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AOP BlogCategory Management

What we learned – insights from Categorypalooza 2021

By September 2, 2021No Comments

Categorypalooza 2021 was just as jam-packed with insights as we hoped it would be. Thanks to the team from ProcureAbility (and all of our roadies) for sharing their know-how and challenging us to think differently about what category management is and what it allows procurement to achieve.

All of the sessions from the festival are now available to watch again on demand, but here are a few highlights:

Analysis Paralysis

We’re all “swimming in data” and that can feel pretty overwhelming. When procurement is approaching a huge mass of data for the first time, it is wise to take a scientific approach:

  • Formulate a hypothesis that can be tested against the available data and then refined, approved, or disproved
  • Articulate specific questions that the team can try to answer using the data set(s)
  • Monitor internal and external sources of information for signals that something is changing, and then look for corresponding adjustments in procurement’s data

It is also important to ‘roll up our sleeves’ and get into the data as opposed to delegating that to other team members. In many cases, first hand contact with data can make a huge difference in data mastery, while keeping a distance allows it to continue seeming unmanageable.

Embrace the Merits of Procurement 101

The complexity we associate with category management often makes this approach harder than it needs to be. Even a one-page category plan can make a huge difference in procurement’s clarity and the resulting project strategy. At the same time, category management should be discernibly different than ‘regular’ sourcing. Procurement should be careful to distinguish between sourcing and category management in thought, word, and deed.

Try a New Approach to Old Problems

There are many best practices that have become so familiar we may forget to run them up against new challenges. For instance:

  • Category management may be a solution to reducing tail and/or rogue spend if the spend categories or conditions leading to that problem spend are directly tied to the category’s suppliers, contracts, or point of purchase.
  • Should cost modeling is a proven but underutilized approach. Procurement should not only include it in appropriate projects, but bring it into the sourcing process as well – when we have the greatest opportunity to compare and impact supplier prices.

For more from CategoryPalooza 2021, including how to manage complex service categories and how to manage spend in inflationary conditions, click here to view the sessions on demand!

 

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