Complete Guide to

Category Management
How to utilize an effective category management
strategy to simplify procurement and increase
cost savings.
Table of Contents
3... Introduction to Category Management

4... What is Category Management

5... Benefits of Category Management

6... The Category Management Process

7... Category Management vs Strategic

7... Sourcing

9... How GPOs can Help with Category

9 | Management

10... The Una Difference

11... Una’s Process

12... GPO Membership Details

13... How to Add Value to Your Category

13... Management Strategy
Introduction to Category
Management
Between deciding which kind of strategies to implement that will
make the biggest impact, forming and hiring a qualified team to
carry out sourcing initiatives, and ultimately adding value beyond
just cost savings, procurement professionals are inundated with
many different ways to structure their procurement function.

This guide focuses on one particularly important piece of the

puzzle: category management.

Una’s Complete Guide to Category Management will highlight the

importance of using an effective category management strategy to
simplify the way you do business while increasing the cost savings
procurement professionals seek every day.

We’ll discuss the elements of a successful

category management process and hash
out the differences between category
management and strategic sourcing,
along with ways the two concepts work
together.

Finally, this guide will explain ways a group

purchasing organization can help ensure
the success of your category management
efforts.
What is Category Management?
Category Management is a strategic approach to procurement
that involves organizing a company’s spend into related or similar
groups so funds can be allocated appropriately and managed
effectively.

This concept can easily be related to creating a household budget.

Typically, a budget is formulated by dividing your total monthly
spend into different categories, analyzing how much you purchase
within each of those segments, and seeing how it relates to the
total amount of money available within that time frame.

When funds are tracked and managed appropriately, adjustments

can be made where necessary to stay on budget. It allows
for visibility so you can see where your money is going, when
purchases are being made, and whether or not a specific category
needs more attention.

Additional Resources:

How to Explain Category Management

Benefits of Category
Management
One of the main benefits of category management is spend
visibility. Once your spend is divided into categories, it’s easy to
decipher key pieces of information, like where your biggest areas
of spend are, which expenditures must be paid, which costs can be
reduced or avoided altogether, and where spending is perhaps out
of control.

Visibility can lead to significant cost savings thanks to the category

manager’s expertise when it comes to creating value from each
dollar spent within their segment. Other benefits include the
chance to develop custom strategies for each category of spend,
prioritizing spend across the organization, and breaking each
category into sub-categories to reveal more insights.

Category management also provides a way for procurement

to effectively tackle maverick spend and tail spend within your
organization, and if eventually applied to each category, helps
improve procurement efficiency across the board.

Additional Resources:

How a Category Management

Strategy Helps Procurement
Succeed
The Category
Management Process
An effective procurement strategy relies both on segmentation
and consolidation. When it comes to category management,
the process begins with a divide-and-conquer approach. Once
categories are identified you can begin the process of consolidating
spend within that category (or sub-categories) to achieve savings.

The typical category management process can be broken down

into six basic steps:

Define Your Categories

Divide these into two separate types of spend - direct and indirect - in
order to get a clear picture of where the money is going.

Understand the Market

Gather market intelligence for each category to understand the supplier
landscape and trends happening within each category.

Analyze Spend
Use analytics to identify opportunities that add value.

Create a Category Strategy

Define objectives for each category, track and measure goals through
KPIs, and ensure each objective is tied to your overall business strategy.

Implement Improvements
Use market intelligence and spend analytic data to build better supplier
relationships, educate maverick spenders, and negotiate better contracts.

Review
Category management is an on-going task. Objectives need to be
reviewed regularly and updated to stay relevant as to what’s happening
within the business.
Category Management vs
Strategic Sourcing
While category management is a procurement strategy that
organizes spend into focused areas like HR, IT, and marketing,
strategic sourcing is a procurement process aimed at selecting the
right suppliers and negotiating the best pricing to meet business
goals.

Other benefits of strategic sourcing include regular contract

analysis and deep supplier audits to determine which suppliers
best meet organizational needs. This can lead to stronger supplier
relationships thanks to the additional attention that’s been placed
on strategic selection.

Strategic sourcing can actually become an element of a category

management strategy, with category managers looking to
optimize spend within their category and provide value, and
using a strategic sourcing process to identify vendors and select
suppliers.
Both concepts put an emphasis on research and analysis and both
can be considered part of supply chain management, aiming
to reduce costs within the supply chain (strategic sourcing) and
analyzing each step within the supply chain to increase efficiency
and optimize spend (category management).

When both concepts work together, a laser focus is put on finding

suppliers who offer value and allow the organization to either
spend less or spend smarter, and gives way to a closer alignment
of organizational values, shared objectives, and increased
collaboration.

Additional Resources:

The Difference Between Category Management &

Strategic Sourcing
How GPOs Can Help with
Category Management
Certain categories within a company’s indirect spend or anything
that constitutes as tail speed are oftentimes left unmanaged by
procurement. This could be for a myriad of reasons including lack
of resources and insufficient visibility of spend, but there is still
value to be found within these areas.

When it comes to getting a handle on these particular categories,

outsourcing some procurement activities to a group purchasing
organization is a viable option for most businesses.

Group Purchasing Organizations, or GPOs, leverage the collective

buying power of their members to obtain volume discounts from
suppliers.

Once you join a GPO, you’re

able to take advantage of pre-
negotiated contracts and receive
discounted pricing on the goods
and services needed to run your
business, saving you money, time,
and effort.
The Una Difference
A GPO like Una acts as an extension of your procurement team,
helping you sort through and analyze your spend data in categories
that are currently left unmanaged.

Popular categories that are outsourced to a GPO may include

corporate travel, office supplies, shipping and packaging, logistics,
and more. Enabling the help of a GPO allows you to consolidate
your supply base and establish which vendors are the best fit for
your business.

At Una, our team of Sourcing Advisors work with you to identify

high-risk or high-cost areas within your indirect or nonstrategic
spend supply base to establish which categories would most
benefit from volume-driven initiatives and pre-negotiated supplier
contracts.

With this additional category management expertise fully

accounted for, your team will have the capacity to focus on other
areas of strategic spend.
Una’s Process
Una is a sourcing accelerator on a mission to increase organizations’
profitability quickly using our group purchasing platform. Our
sourcing advisors and member experience team are passionate
about helping procurement and business leaders save big.

When it comes to helping with indirect spend management, our

team will approach each category the same way:

Discovery Call
This 30 minute call serves as a two-way interview so both parties can ask
questions and explore the potential savings opportunities available.

Cost Analysis
Our Sourcing Advisors will work to conduct a cost analysis one category at
a time, comparing your current pricing to the value of our contracts.

Finding and Connecting to Suppliers

Our team will help facilitate the relationship with each supplier in order to
gets you connected to savings quickly.

Start Saving
Members can start buying on Una’s pricing right away and have full
access to the supplier catalog.

Repeat
Una’s seamless process allows us to facilitate savings across multiple
categories quickly and efficiently.
Una Membership Details
Not all GPOs are the same when it comes to membership. With
Una, here’s what you can expect:

Free Membership

At Una, our pricing structure is set up so membership is always

free to join and free to use. Every time you purchase through our
contracts, we are paid an administrative fee by the supplier. We use
that admin fee to finance our services, allowing us to make and
keep membership free for members.

No Membership Contracts or Exclusivities

In addition to never charging a membership fee, Una does not

require members to purchase from certain suppliers or commit
to a specified purchase volume and Una membership is free of
exclusivities. You are free to pick and choose the suppliers that will
best suit your needs, remaining in control of your spend categories.

Speed to Service & Responsiveness

Una’s “keep it moving” mentality means our team delivers at a pace

that sets us apart. We have implemented tools and technology to
speed up the process and remove bottlenecks so our members can
reach us when they need us.
Add Value to Your Category
Management Strategy
We like to think of group purchasing as procurement’s best-kept
secret. Being able to obtain savings on products and services you
need to run your business is an incredible advantage. And while
the cost savings are key, the value a GPO unlocks in terms of effort
and time saved is just as important.

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.

Una’s one-on-one advisory approach means we’ll define what

success looks like together and take the time to understand your
goals.

Schedule a consultation with

one of our expert Sourcing
Advisors to learn how to
unlock cost savings and other
benefits through indirect
spend category management.
Additional Resources
Find the procurement resources you need by visiting Unaversity,
Una’s online resource center dedicated to empowering
procurement.

www.una.com/resources
 Ready to Save
with Group Purchasing?

Learn more at www.una.com