When was the last time you took a good, hard look at your category management strategy? If it's been a while, you might be sitting on a goldmine of missed opportunities. A fresh, dynamic category strategy is essential for driving continuous improvement and making sure your procurement efforts are truly adding value to your organization.
One of the best ways to supercharge your strategy? Partnering with a group purchasing organization (GPO). In this article, we dive into how teaming up with a GPO can give you a serious advantage and share some practical tips to give your category strategy the boost it needs.
Why Category Management Matters
First, let's acknowledge there’s much more to effective category management than cutting costs. Done properly, it becomes a strategic imperative that shapes how your organization operates. Each category represents a unique opportunity for growth, innovation, and risk management.
If you treat your procurement like a household budget, you risk losing sight of essential insights that can drive your business forward.
Reduce Costs, Add Value
Here are several reasons why a procurement team may implement a category management strategy to help reduce costs and add value:
- Tailored Strategies - having a one-size-fits-all strategy across all goods and services simply does not work. Category management enables the development of targeted strategies, each tailored to the unique cost/risk balance of each category.
- See the Whole Picture -using a category management strategy will help you get a better picture of spend across the whole organization with a dashboard view that enables deep dives into particular areas.
- Dive Deep into Subcategories - taxonomies and categories can be divided into subcategories - and then further divided again as deep as you like.
- Tackle Maverick Spend - having visibility of category spend enables you to spot where maverick spend is occurring.
- Prioritization - using a category management strategy will help you determine where to put your time and resources by understanding your biggest areas of spend and highest-risk categories.
- Search for Cost Savings - spend analytics software can be used at the category level to identify waste, duplication, or supplier consolidation opportunities.
- Improve Processes & Productivity - trying to improve your entire spend in one go can be difficult and unwieldy. Instead, apply process improvements at the category level to improve procurement in your organization one area at a time.
How a GPO Can Help
A group purchasing organization can be a game-changer, not just by unlocking discounts but by enhancing your entire procurement strategy. By leveraging collective buying power, GPOs like Una can save you money, time, and effort while lowering procurement risk.
GPOs can make a significant impact with indirect categories because these spend areas are not only common across organizations but also come with high volumes, making them ideal for group purchasing. Indirect spend encompasses essential items like office supplies, IT services, and maintenance supplies, which virtually every organization requires. This universality allows GPOs to leverage collective buying power to negotiate better terms and prices that individual companies might struggle to achieve on their own.
By helping streamline your procurement processes and providing access to pre-negotiated contracts, GPOs empower you to unlock substantial savings - often 18-22% on average - while freeing up your team to focus on strategic initiatives that drive greater organizational value.
Six Ways to Improve Your Category Strategy
Below, we offer some tips on developing your category strategy to make it a live document that is aligned to enterprise goals, implementable, and data-driven.
1. Make it Live
Don’t let your category strategy become a “set and forget” document. Many folks whip up a strategy and then shove it in a drawer, thinking they’re done.
Instead, treat it like a living document. Make it part of your daily conversations and regularly update it to reflect changes in your business landscape. This way, everyone on your team understands the why behind your decisions, making it easier for them to support your category initiatives.
2. Ensure Alignment with Business Goals
Business priorities are always shifting—new leadership, market conditions, or competitive pressures can change everything overnight (hello, tariffs!). Your category strategy needs to keep pace. If your organization is focusing on sustainability while your procurement efforts are strictly about cutting costs, you’re setting yourself up for misalignment.
Regularly check in on your enterprise strategies—finance, risk, and sustainability—to ensure your category strategy remains relevant and impactful.
3. Make it Implementable
Having big dreams is great, but your goals need to be realistic and achievable. Outline how your team will reach those targets, set clear timelines, and identify any potential roadblocks. Create backup plans for challenges and clarify the resources you’ll need to implement your strategy.
If you find yourself under-resourced, consider using a GPO as an extension of your procurement team. By assigning roles and making sure everyone knows what they’re responsible for, you’ll drive effective execution of your initiatives.
4. Emphasize Data-Driven Decisions
Data is your best friend when it comes to refining your category strategy. Ditch the guesswork and lean on clean, reliable analytics to track category performance. Identify the key performance indicators (KPIs) that matter and use spend analytics to find cost-saving opportunities, prioritize suppliers, and spot risks.
5. Foster Evolution
If you think your old category strategy will still cut it today, think again! Regularly review your strategy to ensure it aligns with current market conditions and organizational goals.
Ask yourself: Has demand changed? Are new technologies shaking things up? Has anything disruptive happened recently? Staying flexible and responsive to these changes keeps your strategy relevant and effective.
6. Prioritize Thoughtful Category Management
Effective category management should be a top priority. Too many teams underestimate the resources needed for comprehensive management.
If your procurement team is small or if you see potential value in your category management efforts, consider teaming up with a GPO. Organizations like Una can provide the expertise and support you need, especially for indirect spend categories where we can create massive value due to the high volumes involved.
Unlocking Value Through GPO Engagement
Partnering with a GPO can totally transform your category management strategy. GPOs like us leverage collective buying power to secure big discounts across indirect spend categories, including office supplies, travel, facilities maintenance, and more. By engaging with a GPO, you can enjoy:
- Cost Savings: Average savings of 18-22% on indirect spend categories.
- Time Efficiency: Streamlined procurement processes let your team focus on strategic initiatives.
- Expertise: Access valuable market insights and supplier relationships that can enhance your strategy.
There’s untapped value waiting to be discovered in your indirect spend categories. Partnering with a GPO like Una can help you unlock that potential and elevate your overall procurement strategy.
Get in touch with Una
Don’t overlook the value that a Group Purchasing Organization can bring to your category management strategy. Outsourcing category management to a group purchasing organization not only helps achieve savings on indirect spend, but gives procurement professionals the ability to rely on additional resources to help reach their goals.
Download Una’s Complete Guide to Category Management for more insight as to how category management and strategic sourcing can benefit your organization.
