Category management a ‘top priority’ for eight out of 10 firms

Will Green is news editor of Supply Management
27 November 2013

More than eight out of 10 firms say category management is a top priority for procurement, a survey has revealed.

Future Purchasing’s Category Management Study found 85 per cent of companies thought category management was a top-three priority.

However, just 2 per cent rated their use of category management as excellent, with a quarter of respondents describing themselves as “leaders” and the rest as “followers”.

The study revealed that a fifth of followers, defined as those who described the level of category management in their organisation as basic or improving, had no measure of savings. This compared with leaders, defined as those where category management is “optimised”, where 2 per cent did not measure savings.

The report said: “Our survey noted that a surprising number of organisations do not measure savings. It is essential that savings are measured to assess contribution to overall profitability.”

The study found leaders achieved on average 46 per cent more savings than followers, achieving average savings of 9.5 per cent in 2011, compared to 6.5 per cent for followers.

The research found the top three drivers for savings among leaders was volume consolidation, supplier integration and “competitive leverage”. For followers it was competitive leverage, volume consolidation and “aggressive price attack”.

Mark Webb, managing director at Future Purchasing, said: “When we analysed our research we were shocked at the scale of opportunity that all companies are missing.  There is a commonly held perception that category management is a done deal in many organisations and that they are looking for the next wave of change.

This research proves that for most organisations, category management has not been rigorously implemented and all companies can increase performance by 25 per cent to 83 per cent if they give it more focus."

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