categorymanagement

Category management is a strategic approach to procuring or merchandising groups of products or services as categories rather than as individual items, with the aim of maximizing value across the supply chain. It is used in retail, consumer packaged goods, and B2B procurement to align offers with customer needs and operational goals.

The core idea is cross-functional collaboration among buyers, merchandisers, finance, and suppliers to treat a category as a discrete business unit with its own strategy, demand, supplier base, and performance targets. Procurement category management focuses on sourcing, contracts, and supplier relationships, while merchandising category management concentrates on assortment, space allocation, pricing, and promotions.

The process typically includes defining the category, collecting and analyzing data, developing a category strategy, engaging suppliers, implementing plans, and ongoing performance measurement and governance. Data-driven insight, scenario planning, and cross-functional sign-off are common elements.

Key benefits include improved cost savings and total cost of ownership, stronger supplier collaboration, optimized assortment and shelf availability, better forecast accuracy, and clearer accountability for category outcomes.

Common tools support category management, such as category scorecards, data analytics platforms, demand forecasting, and supplier performance dashboards. Metrics often tracked are savings, share of shelf, service level, forecast accuracy, inventory turns, and total cost of ownership.

Challenges can involve data quality, organizational silos, change management, and balancing category strategy with local execution. The practice originated in the 1990s in retail and consumer goods and has since expanded with digital analytics and integrated supply chain insights.