One of the goals of any company is to simplify their procurement procedure and categorize products or suppliers according to their relativity. This is needful to avoid complexities involved in purchasing the items that the company needs from different vendors. Companies adopt category management to ensure efficiency, convenience, and effectiveness.

 

What is Category Management?

A category refers to the grouping of similar products or items that a company intends to purchase in a single deal. The management aspect of category management is the application of procurement methodologies to help the company reduce costs and save money.

The purpose of category management is to compile all the needed items according to their similarities and place an order for the products in bulk from a supplier to facilitate a lower price per unit as one of the benefits of buying on a large scale.

As companies aim to simplify item procurement using category management, suppliers also can benefit from the concept. The concept became popular in the late 1980s after research conducted by Professor Brian F. Harris of the University of Southern California.

Category management brought about a significant change in how suppliers and retailers operated. Instead of competing with one another, suppliers brought together their products according to their similarities to simplify the purchasing procedure for the consumers when making purchasing decisions. Therefore, the suppliers grouped the range of related products offered for sale.

 

Reasons for Category Management

Category management is necessary for the product procurement industry for several reasons, among which are:

1. Facilitate collaboration among suppliers

2. Help the procuring company focus when making decisions relating to items or products procurements

3. Create a strategy that will birth healthy competition and differentiation

4. Promote cooperation and communication concerning decision-making in a company

5. Evaluate decisions regarding asset and allocation of resources

6. Clarify employee or departmental duties or responsibilities

7. Benefit from trading on a large scale

 

Category Management Ensures Consumer Satisfaction

The quest to improve the level and quality of services to consumers through collaboration among manufacturers, wholesalers, and retailers was one of the factors that brought about category management. When effectively analyzed and implemented, manufacturers, wholesalers, or retailers would be able to attract the more significant percentage of the consumers in the market. The process will help to meet consumer needs without hassles and ensure more category opportunities than they could achieve individually.

As a result, manufacturers, wholesalers, and retailers must focus on meeting the needs of their consumers by unifying the process. Companies should also tidy up the loose ends and make their procurement process more functional, efficient, and focused on achieving enhanced benefits that category management offers.

Author's Bio: 

Matt Wilson is a Motivational Speaker, Technology Enthusiast, Health Freak and Father of a little angel!