Using SRM to Automate Category Management
Implementing category or commodity strategies enhances business efficiencies by optimizing processes. Organizations should maintain contractual relationships with suppliers and facilitate procurement change initiatives within categories to improve overall business performance.
Does the following all-too-common scenario sound familiar to you?
For example, the manufacturing team has a category manager who is doing a terrific job. She and her team are reporting multiple metrics around their raw materials. They’re keeping tabs on many aspects of how these commodities are moving along the supply chain.
That’s the good news. The bad news is that these very talented, highly-compensated professionals are not devoting the bulk of their efforts to analyzing data, drawing insights, and making decisions. Instead, more than half of their time is being spent seeking and collecting data and compiling it into a usable format so that the “real work”—i.e. the work that actually creates a significant ROI for the business—can be done.
To make matters worse, from time to time, members of this teamleave the organization. Every time this happens, a wealth of category-specific expertise about where to obtain information and how best to compile it goes out the door.
We’ve seen this costly procurement category management problem play out at many organizations. Luckily, it does not have to happen to you.
Why has category management been so challenging?
Category management streamlines your supply chain, reduces costs, mitigates risks, and helps build robust supplier relationships. By implementing category management automation within your Supplier Relationship Management (SRM) system, you can automate data feeds that bring internal and external information directly into your SRM system. This compiles data into a usable format on the dashboard for real-time analysis and review. Additionally, rules can be set to trigger alerts based on specific conditions, such as price increases or KPI score drops, prompting your procurement team to investigate further.
The result? Faster reaction times and more efficient use of your skilled team members’ time. Unlike manual processes, where data collection occurs quarterly, an automated data feed ensures you always have the latest information at your fingertips. Reacting swiftly to market changes, such as commodity shortages or performance trends, gives you a competitive edge.
Category management is a time-intensive, project-oriented activity that requires specialized data expertise and analytical skills. As a result, the work has been costly to develop. Then, once the effort is made to do this work, the outcome of each planning cycle tends to become quickly outdated.
Why? Because procurement had been challenged by Kraljic to become “supply management.” The urge to be more strategic and see the forest instead of the trees. Consequently, category managers have been bucketing suppliers into categories and creating strategies and tactics optimal for that group….mostly.
Category management automation provides a wealth of benefits
Category management streamlines your supply chain, reduces costs, mitigates risks, and builds robust supplier relationships. By implementing category management automation within your Supplier Relationship Management (SRM) system, you can automate data feeds that bring internal and external information directly into your SRM system. This compiles data into a usable format on the dashboard for real-time analysis and review. Additionally, rules can be set to trigger alerts based on specific conditions, such as price increases or KPI score drops, prompting your procurement team to investigate further.
The results? Faster reaction times and more efficient use of your skilled team members’ time. Unlike manual processes, where data collection occurs quarterly, an automated data feed ensures you always have the latest information at your fingertips. Reacting swiftly to market changes, such as commodity shortages or performance trends, gives you a competitive edge