Cost reduction is one of the best ways to ensure profitable business operations. As business operations, you need to seek ways of spending less on procurement while meeting the business needs.
So far, category management is the best way to achieve cost-saving measures. It involves categorizing goods and services into units for efficient and effective business operations.
Developing a Working Category Management Strategy
Now that you know what category management entails, you understand the need to develop a working strategy. Creating a winning category strategy involves a lot of work.
The first is to define the category and role.
Deciding the category of the various products helps in planning for the multiple products in the store. You will then use the information to make the consumer’s work as easy as possible. You can use consumer habits and relative importance in defining the product. After defining the product, you can then find its role.
The next step in developing a working category management system is to analyze data. Use the data to establish the market segment, consumer behavior. The data will help you encode a product information management (PIM) system for category allocation.
Once you have the data and information on products, you can choose the best category development strategy. Some options to choose from are; traffic building, image enhancing, profit generation, excitement creation and turf defending.
Implementation is the last aspect in developing a successful category development strategy. Work with your team to implement the category you are working on. Use the variation automation and retail analytics tools wherever possible and the production information management (PIM) system for market allocation.
Benefits of Category Management
Having a streamlined category management system comes with a lot of benefits for the business. Some of these include;
Increase revenue – a functional category management system allows the procurement professionals to analyze for better deals and how best to make the system work for the business. The professionals also get to organize the business resources better to gain from the economies of scale. The business ends spending less with more income.
Improved vendor risk management – a successful category management system allows the business to evaluate its suppliers, depending on their value continually. The organization gets to realize the various risks with the given suppliers then develop ways to manage them.
A greater understanding of the business operations– you require a successful category management system to understand how exactly the business operates. With the product information management (PIM) system, you can know the various products and their actual value. You will also understand the different aspects like suppliers and employees to help you align with business goals.
Category management is a proactive approach to procurement. Instead of waiting for suppliers to determine the market value, you get to understand it better. The system allows you to plan for the most valuable products for your business. You also get to enjoy the economies of scale and more aligned business operations.