Managing Complex Categories – download our latest Paper here

We launched last week our latest briefing paper, snappily titled “Managing Complex Categories – Beware the Complexity of Standardisation!”

It’s sponsored by Marketing Services spend management company  ProProcure, and is available to download now, free on registration here.

Standardisation “involves focusing on the specifications and requirements for the goods or services the organisation buys and, where appropriate, refining and standardising those in the light of market availability and dynamics to achieve better value for money”. 

But, as we said last week, standardisation has some hidden dangers. In the paper, we give the example of retail chiller cabinets (for soft drinks, etc). Looks like a simple enough item to buy – but there are actually a range of requirements for different regions and products that must be considered. As we say in the paper;

In Canada, certain elements within chiller cabinets are treated as ‘hazardous materials’. In other countries there are various requirements in terms of recycling or use of certain chemicals in their manufacture.  Then there are the technical differences driven by the situations in which the cabinets are used. A cabinet designed to keep product at 10C (50F) in Qatar needs to have some different specifications to one designed for use in Alaska”!

So how can procurement address this challenge? Here’s a short extract from the paper.

Whilst standardisation is a worthwhile goal of category management programmes, when we are dealing with complex categories, care must be taken to understand thoroughly the internal requirements for the particular goods or services, and the external factors such as local or national preferences or regulatory issues. It is essential to make sure these issues are understood before the core supplier selection and negotiation stages of the category management process are undertaken. That is perhaps even more most important if what is being bought is to be used in a consumer facing environment, rather than just inside the organisation.

 So, gathering information about the internal needs in a structured and careful manner is vital for procurement. This can be a difficult task in a complex multi-national environment. Similarly, there is a challenge when internal users genuinely have different needs. Understanding these needs, then developing appropriate contracting strategies and a structured compliance management process are necessary to ensure good results can be delivered, even given this complexity.

Download the whole paper now for more insight and recommendations.

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