The Business Case for Category Management

FP are global leaders in category management and we often help procurement teams to create a compelling and bespoke business case for category management optimisation.

Most procurement professionals are aware that category management has huge potential to deliver value way beyond traditional sourcing approaches. However, the practices that really make it work have remained elusive until now.

From our recent Category Management Leadership Report 2016-17, we have now identified the top 19 category management practices that will deliver 68% of the value from best practice category management. Focusing on these practices allows procurement teams to put improvement plans in place to accelerate category management performance. 

So why improve category management?

The survey shows that leaders achieve higher savings rates than followers from their category management projects - 11.1% compared to 7.7%. Yet, even leaders recognise they are missing opportunities and leaving value on the table – a further potential 5.2% by their own estimates.

Leaders also have a higher proportion of their spend covered by category strategies - 64%, compared with 34% for followers. The survey results demonstrate that a third of leaders are achieving greater than 75% category strategy spend coverage and a potential target of 80% is reasonable.

The diagram below shows the combined impact of savings rates and strategy spend coverage for followers, leaders and the full potential. It also includes the total savings achieved at each of the three levels per €1 million spend. Followers achieving the potential will boost their current savings performance by 400% , compared with an 83% performance boost for leaders achieving the full potential.

Savings Potential for Leaders and Followers per €1m spend


Take a look at the additional value that can be achieved:


Download the Executive Summary of the   2016-17 Global Category Management Leadership Report


How can we help?

Profile Your Category Management Performance

We can compare you against “category management leaders” and confirm the detailed changes required to advance your category management performance to the next level. FP will profile your organisation’s category management performance against our recognised top 19 best practices. 

You will receive an insightful profile detailing your strengths and a prioritised list of areas to improve. We would then work with you to develop a business case for category management optimisation.

Contact us for more information on how FP can help you transform your category management performance.

Call Simon Brown on: + 44 (0) 7961 110529
or email sbrown@futurepurchasing.com

Read More

The Business Case for Category Management
 How to Successfully Implement Category Management
Category Group Planning
Strategic Sourcing
Track8 Procurement Software
FP Category Management Survey 2016 - 2017
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