Category Strategies

22 Mar, 2023

The Strategy Blueprint

Construct a world-class procurement strategy.

The Strategy Blueprint is a series, guiding you through the steps to developing a strong, holistic procurement strategy.  Weekly publications will dive into one of the 15 modules supporting Sourcing Champion’s procurement strategy and provide insights from our procurement experts.

SP.02.Category Strategies

Category Strategies

Developing robust category strategies is critical to achieving business goals and optimizing procurement activities. Based on past cases, small and medium-sized businesses usually require 15 to 20 strategic category plans, while large enterprises may need well over 100.

The process of formulating a category strategy involves analyzing the market and its segments (Module 5), defining value contribution targets and strategy drivers for the category (Module 6), examining the procurement situation of the company in the market, identifying possible strategic levers (Module 7), and deriving a consistent strategy from the available options (Module 8).

Formulating strategies for multiple categories is a detailed and research-intensive process. Nevertheless, leveraging digital tools and AI can transform this task from challenge to competitive advantage

Digital Category Strategy Creation with Cirtuo

Sourcing Champions partners with Cirtuo, the leading AI-powered category management software that boosts category strategy creation. Cirtuo’s software enhances the category strategy process by providing a step-by-step guided strategy creation through each module.  With this software, businesses can develop robust category strategies that align with their overall procurement strategy.

The platform provided by Cirtuo’s software allows for a systematic and collaborative approach. Market research is enhanced (Module 5) by analyzing categories in detail and breaking them down into sub-categories to achieve comprehensive market transparency. In addition, the software facilitates the definition of category targets (Module 6) by incorporating value contribution objectives and strategy drivers, stakeholder requirements, and driver variables for individual supply markets.

Furthermore, Cirtuo helps in checking all possible strategic options and levers of the category (Module 7) using a comprehensive checklist and analyzing their relevance, including risk aspects. This step is the core of the category strategy and provides insights into the strategic options for action. The software also facilitates the formulation of category strategies (Module 8) by enabling the selection of strategic directions based on their potential for strategic success and coherence with the corporate and procurement strategies. The strategic directions are then further specified with specific projects and measures.

By leveraging Cirtuo, businesses can efficiently develop robust category strategies for each critical category and document them in an executive summary. The software also facilitates the annual updates and regular reviews of the strategy with monitoring of quantitative targets and project progress.

In conclusion, a strong procurement framework strategy is essential for any successful business. It provides the foundation upon which the procurement strategy is built, ensuring that every aspect of the procurement strategy is aligned with the company’s overall goals. By designing a solid and agile framework, businesses can position themselves for long-term success in an ever-changing business environment, much like a well-built structure that withstands the test of time.

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Stay tuned for next week’s issue, we’ll be exploring the third strategic partition of our 15M architecture.