Key Elements of Category Management Lori Kelley Category Management - PowerPoint PPT Presentation

Key Elements of Category Management Lori Kelley Category Management COE Lead, ICG Commerce ICG Commerce – Confidential and Proprietary Information ICG Commerce – Confidential and Proprietary Information

Agenda • What is Category Management? • Key Elements of Category Management • Category Management Lifecycle • Category Management Workbench • Category Management Value 2 ICG Commerce – Confidential and Proprietary Information

What does Category Management do? 1. Ensure Delivery and Tracking of Realized Savings Spend and Compliance Category Price Continuous Implementation Savings Management and Planning Management Improvement Management Reporting - Ensure vendor - Develop and enablement is - Report commodity spend maintain Annual - Identify and - Work to ensure - Drive process with non-preferred complete prior to Category Strategy manage gaps in suppliers go-live suppliers are improvements to reported complying with help lower the - Monitor contract spend/savings - Communicate - Develop methods to drive contracted cost of business expirations and numbers versus relevant data to field field spend to preferred pricing terms for client develop action projections supplier for commodity and relevant plans functional groups 2. Maintain and Improve the Performance of the Supply Base Continuous Supplier Performance Management Re-Sourcing Improvement - Track applicable KPIs for each supplier - Identify areas or sub-categories where service needs are not met - Drive process - Conduct end-users surveys regarding under current agreement improvements to supplier performance reduce total cost of - Work to optimize the delivery ownership for client - Review performance data with suppliers platform to ensure service levels are and develop action plans to resolve issues acceptable 3 ICG Commerce – Confidential and Proprietary Information 3

Key elements of Category Management Service Description Ensures  Sets the category direction and  Developing annual plans, specifying the goals. Can help measure Category Planning sourcing & category management projects w/ procurement’s impact on realized savings forecasts department budgets  Higher degree of realized  Providing site specific implementation and Implementation savings through higher contract rollout support post sourcing adoption  Review & analyze spend & savings; uncover  Higher degree of certainty that Spend & Savings underlying issues that create variances; identified savings will be Management develop action plans to address root causes realized. Understanding of of variances spend  Objective, auditable, visibility Compliance  Delivers monthly spend/savings reporting for into spend, savings, & Management & sourcing & CI projects; compliance visibility compliance patterns, by location/unit; corrective action plans Monitoring attainment of realized savings  Providing price control services, including  Higher degree of certainty that supplier price audit, price file management, Price Management identified savings will be price impact analysis, e-catalog content realized management  Identifying and implementing ongoing, post Continuous  Ongoing TCO improvement, sourcing, continuous cost improvement Improvement sustainability programs 4 ICG Commerce – Confidential and Proprietary Information

Key elements of Category Management Service Description Ensures  Day to day management of the supplier Supplier Performance  Increased supplier relationship; resolution of tactical issues, Monitoring & performance which yields score carding performance, contract lower total cost of ownership Management management, etc.  Project based re-sourcing of category spend, including sourcing, negotiations and/or Re-sourcing  Ongoing cost competitiveness renegotiation of PO/contract terms, pricing, etc.  Developing & implementing action plans to  Awareness of potential Stakeholder address stakeholder concerns and systemic issues; opportunity Management opportunities. identification 5 ICG Commerce – Confidential and Proprietary Information

Category Management Lifecycle CM Lifecycle for Typical Category Early Lifecycle Late Lifecycle Ongoing 0 – 6 Months Post Sourcing 18 + Months Post Sourcing Spend & Savings Implementation Re-Sourcing Compliance Supplier Performance Management Price Management Category Planning Compliance Management Continuous Improvement Stakeholder Management 6 ICG Commerce – Confidential and Proprietary Information

Category Management Workbench 7 ICG Commerce – Confidential and Proprietary Information

Category Planning 8 ICG Commerce – Confidential and Proprietary Information

Implementation 9 ICG Commerce – Confidential and Proprietary Information

Spend, Savings & Compliance 10 ICG Commerce – Confidential and Proprietary Information

Price File Management 11 ICG Commerce – Confidential and Proprietary Information

Continuous Improvement 12 ICG Commerce – Confidential and Proprietary Information

Supplier Performance Management 13 ICG Commerce – Confidential and Proprietary Information

Stakeholder Relationship Management 14 ICG Commerce – Confidential and Proprietary Information

Through CM your organization can experience 5 - 30% gains post sourcing Improvement Savings Solution Opportunity Potential Substitution of lower cost, product with 5 – 20% Specification change equal fit/function Specification substitution & 10 – 25% Implement new product across company standardization Re-implement targeted 5 – 10% Compliance Improvement low adopting locations Leverage additional product lines & 5 – 20% Decrease number of suppliers services Reduce monthly air filter change to 10 – 30% Demand/TCO management quarterly w/ higher price filter Transaction / Service Level Increase average order size and 3 – 6% process improvement / achieve discounts rationalization Inventory analysis, Supplier buyback of 5 – 20% “C” or “B” items, VMI rationalization 15 ICG Commerce – Confidential and Proprietary Information