Sourcing and Procurement
Strategies for overcoming challenges in category management: Expert advice and solutions
An integral part of the end-to-end procurement management process, category management allows businesses to group similar products or services and help streamline the inventory management process. However, modern businesses must overcome key category management challenges to ensure the successful implementation and utilisation of category management processes to achieve the desired business outcomes.
What is category management?
Category management is a systematic approach to managing different sets of products with similar characteristics as distinct "strategic business units". These sets of products or services can also share similar functionalities, supply markets, or customer segments.
Originating in the retail industry, the initial concept of category management focused on breaking down the products a retailer carries into distinct groups based on the similarity of the product characteristics or functionality. The aim was to simplify the inventory management workflows.
However, as time has passed, other industries have also realised the benefits of category management and are embracing its principles to group the products or services that have similar characteristics and treat them as a distinct group. Companies in both the public and private sectors are leveraging category management to optimise their end-to-end procurement processes.
Solutions to overcome category management challenges
Category management has several advantages, including cost optimisation, enhanced risk management, improved supplier relationships, transparency and visibility, and a competitive edge. Despite its advantages, implementing category management is not without its challenges.
Here are some key category management challenges businesses must overcome to ensure successful implementation:
Aligning stakeholders and getting their participation
One of the first category management challenges is aligning the objectives, interests, and expectations of different stakeholders and getting their participation in category management. Each stakeholder has different priorities and goals, and making them active participants in category management can be a challenge.
Ensuring clear and efficient communication, making sure each stakeholder understands the importance of category management, understanding the needs of different stakeholders, and balancing trade-offs are crucial to overcoming this challenge.
Bridging workforce capability gaps
Implementing category management shifts the focus from operational to strategic aspects of procurement and inventory management workflows. This can result in capability gaps within the existing workforce.
Specialised training and coaching programs or on-the-job training for the company’s workforce can help overcome this challenge, where experts can coach the employees on the new ways of working. You will need to set aside a budget to support the training costs and bridge the capabilities gap.
Getting support from management teams
Although management teams are among the first ones proposing change, they often lack engagement and operational support when it comes to actual transformation. As a result, businesses may not be able to realise the full potential of category management.
Engaging the management teams throughout the transformation process – from stakeholder meetings and supplier negotiations to data analysis – can ensure the successful implementation of category management.
Managing change
Similar to any transformation, managing change when it comes to implementing category management is also a significant challenge. Category management may entail changes in procurement processes, operational systems and policies, and organisational culture. Some stakeholders may be reluctant to adopt these changes, demonstrating resistance to change.
The solution to overcome this category management challenge is to engage and involve stakeholders in the transformation process, demonstrate the value category management will bring, and address their concerns and feedback every step of the way.
Mitigating risk
Risk management and mitigation can also pose a critical challenge to category management as they can potentially expose the company to various risks, including supply disruptions, contractual disputes, price fluctuations, quality issues, and non-compliance.
Conducting a thorough risk assessment, developing risk management and contingency plans, continually monitoring performance, and implementing necessary corrective actions can help you overcome this challenge. A category management plan can help you ensure adequate governance, controls, and audit protocols are in place to ensure risk mitigation, accountability, and compliance.
How can Infosys BPM help?
Effective category management can help you realise several benefits, including cost savings, quality improvement, enhanced supplier relationships, and many more. Infosys BPM’s Category Control Tower (CCT) can help you develop a category management plan that will ensure successful implementation and help you overcome any challenges. With Infosys BPM CCT, you can leverage real-time insights and proactive alerts to realise the full potential of category management and streamline your procurement and inventory management workflows.
