LegraDelong994

The most important data and facts required by people employed to work as Category Managers has been recorded millions of times, e.g. spend by service provider, category, small business unit etc. (see the standard model that we have built further down.) Suprisingly sometimes when people come to try to find this kind of information, it can be difficult to find. Category management experts can be found tearing their hair out wrestling with overworked and / or under prepared paperwork of many different sorts to find the information they need to complete a 100 picture of their categories state of affairs. This article seeks to identify an additional level of category info which is unique and not identified somewhere else to the best of our knowledge. This second tier data is of a granular kind and may vary greatly between categories significantly where the most elementary questions have not already been answered. Your time and effort to extract this kind of knowledge however is undoubtedly worthwhile as the information obtained is often of a extremely high value. The main importance of comitting to the extra efforts are found when negotiating with suppliers because the information obtained gives beneficial insight to prices and also determine opportunities to go after a reduction and / or add value sufficient to provide a transformation to the relationship with the supplier at the same time making management of them better. Top 10 ways Procurement People really benefit from category knowledge Category Management Information - Ten important gaps it's essential to fill1. Cost BreakdownsCost breakdown or PPCA action figures out the principle cost elements that are incurred by the supplier providing products or services. By calculating the share of the supplier’s total price that is going to be attributable to each and every cost component, comparisons can be made across suppliers. Of course, using this method potentially avoids making assumptions and will help to recognise not just what makes up any particular price but also what normally drives it. For instance, where logistics is a high of the total cost price then a increase in petroleum prices will almost certainly impact the overall cost. 2. Specification MappingWhen you are evaluating cost savings from the supplier, this categorisation approach is a major help. Part of the category strategy should go in to significantly greater depth in order to find cost reduction opportunity which should be designed as part of the process. This requires the examination of the specific part numbers or services purchased, identifying the technical specifications and/or performance behind them and linking all of them to the related costs and volumes. When successfully completed, analysis of the results to ascertain value can be done. Never overlook the smallest detail of your products or services, it could be the key to a new opportunity to minimize cost. 3. Finished Product Cross-fertilisationTo understand exactly what products link to other sorts of products (or services) used by end consumers the suppliers sub-categories really needs to be matched with the end item. Patent Pending is a dynamite online database for more about the purpose of this view. Use this to successfully encourage suppliers to offer the best pricing and/or new developments, so that they feel instantly connected with business development with the end consumer which allows them to influence demand for their own products and services. 4 Benchmarking and Unit ValueBreaking costs right down to the single unit will help determine a benchmark value. Spend is divided up by a variable which is relevant such as height or customer feedback. This enables benchmarking across diverse suppliers or parts of an organisation, to ensure variances in performance are often identified. The next phase is to find the causes of the differences, eliminate any poor practices and then promote the best practices that result in lower prices across the organization. An example of this method applied by us, was the analysis of unitised total FM costs in each square metre throughout 80 depots for a UK coach company. 5 Operations Data OverlayPricing differences amongst substitute products or services which are exactly the same as the original product have always been simple to measure. Yet, where a replacement has a completely different anticipated performance, the validation associated with a pricing difference is more problematic. Evaluating the overall cost of ownership can be done with the aid of operations data files which as well as verifying cost variations may also realise even more potential opportunities. A example of these rewards includes situations such as in which a battery is identified as lasting for a longer period compared to the previous one or where the new preservative boosts life expectancy by 20 extra. 6 Revenue & Profitability OverlaysWhen going over end product sales revenue and profitability overlays it's possible to identify target areas where procurement activities could be used to support or enhance existing levels of revenue and profit margin. The main focus will finally be on the consolidated costs of finished products or services. During this period individuals from several other business units are invaluable in helping to validate opportunities to reduce price. One of the best advantages however as a result of working across all of the different categories is the fact that many more potential opportunities are exposed to the category purchasing people. 7 The Suppliers View on Data Measuring a supplier relationship can be done both internally in the business but also, even more importantly by the suppliers theirselves. It identifies instances of weakness and possible areas for development when it comes to working relationship quality. Visit Purchasing Category Management Simplified to read why to ponder it. It helps you to identify exactly how important the business is as a customer to the supplier. To explore additional information, consider taking a glance at So What On Earth Could Be Described As Category Management In Procurement?. Questions to ask will includeHow well do the strategic agendas of all parties align? Is the business relationship with the supplier working effectively? Is the relationship properly supplying the benefits required by the business? Have any business opportunities not been acknowledged? With these details readily available and also clearly linked to the relevant categories, development opportunities can be made visible, integrated in category strategies and put into practice. 8 Overlaying Market DataBypassing significant industry knowledge such as commodity prices would likely clearly be a error. This may be because the organization is directly buying the thing in question, or perhaps it's a key element in a supplier’s cost base and the business needs to track changes in the cost base. 9. The Profile of ConsumptionAnywhere seasonal demand profiles exist they should be prepared for and analysed. By mapping the demand profile and consequently thinking about its impact on particular suppliers, more details can be given to them, much better business relationships produced and more strategic negotiations started. Next Steps and InsightsYou may at this point like to take a look at the Knowledge Hub run by Future Purchasing. that has a great deal of important info. Using a high quality “Procurement Ready” base of knowledge, generating a formidable category strategy is easier and quicker. The likelihood of successful change programs are increased as a result. Taking this method is definitely a characteristic of top rated category management exponents and typically can result in more than 45 more cost savings than those whose methodology is less vigorous. Making sure every one of the category managers adhere to the same method is vital therefore the process has to be mapped out to guarantee uniformity. Another development we have witnessed, at foremost organizations, is to set up a specialist function within the procurement team that specialises in generating this information ,freeing up the category management team to use the information for their strategic thinking. Prioritising the need for a Knowledge base is fundamental to being successful and must be planned and prioritised so that they can really transform ways of working. Dismissing Category Management in modern-day procurement departments is no longer an option and should get prioritised. Both public and private sector businesses must supply procurement kpi’s correctly and accurately. Discover further on an affiliated portfolio - Click here procurement consulting. Adopting the process above will bring about an organisations step change in providing value. Finding a procurement consultancy that can help you through the process is generally the best way to go and avoiding a variety of pitfalls out there..