What is category management?

Category management is a transformative process that changes the reactive, transactional function of the procurement process to a more proactive and strategic one so that each dollar spent within a specific category will deliver maximum value.

In this approach, the procurement team groups similar products and services in a separate spend category so that they can manage these categories holistically. There are no one-off purchase treatments when it comes to category management, as every purchase is sliced and diced to find maximum value or efficiency.

Category management is performed by dedicated category managers or a team of them. These experts understand the supply market deeply, from the supplier capabilities to technological advancements and future market trends.

Based on their deep understanding of the category, these professionals then draft a procurement strategy for the entire category. In their day-to-day work, category managers deal with tasks such as supplier consolidation, contract negotiation, risk mitigation, and supplier performance optimization to derive a holistic, long-term value out of a category.