Category Management vs. Strategic Sourcing

Category Management is not fancy sourcing. In contrast, it actually covers the entire lifecycle of a spend category.

Strategic Sourcing

Strategic sourcing starts with understanding requirements, finding suppliers that meet these requirements and then negotiating a deal that makes sense with your business. 

The main challenge here is that spend data often exists across multiple systems which are then exported into excel and require it to be cleaned up. By the time it is, in many cases it is too late.

Category Management 

In comparison, category management involves several steps including strategy and sourcing, but also tasks like supplier performance and risk and continuous improvement.   

Treating categories like one-off sourcing projects.

Category Management is NOT a project.

It's an ongoing capability.
Spend Analysis

The process typically kicks off with an analysis of spend, where team members review current and historical spending as they look for opportunities to reduce costs. The objective is to categorize spend based on similar spend groupings, like IT.

Prioritize and Assign Categories

Once spend is categorizes, teams will then prioritize and assign them to a category manager.

Define Value and Identify Opportunities

Category managers are then responsible for finding the value levers within each category with their stakeholders (including savings, quality, risk mitigation).

Formulating and Building Strategy

With this background in mind,  teams can then build their category game plan, asking questions like how they will allocate time and funds to maximize value and in what order.

This step might also include defining benchmarks that can be measured against for success.

Building A Solution That Works

Most procurement teams don’t lack tools. They lack coherence. Over time, they’ve added spot solutions to fix isolated pain points—an intake form here, a sourcing tool there, an AP workflow somewhere else. Each one works in its lane. But none of them understands the full request, the context behind it, or what should happen next.

This is where Rio helps as an intake & orchestration layer that also offers extended capabilities for sourcing and category management, recognizing they are different and unique components of the procurement process.  Request a demo using the link below.