We all have frequently looked at the fundamental information and data to which Category Managers need access. e.g. spend by supplier, category, small business unit etc. - there's a good example of this mapped out listed below. As we have mentioned, this data is regularly not as readily obtainable as would be liked. Having said that, it's absence is definitely recognized and reported by the Category Managers that must have fun playing \u2018Spreadsheet Detective' in order to manually bridge the information gap!
This short article attempts to identify another type of category data which is unique and not found elsewhere to the best of our knowledge. This kind of second level information is of a granular type and may differ significantly between categories notably when even the most elementary queries haven't already been addressed. This gives undeniably leading edge insight and category strategies that will fully connect with the organization.
In most cases this leads to more informed negotiations on prices, improved cost management, greater capture of company innovation and identifies even more opportunities to get value growth.
Category Management Knowledge comes in many different ways
We have recognised Ten different kinds of Tier 2 category specific knowledge:
1 Breakdown the Cost: Cost breakdown or PPCA action establishes the key cost factors that are usually suffered by the supplier supplying a service or product. By estimating the Percentage share of the supplier's price that is going to be attributable to each and every cost element, side by side somparisons can be done across suppliers. Cost breakdowns always build greater understanding of underlying cost drivers which includes specs, production processes plus service delivery processes for example.
2. Understanding Technical specs: Segmenting spend into categories and sub-categories is usually sufficient when estimating potential cost savings. However, when identifying potential opportunities during the development of a category strategy, it is vital to analyse spend in great detail. A great deal of analysis is required to achieve this. It needs to get into the tiniest details of the constituent part of a product or a service because these could be the principal drivers driving the cost price. When completely finished, analysis of the data to determine value can be done. For instance, this can be linked to the overall performance specification for part numbers of electronic components, departure schedules for identified flight sectors, or the addresses of high-street network branches using security alarm reactive maintenance.
3 Finished Product Cross-fertilisation: To appreciate exactly what products connect with other sorts of products (or services) used by end consumers the suppliers sub-categories must be matched with the end product. This can be used to motivate suppliers to give the best prices and/or innovation, so they feel instantly connected with business development with the end customer which allows them to influence demand for their own products and services.
4 Unitisation & Benchmarking: Unitisation is when spend information is divided by a suitable variable such as area, length, customer satisfaction etc. By doing this different suppliers are able to be assessed against one another and differences identified. Cost reduction occurs when beneficial habits are recognised and then shared while damaging practices are eliminated and / or re-engineered. An illustration worth sharing is how the total cost per retail outlet of marketing spend resulted in regional accents being used for television advertising campaigns.
5. The Value of Operations Data: Cost differences between alternate products or services that are identical to the very first item will definitely be simple to assess. However, where the substitution has got a very different anticipated performance, the validation associated with a pricing variation may appear far more challenging. Evaluating the overall cost of ownership can be accomplished by using operations data which as well as verifying price differences may well realise even more business opportunities. For example, these kind of total cost opportunity scenarios could happen if a different compound is used that's twice as beneficial as the old one, or where a modern motor oil filtering system for a motor vehicle is claimed to
This short article attempts to identify another type of category data which is unique and not found elsewhere to the best of our knowledge. This kind of second level information is of a granular type and may differ significantly between categories notably when even the most elementary queries haven't already been addressed. This gives undeniably leading edge insight and category strategies that will fully connect with the organization.
In most cases this leads to more informed negotiations on prices, improved cost management, greater capture of company innovation and identifies even more opportunities to get value growth.
Category Management Knowledge comes in many different ways
We have recognised Ten different kinds of Tier 2 category specific knowledge:
1 Breakdown the Cost: Cost breakdown or PPCA action establishes the key cost factors that are usually suffered by the supplier supplying a service or product. By estimating the Percentage share of the supplier's price that is going to be attributable to each and every cost element, side by side somparisons can be done across suppliers. Cost breakdowns always build greater understanding of underlying cost drivers which includes specs, production processes plus service delivery processes for example.
2. Understanding Technical specs: Segmenting spend into categories and sub-categories is usually sufficient when estimating potential cost savings. However, when identifying potential opportunities during the development of a category strategy, it is vital to analyse spend in great detail. A great deal of analysis is required to achieve this. It needs to get into the tiniest details of the constituent part of a product or a service because these could be the principal drivers driving the cost price. When completely finished, analysis of the data to determine value can be done. For instance, this can be linked to the overall performance specification for part numbers of electronic components, departure schedules for identified flight sectors, or the addresses of high-street network branches using security alarm reactive maintenance.
3 Finished Product Cross-fertilisation: To appreciate exactly what products connect with other sorts of products (or services) used by end consumers the suppliers sub-categories must be matched with the end product. This can be used to motivate suppliers to give the best prices and/or innovation, so they feel instantly connected with business development with the end customer which allows them to influence demand for their own products and services.
4 Unitisation & Benchmarking: Unitisation is when spend information is divided by a suitable variable such as area, length, customer satisfaction etc. By doing this different suppliers are able to be assessed against one another and differences identified. Cost reduction occurs when beneficial habits are recognised and then shared while damaging practices are eliminated and / or re-engineered. An illustration worth sharing is how the total cost per retail outlet of marketing spend resulted in regional accents being used for television advertising campaigns.
5. The Value of Operations Data: Cost differences between alternate products or services that are identical to the very first item will definitely be simple to assess. However, where the substitution has got a very different anticipated performance, the validation associated with a pricing variation may appear far more challenging. Evaluating the overall cost of ownership can be accomplished by using operations data which as well as verifying price differences may well realise even more business opportunities. For example, these kind of total cost opportunity scenarios could happen if a different compound is used that's twice as beneficial as the old one, or where a modern motor oil filtering system for a motor vehicle is claimed to