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We have frequently looked over the essential resources and knowledge to which Category Managers need access. for example, supplier spend, category spend along with individual business unit spend -- there's a good example mapped out listed below. Should you hate to get further about understandable, we know of millions of online resources you might consider investigating. Suprisingly maybe when most people come to look for this type of data, it can be hard to locate. In spite of this, it’s absence is unquestionably known and reported by the Category Managers that have to engage in ‘Spreadsheet Detective’ in an effort to manually close the information gap! This document seeks to find another level of category knowledge which is different and not found any place else to the best of our knowledge. Tier Two is far more specialised data that will vary depending on the profile of the particular category and also the potential value which can be obtained by simply building on the information and understanding from Tier 1. This provides you with truly ground breaking knowledge and category strategies that will fully connect with the business enterprise. In many cases this can lead to more intelligent negotiations on prices, much better cost control, greater capture of company innovation and identifies further opportunities for value enhancement. Different types of Tier 2 Category Specific Knowledge Category Management data -- Ten important gaps it's fundamental to fill1. Cost BreakdownsPurchase Price Cost Analysis (PPCA - a different term for “cost breakdown” is considered the job associated with determining the key factors that make-up every particular cost from the provider for the service (or product). Procurement Specialists contains more about the inner workings of this hypothesis. By simply estimating the share of the supplier’s total price that's likely to be attributable to each and every cost element, side by side somparisons can be done across suppliers. Cost breakdowns always build improved understanding of underlying cost drivers such as technical specifications, production processes plus service delivery operations for example. 2 Understanding Technical specificationsSegmenting spend into different categories and sub-categories will be enough when estimating potential savings. Part of the category strategy should go in to greater depth to find cost reduction opportunities and this should be designed as part of the whole process. This involves the analysis of the specific part numbers as well as services purchased, determining the technical specs and/or performance behind them and associating all of them to the related prices and volumes. Once successfully completed, analysis of the conclusions to establish value can be done. You should not overlook the tiniest details of any products or services, it could be one of the keys to a new chance to help reduce cost. 3. Finished Product Cross-fertilisationTo appreciate what products link to other sorts of products (or services) used by end consumers the suppliers sub-categories must be matched up with the finished item. Use this to successfully motivate suppliers to provide best prices and/or innovation, to allow them to feel directly connected to business development with the end consumer which allows them to have an effect on the demand for their own products and services. 4 Benchmarking and Unit ValueUnitisation is when spend data is divided by a relevant variable eg area, length, customer satisfaction etc. By doing this different suppliers can be assessed alongside each other and differences acknowledged. Cost reduction takes place when superior habits are identified and shared while damaging practices are eliminated or re-engineered. One example of this approach applied by us, was the analysis of unitised total FM costs per square metre across eighty depots for a UK bus business. 5 Operations Data OverlayPricing differences among replacement products or services which are exactly like the very first item are usually straightforward to assess. Naturally, figuring out price variations where a substitute product or service is different is more complicated. Studying the overall cost of ownership is possible by using operations data which as well as validating price differences may also realise even more opportunities. For example, these total cost opportunity situations can occur where a brand new additive is used that is two times as productive as the old one, or when a new engine oil filtering system for a vehicle is claimed to last x kilometers longer before replacement, compared with the present filtration system. 6 Overlaying Profitability and RevenueWhen going over end product revenue and also profitability overlays it is possible to identify particular target areas where purchasing activity can be used to support and / or improve current levels of income and profit margin. This novel category management consulting link has specific impressive lessons for where to see about it. Instead of focusing on the buying price of specific part numbers or sub-categories, the cost of these are typically grouped together around a consumer end product or service. At this time individuals from various other business units are typically crucial in helping to authenticate opportunities to reduce price. One of the best benefits however when working across most different categories is the fact that more potential opportunities are exposed to the category buying teams. 7 The Suppliers View on Data Measuring a supplier relationship can be carried out both internally in the company but also, even more importantly by the suppliers theirselves. It identifies instances of weakness and possible areas for development in relationship quality. It helps you to identify exactly how important the business is as a customer to the supplier. Standard themes asked about includeHow well do the tactical agendas of all parties align? Is the business relationship with the supplier working well? How well are the organisation’s business requirements currently being delivered through the relationship? What improvement opportunities are obtainable? Using this feedback and accepting it is not necessarily always easy however category managers will find it invaluable whilst discussing strategy. 8. Overlaying Market DataMarket information and facts such as energy prices, metals costs, chemical prices, labour costs etc. really should be available to appropriate purchasing team members. This could be mainly because the organization is directly buying the commodity in question, or perhaps it is a key component of a supplier’s cost base and the organisation ought to track a change in the cost base. 9. If people need to learn further on check this out, we know about tons of databases people might investigate. Consumption Profile Anywhere seasonal demand profiles can be found they should be prepared for and analysed. This empathic approach with suppliers assists your SRM (Supplier Relationship Management) as their particular demands are better understood and also prepared for. Next Steps and InsightsYou may at this point like to investigate the Knowledge Hub run by Future Purchasing Procurement Consultants. which has a great deal of insight. The very best category managers will produce a strategy based on a solid procurement knowledge. They will get it done more easily and the strategy needn't be hard for them. The probability of successful change programmes are raised as a result. A ‘Procurement Ready’ knowledge base is among the differentiators between Category Management Leaders and Followers and makes a contribution to the 46 extra cost savings that Frontrunners enjoy compared to Followers. Making sure all category managers stick to the same process is crucial and so the method has to be planned to guarantee uniformity. The foremost forward thinking businesses have champions of this methodology whose duty it is to ensure the procurement knowledge database is constantly updated ,freeing up the category management team to make use of the knowledge in their strategic thinking. One of the most successful way we have experienced “Procurement Ready” knowledge bases get created and established is when Procurement prioritises the need for this kind of capability and establishes a plan to achieve it. Making category management a core commercial competence of modern procurement departments should be a top priority. Both public and private sector businesses should deliver procurement kpi’s efficiently and competently. Implementing a ‘Procurement Ready’ strategy is a key basis to deliver outstanding value faster. Choosing the best procurement consultant that will help you through the process is generally the best way to go and steering clear of a variety of hurdles out there..