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Colleges and universities today are looking for innovative solutions to control costs and create efficiencies when purchasing goods and services. By organizing procurement activities around specific categories of spending, category management in procurement enables academic institutions to leverage their buying power and create strategic relationships to drive greater value.
Procurement category management is a systematic approach grouping similar or related products according to demand, supplier, or other characteristics to enhance buying campus-wide. While it has different frameworks, one of the most commonly used is the United Nations Standard Products and Services Code® (UNSPSC), an open standard for the classification of product groups. However, you can also create a category list that fits your unique spend taxonomy.
Rather than treating each purchase as an isolated activity, category management takes a holistic approach, allowing procurement teams to develop longer-term strategies to optimize value within each category. Procurement teams typically have category experts who have specialized insight into specific markets, suppliers, and requirements.
Category management in procurement serves as an umbrella for strategies such as portfolio management, strategic sourcing, and supplier relationship management.
CATEGORY MANAGEMENT | ||
Portfolio Management | Strategic Sourcing | Supplier Relationships |
· Strategy and targets · Forecasting and planning · Total cost of ownership · Change management | · Spend analysis · Market research · Negotiation and contracting | · Collaboration · Strategic alignment · Ongoing optimization · Contract management |
Category managers are skilled professionals responsible for developing and executing strategies for their assigned categories. They become experts in markets, suppliers, and institutional requirements, enabling them to make better decisions. This leads to a variety of benefits, including:
By consolidating spend and leveraging buying power across departments and campuses, category managers can negotiate more favorable terms with suppliers, resulting in substantial cost savings for colleges and universities. They can also identify opportunities for standardization and optimization of the institution’s spend, further contributing to cost efficiency.
Through regular engagement and communication, category managers can achieve greater insight into market trends, emerging technologies, and innovative solutions. This close collaboration enables institutions to stay ahead of the curve and benefit from the supplier’s expertise—an often untapped resource in commodity purchasing.
Higher education institutions often have complex regulatory environments and must comply with strict requirements. Procurement category management strategies reduce potential risks, such as supply chain disruptions, ethical concerns, or regulatory non-compliance.
By proactively mitigating these risks, category management helps institutions protect their reputation, ensure business continuity, and maintain compliance with institutional policies and external regulations.
As academic institutions look to optimize sourcing and procurement, several key steps are involved in implementing a category management strategy.
Start by defining the relevant categories and subcategories by group purchases in categories such as:
Apply any overriding institutional initiatives to each category and ensure compliance with any policies or regulations.
Data is key here, as you want to look at total spend, historical patterns, and updated catalogs for goods and services, along with price lists.
Category experts will understand market trends over time, which helps in assessing market conditions and finding opportunities to consolidate purchasing. For example, someone overseeing the IT hardware category may identify an opportunity to consolidate server purchases across multiple departments for better pricing and terms.
Building relationships with key suppliers is a crucial aspect of category management in procurement. Ongoing discussions with leading suppliers help procurement team members become category experts and gain a better understanding of supplier capabilities, products and services, and potential risks.
These relationships foster collaboration. A category manager might work closely with key suppliers to explore innovative technology to reduce operational costs. An example might be looking at a portfolio of products that could enhance sustainability efforts.
Colleges and universities often have a complex web of goals and initiatives. They may want the lowest possible pricing while also meeting sustainability, diversity, and localization objectives. Category managers are best positioned to balance these needs to create optimal outcomes.
By consolidating individual purchases into broad categories, you can increase the volume of spending systemwide to negotiate more favorable pricing. You can also leverage cooperative purchasing agreements from E&I Cooperative Services. Our categorized portfolio can help your higher institution with category management.
E&I is the only member-owned non-profit that focuses exclusively on serving the education community. By leveraging aggregate spend across its 6,000 member institutions, E&I competitively solicits contracts with top manufacturers and suppliers to provide best-in-class pricing and terms favorable to higher education institutions, lowering costs and helping schools manage categories for greater savings.
Contact E&I Cooperative Services today to view available contracts to aid in procurement category management.
