Track: Operations Management

Abstract

“Purchasing category management” term has been proposed and used for over 10 years to describe a practice of supply management in manufacturing organizations. But the methodology of category management for manufacturing companies has not been clearly defined yet. Traditional category management (CM) in retail involves effective management of the margin of goods, which is achieved by concentrating the control over purchase, pricing, promotion and marketing in the single hands of a category manager. It is obvious that the whole set of tools of traditional retail category management is impossible to apply to the purchases of industrial companies due to a number of specific restrictions: some of the goods purchased by the industrial enterprise are modified in the process of production, and the others are acquired not for external, but for the needs of company internal consumer. Therefore, it is necessary to make a number of clarifications in the methodology of category management for industrial companies concerning the toolkit and implementation algorithm used. In this regard, we proposed a fundamentally new concept of "category approach to procurement management" that allows to expand the boundaries of the use of traditional retail category management. By analyzing the theory of traditional CM and summarizing the experience of industrial companies we outline the methodology of implementing "category approach to procurement management" in manufacturing companies that will become a basics for further efficiency evaluation of this practice.