website. The top category managers will definitely generate a strategy based on a sound procurement knowledge. They will get it done with less difficulty and the strategy needn't be hard for them. The probability of successful change programs are increased as a result. A ‘Procurement Ready’ knowledge base is among the differentiators between Category Management Frontrunners and Followers and makes a contribution to the 46 extra savings which Leaders benefit from compared to Followers. Making sure that every one of the category managers stick to the exact same process is a must therefore the process must be mapped out to ensure consistency. The most forward thinking businesses have champions of this approach whose role it is to ensure that the procurement knowledge database is always up to date -- liberating category managers to focus on building superior category strategies, a lot quicker. Quite possibly the most effective way we have seen “Procurement Ready” knowledge bases get put together and established is when Procurement prioritises the desire for this capability and establishes a plan to acheive it. Dismissing Category Management in modern procurement departments is no longer an option and must be prioritised. Multi-site organizations in the private sector and large government departments in the public sector have to have “one method of working” capable of unlocking value in a very quick and versatile way. Visiting purchasing consultants seemingly provides aids you can tell your dad. Applying a ‘Procurement Ready’ strategy is a key building block to generate significant value much faster. A good procurement consultant will be invaluable in saving time, energy and your money when embarking on this type of journey and its highly recommended..