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Rubina Ronci
8 April 2021
Category Management Agreement

How do I manage these categories? A supply Leaders retraces seven steps in category management. Grouping items into categories allows a purchasing team to achieve substantial savings by assigning its purchases in fixed parameters and mass agreements with strategic supplier partners. Ultimately, this allows companies to buy cheaper and reduce unit prices in order to gain competitive advantages in the marketplace. As a result, many organizations are not able to successfully apply category management. This is what we can say about surprisingly demanding companies. The result is a chaotic set of agreements, each being known to one person in the organization. Imagine the wide range of prices, payment terms, quality, contract duration and post-JC delivery plans. This supplier strategy is called “division and dominance.” “Category management provides a better understanding of the market, products, suppliers and supply chain to develop strategic class plans. This deeper level of supply chain understanding and mapping takes environmental, social and political factors into account to more effectively manage risks to the organization. This process is not set in stone, and not all levels will always be relevant to all category managers and organizations, but what it does is to provide a starting point and a guide to develop an effective category management process for acquisition. “Category management is a process in which product categories are managed as business units and adapted [on a branch basis] to meet customer requirements.” (Nielsen) [3] The maturity of category management in purchasing organizations [Source: Purchasing Manager] This process is similar to that of project acquisition, but the main difference is that the category management process is applied to strategic and long-term value added, while project acquisition is focused on creating short-term profits. It is customary for a particular supplier to be named in a category by the retailer as the master of the category.

The captain category is expected to have the closest and most regular contact with the retailer and also invest time, effort and often financial assets in the strategic development of the category within the retailer. In return, the supplier obtains a more influential voice from the reseller. The captain category is often the supplier with the largest turnover in this category. Traditionally, the position of category captain is assigned to a brand supplier, but in recent times, the role has also been assigned to private label suppliers particularly involved. [13] To do the job effectively, the provider can access more data exchanges, for example.B. more access to an internal distribution database like Walmart`s Retail Link. The right time to move to a category management approach depends heavily on the industry you are in and the revenue you generate. The general advice is that this is the best approach if you win somewhere in the vicinity of US$200 million and $1 billion in annual revenue.

This method is reflected in a consumer`s shopping experience. When you enter an e-commerce experience, the product categories are clearly defined. Take, for example, IKEA, Power House Furniture and one of the pioneering organizations of modern category management. Because you group items with your suppliers, you can reduce the total number of suppliers you have. With fewer relationships overall to manage, you can focus more on developing quality relationships with those you have. You`ll also find that your processes are accelerating because there is less to manage when it comes to setting up lenders, processing accounts and managing risk. SeaPort Next Generation (NxG) Naval Sea Systems Command (NAVSEA) launched the Seaport contract vehicle in 2001 to maximize the cost savings in support services

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