A Strategic Approach to Maximize Business Profitability
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Category Management is a strategic approach used to understand markets, analyse spend and drive in new purchasing arrangements. When deployed effectively, category management can leverage a considerable reduction in the cost of bought-in goods and services, but can also reduce risk exposure, and can dramatically increase the value and innovation suppliers provide.
It is about a pathway from accepting high cost goods and services, where suppliers hold too much power, to a position based upon strength, leverage and effective supply management that delivers real value. By altering how purchasing effort is directed to examine the entire organizational spend by groups or ‘categories’ of good or services, it helps to shift purchasing from being a tactical, transaction-based function to a strategic business contributor creating real bottom-line value for the business.