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Benchmark Data Points to Big Advantages of Category Management

Companies that have adopted category management practices—managing product categories separately and customizing them according to specific customer needs—outperform others on a number of key supply chain metrics.

By ·
By ·

Companies that have adopted category management practices—managing product categories separately and customizing them according to specific customer needs—outperform others on a number of key supply chain metrics. That’s according to new data released by APQC (http://www.apqc.org) as part of its Open Standards Benchmarking in Procurement program. 

APQC found that organizations that have implemented supplier category management enjoy:

Shorter supplier lead time. They have a median supplier lead time of only six days compared to 28 days for companies with no category management.

Faster cycle time. Companies with category management programs show a median turnaround time of eight hours vs. a median 72 hours for others. 

Higher productivity. Top performing organizations with category management report 199% more POs processed per FTE (full-time equivalent).  They also report 327% more PO line items processed per FTE at the median. On average, organizations with category management in place approve 46% more of their POs electronically.

Fewer FTEs to order materials and services. Companies that do not have category management in place require at least 2.5 times as many FTEs to order materials/services compared to organizations with such programs.

 


About the Author

Frank Quinn, Editor Emeritus
Frank Quinn is Editor Emeritus of Supply Chain Management Review, considered the premier publication for supply chain executives. Frank was the founding editor of SCMR and has overseen its growth over the past 16 years. He has been covering the logistics and supply chain scene in various editorial and consulting positions for more than three decades. Frank is also co-author of the book Diagnosing Greatness: Ten Traits of the Best Supply Chains.

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From the May-June 2017
Too often, working capital pressures roll over supplier relationships without regard for what happens to supply chain risk. But now that new supply chain financing tools and techniques are proliferating, companies have a fresh chance to implement a coherent business strategy that balances the legitimate concerns of the buyer’s finance department with those of the company’s supply chain management experts.
How they did it: Supplier Trust at General Motors
Supply Chain Negotiations: Creating Leverage
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