How to Manage Complex Categories
Peter Smith recently published a paper titled “Managing Complex Categories – Beware the Complexity of Standardisation!” on Spend Matters UK/Europe. The paper discusses how to deal with complex categories and the concept of standardization in general. The following is an excerpt from Peter’s article.
“Along with aggregation and rationalisation, standardisation has long been a fundamental principle of category management theory and practice. But our premise in the paper is that whilst standardisation is an appropriate aim within such programmes, we have to pursue it with caution. It can lead to unforeseen consequences; even having a negative impact on overall value for money if we’re not careful. And sometimes it may simply not be possible for legislative or practical reasons, particularly when we’re looking at an international environment.”
Let’s cut to the chase then, and look at our final conclusions and recommendations in the paper. What should procurement executives and others involved in the procurement process take away from this discussion about complex categories and standardisation in particular? Here’s an extract from the paper.
“Here are four key points to note and consider in developing strategies and executing category management processes.
- Don’t make assumptions about standardising products or services particularly when you’re looking at complex spend categories (e.g. with international requirements and supply markets). Standardisation is a good and appropriate goal – but has to be approached carefully.
- Gathering requirements from budget holders and users of the goods or services (internal or external) is a vital stage in the process – really understand their needs and don’t just assume you can impose standardisation.
- Understand the market or markets where the purchased items will be used, including cultural, geographic, national and consumer preferences or legislation.
- Consider using tools and / or external support to support the management of complex spend categories and situations”.
There’s more in the full paper of course – download it now for more insight and recommendations.