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We all have often looked at the fundamental information and knowledge to which Category Managers need access. for example, supplier spend, category spend along with individual business enterprise unit spend -- there's a really good example of this mapped out in the following paragraphs. Suprisingly perhaps when most people begin to try to find this sort of data, it can be difficult to locate. However, it’s absence is definitely known and reported by the Category Managers that have to engage in ‘Spreadsheet Detective’ so that they can manually bridge the information gap! This article tries to find an additional type of category knowledge that is unique and not revealed any place else to the best of our knowledge. The 2nd level information is of a granular kind and often will differ considerably between categories notably where the most elementary questions have not already been addressed. This provides you with genuinely ground breaking insight and category strategies which will fully connect with the organisation. The main value of putting in the additional efforts are gained when negotiating with suppliers because the information gained gives useful insight to prices as well as determine opportunities to pursue a reduction or add value sufficient to provide a transformation to the relationship with the supplier also making management of them considerably easier. 10 ways Purchasing Teams utilize category information Category Management Knowledge - 10 essential gaps it's essential to fill1. Cost BreakdownsPurchase Price Cost Analysis (PPCA - a different name for “cost breakdown” is the work of identifying the key factors that make-up every distinct cost from a supplier for the service (or product). By simply calculating the Percentage split of the supplier’s total price that's going to be attributable to each cost component, side by side somparisons can be made across suppliers. Price breakdowns always build greater knowledge of fundamental cost drivers which includes specifications, production processes plus service delivery processes etc. 2 Understanding SpecsWhen looking for cost savings from the supplier, this categorisation method is a major help. However, whenever identifying potential opportunities during the creation of a category strategy, it's really important to review spend in depth. Visit go here for more info to compare why to think over it. A large amount of analysis is required to achieve this. It must get into the smallest details of the constituent part of a product or a service because these can be the principal drivers behind the cost price. This level of detail will make it possible for in-depth Value Analysis activity to be carried out. For example, this could be linked to the overall performance specification for part numbers of electrical components, departure schedules for defined flight sectors, or the addresses associated with high-street network branches using alarm system reactive support. 3 Finished Product Cross-fertilisationThis requires an awareness about which sub-categories provided by a supplier are used in which end products sold to customers and then making this obvious to the supplier. This can be used in order to motivate suppliers to give best pricing and/or innovation, so that they feel directly connected with business development with the end customer and can influence the demand for their own products and services. 4 Benchmarking and Unit ValueUnitisation is where spend information is divided by a suitable variable such as area, length, customer satisfaction etc. In this way several suppliers can be assessed alongside one another and differences identified. The next phase is to find the reasons for the variations, eradicate all bad practices and then talk about the excellent practices which result in lower costs across the organization. An example well worth sharing is how the total cost for every retail store of marketing spend led to regional accents being used in television ads. 5. The Value of Operations DataPurchasing a alternative product or service which directly compares with the previous one is simple to validate with regard to cost difference. Obviously, identifying pricing differences when a replacement product or service is different is much more difficult. That's where the overlay of operations data could very well make it possible for a total cost of ownership (TCO) analysis to take place and even more challenging opportunities and related cost differences checked. A example of these benefits would include scenarios such as when a battery is identified as lasting longer in comparison to the old one or when a completely new additive increases shelf life by 20 extra. 6 Overlaying Profitability and RevenueWhen evaluating end product sales revenue and also earnings overlays you are able to discover particular target areas where procurement activities will be used to support or improve current levels of income and profit margin. The focus will now be on the combined costs of completed products or services. Cross-functional teams can then get the job done collaboratively either to establish possible cost reduction opportunities or retain the confidence of high revenue sales. One of the best benefits however when working across all of the different categories is usually that many more opportunities are exposed to the category purchasing people. 7. Supplier Perception DataThis is structured qualitative feedback from suppliers and also internal stakeholders concerning the existing condition of a relationship. Procurement Consulting Info includes further about why to flirt with this concept. The process can flush out exactly where things are going both well and not very well. The added benefit of learning how vital the organisation is to the supplier is also identified. Clicking high quality supply chain procurement probably provides suggestions you could tell your sister. Typical subjects covered may includeAre your strategies aligned correctly? Is the relationship with the supplier working well? Is the relationship properly providing the benefits required by the business? Specifically what development opportunities are available? Taking this feed back and accepting it is not necessarily easy nevertheless category managers will find it beneficial when discussing strategy. 8 Market Data OverlayMarketplace information that include utility prices, materials costs, chemical prices, labor rates etc. need to be available to relevant procurement team members. This can be simply because the organization is directly buying the thing in question, or it's a key element in a supplier’s cost base and the organisation ought to track a change in the cost base. 9. Consumption Profile Where seasonal demand profiles exist they need to be prepared for and analysed. This empathic methodology with suppliers helps your SRM (Supplier Relationship Management) as their requirements are better understood and also planned for. Summary & Recommendations for ActionYou may at this stage like to take a look at the Knowledge Hub run by Future Purchasing Procurement Consultants. which has a great deal of help and advice. The very best category managers will create a strategy based on a great procurement knowledge. They will complete the work more easily plus the strategy is straightforward for them. The probability of successful transformation programs are improved as a result. A ‘Procurement Ready’ knowledge base is among the differentiators between Category Management Leaders and Followers and contributes to the 46 extra savings that Frontrunners benefit from versus Followers. Making sure all of the category managers stick to the same method is crucial so the approach has to be planned out to ensure consistency. The most forward thinking businesses have champions of this methodology whose role it is to ensure that the procurement knowledge database is constantly up to date -- liberating category managers to focus on developing superior category strategies, a lot quicker. Prioritising the requirement for a Knowledge base is fundamental to being successful and has to be designed and prioritised in order to really transform ways of working. Ignoring Category Management in modern day procurement departments is not an option and must get prioritised. Both public and private sector organizations should supply procurement kpi’s correctly and competently. Following the method above will bring about an organisations step change in delivering value. A good procurement consultancy can be beneficial in saving time, energy and your money when embarking on this type of journey and it is highly recommended.. This dazzling category management training website has various salient cautions for why to study it.