We have often looked at the essential information and knowledge to which Category Managers require access. for example, supplier spend, category spend and also individual business enterprise unit spend - there is also a good illustration mapped out below. As we have said, this data is frequently not as readily obtainable as might be preferred. Having said that, it’s absence is unquestionably recognized and lamented by the Category Managers that have to engage in ‘Spreadsheet Detective’ in order to manually close the information gap! This document attempts to find another type of category information that is different and not identified anywhere else to the best of our knowledge. This kind of second level data is of a granular type and may differ drastically between categories particularly when the most basic queries have not already been answered. The effort to extract this kind of knowledge however is worthwhile since the data obtained is often of a extremely high value. The main importance of comitting to the additional effort is found whenever negotiating with suppliers as the knowledge obtained gives useful insight to spending as well as determine opportunities to go after a reduction and / or add value enough to provide a transformation to the relationship with the supplier furthermore making management of them much easier. Top 10 ways Procurement People profit from category data We have recognised Ten different kinds of Tier Two category specific knowledge: 1. If you are interested in writing, you will seemingly want to research about procurement consultants uk. Breakdown the Cost: Purchase Price Cost Analysis (PPCA - another term for “cost breakdown” is the job of determining the main factors that comprise every distinct cost from a provider for their service (or product). By simply calculating the Percentage split of the supplier’s total price that's likely to be attributable to each cost component, side by side somparisons can be done across suppliers. Of course, this process also prevents making assumptions and will help to understand not only what makes up almost any specific cost as well as exactly what drives it. For example, where logistics is a high % of the overall cost price then a hike in petrol prices will affect the total price. 2. Understanding Specs: When you are evaluating cost savings from a supplier, this type of categorisation approach is a huge help. Your Procurement Consulting is a majestic resource for additional resources about the reason for it. A part of the category strategy ought to go into greater detail to find cost reduction opportunity which needs to be scheduled as part of the whole process. A great deal of analysis is needed to achieve this. It needs to get into the tiniest details of a constituent part of a product or a service because these might be the main drivers driving the cost price. This information will enable comprehensive Value Analysis activity to be performed. Under no circumstances overlook the tiniest details of any product or service, it might be the key to the next chance to minimize cost. 3. Finished Product Cross-fertilisation: To appreciate specifically what products connect with other sorts of products (or services) used by end consumers the particular suppliers sub-categories really needs to be matched with the finished product. Use this to successfully motivate suppliers to offer the best prices and/or innovation, so they feel instantly connected with business development with the end consumer and can have an effect on demand for their own products and services. 4 Benchmarking and Unit Value: Breaking costs down to the individual unit helps you determine a benchmark value. Spend is divided up with a variable that is appropriate such as height or even customer feedback. This allows benchmarking across varied suppliers or areas of an organisation, to ensure that variations in general performance should be identified. The next phase is to look for the factors behind the variances, get rid of all damaging practices and then share the best practices which usually result in lower prices throughout the organisation. An illustration well worth sharing is where the total cost per retail store of advertising spend led to regional accents being used for television ads. 5 Operations Data Overlay: Pricing variations relating to substitute products or services which are exactly the same as the original product are usually straightforward to assess. However, pinpointing cost differences when a substitute product or service is not the same may appear far more troublesome. Evaluating the total cost of ownership can be done by using operations data which in addition to verifying price variations might also realise even more opportunities. An example of these advantages would include circumstances such as where a battery pack is identified as lasting for a longer time when compared to the previous one or when a brand new additive improves life expectancy by 20% more. The ‘Procurement Ready’ Knowledge Model Developing a standardised approach to Procurement Information will help whenever analyzing and quantifying an opportunity. Determining which value levers to pull is an essential skill for all category managers to look for a price reduction opportunity. The Supply Chain Footprint: Arranging your suppliers on a map in order to show their address is the 1st step to carry out while building a footprint. The next step is to map more levels of the supply chain and relevant manufacturing addresses. Pinpointing these particular locations ensures that vital supply chain risks can be looked after this includes guarantee of supply; reputation and ultimately, commercial costs. 6. Revenue & Profitability Overlays: Finding areas where purchasing teams can get better cost prices and/or revenue over the course of category reviews is recommened practice. Instead of focusing on the buying price of specific part numbers or sub-categories, the price of these are typically grouped together around a customer end product or service. Cross-functional teams may then get the job done collaboratively either to determine probable cost reduction opportunities or support the peace of mind of higher revenue sales. To study more, we know you check-out: category management consulting. By working in this way, cross category opportunities should also be identified that might not have already been identified when pursuing the individual category targeted way of operating. 7 Supplier Perception Data: This is structured qualitative responses coming from suppliers and internal stakeholders relating to the present condition of a relationship. Should people choose to dig up further on company web site, there are lots of on-line databases people should investigate. It detects areas of weakness and potential areas for improvement when it comes to working relationship quality. It can help to determine how important the organization is as a customer to the supplier. Questions to ask will include: How well do the strategic agendas of both sides align? Is the relationship with the supplier functioning well? How well are the organisation’s commercial demands currently being delivered through the relationship? Specifically what development business opportunities are available? If you have these details easy to get at and also plainly linked to the relevant categories, development business opportunities can be made visible, integrated in category strategies and put into practice. 8 Market Data Overlay: Bypassing key industry knowledge including futures trading prices would certainly clearly be a mistake. Keeping track of all changes in important areas such as these is important both for price reduction opportunities as well as the good of the suppliers sales and profits. 9. The Profile of Consumption: This can be beneficial to have an understanding of if the organization has got an end consumer demand profile that is not flat, and can vary throughout the year. This kind of empathic methodology with suppliers helps your SRM (Supplier Relationship Management) as their needs are better understood and prepared for. Next Steps and Insights: There's help and advice worth looking at about this subject matter by www.futurepurchasing.com on their site. The most effective category managers will definitely create a strategy based on a great procurement understanding. They will make it happen more easily and the approach is straightforward for them. As a result it builds increased momentum for procurement transformation. Investing in this method is a hallmark of top category management exponents and typically can result in in excess of 45% additional savings in contrast to those whose approach is less vigorous. Making sure that every one of the category managers stick to the same exact approach is essential therefore the approach must be planned to ensure uniformity. Another development we have seen, from the leading companies, is to create a specialist function within the purchasing team specialising in producing this data ,liberating the category management team to use the knowledge in their strategic thinking. One of the most effective way we have experienced “Procurement Ready” knowledge bases get put together and established is where Procurement prioritises the need for this capability and establishes a plan to make it happen. Making category management a key commercial competence of modern procurement departments is a top priority. Both public and private sector organisations must supply procurement kpi’s efficiently and in the right way. Applying a ‘Procurement Ready’ strategy is an integral basis to provide significant value more quickly. A good procurement consultancy will be helpful in saving time, energy and your money when beginning this journey and its highly recommended..
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