Skip to main content
  • login
  • contact
  • language
    • English
    • Français
    • Español
    • Português
    • Deutsch
    • Italia
    • 简体中文
    • 日本語
  • search
X
    GEP Logo GEP Logo
    • Company  
        • About Us 
        • Culture 
        • Careers 
        • Contact Us 
        • AI-First at GEP
        • Sustainability at GEP

        About Us

        • Leadership
        • Customers
        • Partners
        • News
        • GEP in the News
        • Events
        • Mission & Vision
        • Awards & Recognition
        • Contact Us
        GEP leads Gartner 2025 Magic Quadrant for Source-to-Pay Suites

        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        Read More
        A Procurement Software Platforms Leader — 4 Years Running

        Tariff Resource Center: Strategies and Action Plans 

        Read More

        Culture

        • Diversity
        • GEP Cares
        • GEP Core Values
        • Women at GEP
        A Procurement Software Platforms Leader — 4 Years Running

        GEP & Xylem Unite to Bring Clean Water to 1,800 in Maharashtra

        Mapping & Reducing Scope 3 Emissions: A Quickstart Guide for Procurement Pros

        GEP & Akshaya Patra: Partnering to Deliver 4 Billion Meals and Fight Hunger Worldwide

        Careers

        • Explore Global Careers Opportunties
        • North American
        • Europe
        • India
        • Latin America
        • Asia-Pacific
        • Join Us
        • GEP Per Se
        • Campus Connect
        TOP EMPLOYER 2025 - USA
        TOP EMPLOYER 2025 - UK
        TOP EMPLOYER 2025 - INDIA
        TOP EMPLOYER 2025 - Costa Rica

        Contact Us

        • Ask Us
        • Request for Proposal
        • Schedule a Demo
        • Share Feeback
        GEP - AMERICA

        GEP in the Americas

        GEP - EUROPE

        GEP in Europe

        GEP - ASIA

        GEP in Asia

        GEP - AFRICA

        GEP in Africa 

        GEP - Middle East

        GEP in the Middle East

        AI-First at GEP

        Sustainability at GEP

    • Solutions  
        • Software 
          • GEP SMART  
          • GEP NEXXE  
          • GEP FINA  
          • GEP QUANTUM  
          • GEP GREEN
        • Strategy 
          • Procurement Consulting  
          • Supply Chain Consulting  
        • Managed Services 
          • Procurement Outsourcing  
          • Supply Chain Outsourcing  

        Software

        GEP SMART

        • Procurement Software
        • Direct Procurement Software
        • Indirect Procurement Software
        • Midsize & High Growth Enterprises

        GEP NEXXE

        • AI-First Supply Chain Management 
        • Supply Chain Visibility and Execution 
        • Supply Chain Planning 
        • Supply Chain Collaboration  

        GEP FINA

        GEP GREEN

        GEP QUANTUM

         

        GEP SMART

        • Procurement Software
        • Direct Procurement Software
        • Indirect Procurement Software
        • Unified Source-to-Pay
        • Source-To-Contract Software
        • Procure-to-Pay
        • GEP SMART for Midsize & High-Growth Enterprises
        • Key Capabilities
        • Spend Analysis
        • Sourcing
        • Contract Lifecycle Management
        • Supplier Lifecycle Management
        • Third-Party Risk Management
        • Purchasing
        • Payments
        • Data Analytics and Reporting
        • Do More With GEP SMART
        • Intake Management & Orchestration
        • Intelligent Category Management
        • Tail Spend Management
        • Cost Data & Analytics (GEP COSTDRIVERS)

        GEP NEXXE

        • AI-First Supply Chain Management
        • Supply Chain Visibility and Execution
        • Logistics Visibility  
        • Inventory and Warehouse Management
        • GEP Multienterprise Collaboration Network
        • Supply Chain Control Tower
        • Field Services  
        • Supply Chain Collaboration & Planning  
        • Supply Chain Planning
        • Purchase Order Collaboration  
        • Forecast Collaboration 
        • Capacity Collaboration  
        • Quality Management Software  
        • Should-Cost Modeling
        • Direct Material Sourcing
        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        Read More

        GEP FINA

        • E-Invoice Network
        • E-Invoice Receiving
        • E-Invoice Sending
        • E-Invoicing Compliance
        • Digital Supply Chain
        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        Read More

        GEP QUANTUM

        • AI, ML & Automated Technology
        • AI-Powered Data Analytics
        • Cloud Integration
        • Low-Code Application Development
        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        GEP Is a Leader in the 2025 Gartner® Magic Quadrant™ for Source-to-Pay Suites

        Read More

        Strategy

        Unrivaled supply chain and procurement expertise + the transformative power of AI

        Procurement Consulting

        • Procurement Transformation
        • Digital Procurement Transformation
        • Opportunity Assessment
        • M&A Services

        Supply Chain Consulting

        • Environmental, Social and Governance
        • Sustainability Consulting Services
        • Socially Responsible Sourcing
        • Scope 3
        A Procurement Software Platforms Leader — 4 Years Running

        Tariff Resource Center: Strategies and Action Plans 

        Read More

        Procurement Consulting

        • Procurement Transformation
        • Digital Procurement Transformation
        • Opportunity Assessment
        • M & A Services
        • Strategic Cost Management
        • Supply Risk Management
        6 Strategies for CPG Companies To Supercharge Sales and Operations Planning

        6 Strategies for CPG Companies To Supercharge Sales and Operations Planning

        Read More

        Supply Chain Consulting

        • Environmental, Social and Governance
        • Sustainability Consulting Services
        • Socially Responsible Sourcing
        • Supply Chain Strategy
        • Supply Chain Diagnostics
        • Inventory Optimization
        • Network Optimization
        • GEP Total Inventory Management Solution
        Mapping & Reducing Scope 3 Emissions: A Quickstart Guide for Procurement Pros

        10 Practical Steps To Reduce Scope 3 Emissions

        Read More

        Managed Services

        World-class skills, experience and know-how — amplified by the power of AI

        Procurement Outsourcing

        • Source-to-Contract
        • Spend Analysis 
        • Procure-to-Pay
        • Cost Recovery & Invoice Auditing

        Supply Chain Outsourcing

        • Planning & Forecasting
        • Inventory Management
        • Logistics Management
        • Supply Chain Data Management
        GEP Named a Leader in Procurement Outsourcing Services

        GEP Named a Leader in Procurement Outsourcing Services

        Read More

        Procurement Outsourcing

        • Source-to-Contract
        • Spend Analysis
        • Strategic Sourcing
        • Category Management
        • Tail-Spend Management
        • Procurement Support Services
        • Procure-to-Pay
        • Cost Recovery & Invoice Auditing
        • Accounts Payable
        GEP Named a Leader in Procurement Outsourcing Services

        GEP Named a Leader in Procurement Outsourcing Services

        Read More

        Supply Chain Outsourcing

        • Planning & Forecasting
        • Inventory Management
        • Logistics Management
        • Supply Chain Data Management
        • Supply Chain Risk Management
        GEP Named a Leader in Procurement Outsourcing Services

        Expanding the Possibilities for Procurement and Supply Chain Management by Using AI

        Read More
    • Industries  
        • Explore by Industry 

        Explore by Industry

        • Automotive
        • Chemicals
        • Consumer Packaged Goods
        • Energy & Utilities
        • Financial Services
        • Government & Nonprofit
        • Industrial Manufacturing
        • Life Sciences
        • Oil & Gas
        • Private Equity
        • Retail
        • Telecommunications, Media & Technology
        • High-Tech
        • Media & Entertainment
        • Software, Social & Platforms
        • Telecom
        • Travel & Hospitality
    • Knowledge Bank  
        • Explore by Topic 
        • Explore by Type 
        • Global Supply Chain Volatility Index

        Explore by Topic

        • Artificial Intelligence
        • Digital Transformation
        • Software & Technology
        • Strategy & Planning
        • Operations
        • Procurement
        • Sustainability
        • Inflation Strategies
        A Procurement Software Platforms Leader — 4 Years Running

        Tariff Resource Center: Strategies and Action Plans 

        Read More

        Explore by Type

        • White Papers
        • Research Reports
        • Bulletins
        • Case Studies
        • Webcasts
        • Blogs
        • Podcasts
        • Insights From the Top
        • Glossary
        Resilience: Delivering Value Amid Volatility

        Resilience: Delivering Value Amid Volatility

        Read More

        Global Supply Chain Volatility Index

    • Careers
      • Join Us
      • GEP Per Se
      • Campus Connect
    • Partners
       
    • GEP Software ›
      • GEP Software
      • ‹ Back
        • GEP SMART ›
          • GEP SMART
          • ‹ Back
            • Procurement Software
            • Direct Procurement Software ›
              • Direct Procurement Software
              • ‹ Back
                • Bill of Materials Management
                • Data Analytics & Reporting
                • Inventory Management
                • Master Data Management
                • Quality Management
                • Supplier Collaboration Portal
                • Supply Chain Operations
            • Indirect Procurement Software ›
              • Indirect Procurement Software
              • ‹ Back
                • Source-to-Contract
                • Savings Project Management
                • Savings Tracking
                • Guided Buying
                • Procurement Portal
                • Catalog Management
                • Order Processing
                • Invoice Management
            • Unified Source-to-Pay
            • Source-To-Contract Software
            • Procure-to-Pay
            • Midsize & High Growth Enterprises
            • Key Capabilities
            • Spend Analysis
            • Sourcing
            • Contract Lifecycle Management
            • Supplier Lifecycle Management
            • Third-Party Risk Management
            • Purchasing
            • Payments
            • Data Analytics and Reporting
            • Do more with GEP SMART
            • Intake Management & Orchestration
            • Intelligent Category Management
            • Tail Spend Management
            • Cost Data & Analytics (GEP COSTDRIVERS)
        • GEP NEXXE ›
          • GEP NEXXE
          • ‹ Back
            • AI-First Supply Chain Management
            • Supply Chain Visibility and Execution ›
              • Supply Chain Visibility and Execution
              • ‹ Back
                • Inventory and Warehouse Management
                • Control Tower
            • Logistics Visibility
            • Inventory and Warehouse Management
            • GEP Multienterprise Collaboration Network
            • Supply Chain Control Tower
            • Field Services
            • Supply Chain Collaboration & Planning ›
              • Supply Chain Collaboration & Planning
              • ‹ Back
                • Purchase Order Collaboration
                • Quality Collaboration
            • Supply Chain Planning ›
              • Supply Chain Planning
              • ‹ Back
                • Demand Planning
                • Supply Chain Bill of Materials
                • Supply Planning
            • Purchase Order Collaboration
            • Forecast Collaboration
            • Capacity Collaboration
            • Quality Management Software
            • Should-Cost Modeling
            • Direct Material Sourcing
        • GEP FINA ›
          • GEP FINA
          • ‹ Back
            • E-Invoice Network
            • E-Invoice Receiving
            • E-Invoice Sending
            • E-Invoicing Compliance
            • Digital Supply Chain
        • GEP QUANTUM ›
          • GEP QUANTUM
          • ‹ Back
            • AI, ML & Automated Technology
            • AI-Powered Data Analytics
            • Cloud Integration
            • Low-Code Application Development
        • GEP GREEN
        • Innovation ›
          • Innovation
          • ‹ Back
            • Emerging Technologies
            • Native to Cloud
            • Native to Mobile
            • One Unified Platform
            • Security
            • User-Centric Design
    • GEP Strategy ›
      • GEP Strategy
      • ‹ Back
        • Procurement Consulting ›
          • Procurement Consulting
          • ‹ Back
            • Procurement Transformation ›
              • Procurement Transformation
              • ‹ Back
                • Procurement Strategy
                • Org. Design & Implementation
                • Capability Building
                • Change Management
                • Governance & Performance
                • Processes & Policies
                • S2P Operations
                • Sourcing & Category Management
                • Technology
            • Digital Procurement Transformation
            • Opportunity Assessment
            • M&A Services ›
              • M&A Services
              • ‹ Back
                • M&A Clean Room
            • Strategic Cost Management ›
              • Strategic Cost Management
              • ‹ Back
                • Zero-Based Budgeting
            • Supply Chain Risk Management
        • Supply Chain Consulting ›
          • Supply Chain Consulting
          • ‹ Back
            • Environmental, Social and Governance
            • Sustainability Consulting Services
            • Socially Responsible Sourcing
            • Scope 3
            • Demand and Supply Chain Planning
            • Collaborative Planning
            • Source To Contract
            • Procure To Pay
            • Inventory Strategy & Management
            • Operations & Manufacturing Excellence
            • GEP Total Inventory Management Solution
            • Network Strategy & Optimization
            • Warehousing & Transportation Management
    • GEP Managed Services ›
      • GEP Managed Services
      • ‹ Back
        • Procurement Outsourcing ›
          • Procurement Outsourcing
          • ‹ Back
            • Source-to-Contract
            • Spend Analysis
            • Strategic Sourcing ›
              • Strategic Sourcing
              • ‹ Back
                • MRO
                • CAPEX
                • Logistics
                • Packaging
                • IT & Telecom
                • Energy
                • Direct Materials
            • Category Management ›
              • Category Management
              • ‹ Back
                • Contract Management
                • Supplier Performance Management
                • Savings & Compliance Tracking
            • Supply Market Intelligence  
            • Tail-Spend Management Services
            • Procurement Support Services ›
              • Procurement Support Services
              • ‹ Back
                • eSourcing
                • Supplier Performance Management
                • Savings & Compliance Tracking
                • Sourcing Support
            • Procure-to-Pay
            • Cost Recovery & Invoice Auditing
            • Accounts Payable
        • Supply Chain Outsourcing ›
          • Supply Chain Outsourcing
          • ‹ Back
            • Planning & Forecasting
            • Inventory Management
            • Logistics Management
            • Supply Chain Data Management
            • Supply Risk Management
    • Industries ›
      • Industries
      • ‹ Back
        • Automotive
        • Chemicals
        • Consumer Packaged Goods
        • Energy & Utilities
        • Financial Services
        • Government & Nonprofit
        • Industrial Manufacturing
        • Life Sciences
        • Oil & Gas
        • Private Equity
        • Retail
        • Telecommunications, Media & Technology
        • High-Tech
        • Media & Entertainment
        • Software, Social & Platforms
        • Telecom
        • Travel & Hospitality
    • Knowledge Bank ›
      • Knowledge Bank
      • ‹ Back
        • Explore by Topic ›
          • Explore by Topic
          • ‹ Back
            • Artificial Intelligence
            • Digital Transformation
            • Operations
            • Procurement
            • Software & Technology
            • Strategy & Planning
            • Sustainability
            • Inflation Strategies
        • Explore by Type ›
          • Explore by Type
          • ‹ Back
            • Insights From the Top
            • White Papers
            • Research Reports
            • Bulletins
            • Case Studies
            • Webcasts
            • Blogs
            • Podcasts
            • Glossary
        • Global Supply Chain Volatility Index
    • Company ›
      • Company
      • ‹ Back
        • About Us
        • Leadership
        • Customers
        • Partners
        • AI-First at GEP
        • Sustainability at GEP
        • News
        • Events
        • Culture ›
          • Culture
          • ‹ Back
            • GEP Core Values
            • Women@GEP
            • Diversity
            • GEP Cares
        • Mission & Vision
        • Awards & Recognition
        • Contact Us
    • Global Presence ›
      • Global Presence
      • ‹ Back
        • Americas ›
          • Americas
          • ‹ Back
            • English
            • Español
            • Portugués
        • Europe ›
          • Europe
          • ‹ Back
            • English
            • Deutsch
        • Asia-Pacific ›
          • Asia-Pacific
          • ‹ Back
            • English
            • 中文
        • Middle East ›
          • Middle East
          • ‹ Back
            • English
            • العربية
    • Contact Us
    • Careers ›
      • Careers
      • ‹ Back
        • GEP Per Se
        • Campus Connect
    • Language ›
      • Language
      • ‹ Back
        • English
        • Français
        • Español
        • Deutsch
        • Italia
        • Português
        • 简体中文
        • 日本語
    • BLOGS
    • Strategy
    • Technology
    • MIND
     
    •  
    •  
    •  
    •  
    Blog Image

    Effective Category Management Strategy: A Practical Playbook for Category Managers in Procurement

    • Turn isolated procurement activities into a disciplined operating model.
    • Manage goods and services strategically by aligning cost, risk, suppliers, and business goals.
    • Map sourcing strategies with the Kraljic Matrix to build an effective category management framework using AI.

       

    October 01, 2025 | Procurement Strategy   10 minutes read

    In the life of a category manager, change is constant, with most of it being absolute chaos. 

    Markets can shift overnight, suppliers push back, and costs shoot up. Yet budgets and timelines stay fixed while leadership demands answers you don’t yet have. 

    When time isn’t on your side, a reliable category management plan that executes flawlessly in virtually any situation can be your biggest win. Think back to every setback. What did you need in that moment?

    Fewer surprises? Better supplier support? Real-time visibility? Strategic moves that keep supply, spending, and compliance in check? 

    That’s the promise of a strong category management strategy: it takes the chaos and turns it into decisions you can stand behind. It shows what to buy, where, at what price, what risks to expect, and how to do it right. And with the correct digital platform in place, this process plays out in real time.

    This blog covers everything from understanding why category management matters to building a framework you can actually rely on, regardless of how unpredictable things get.

    What is category management?

    Category management treats a set of related goods or services as a portfolio. This portfolio has well-defined objectives, a market view, supplier records, and sets the rules that make buying repeatable and measurable.

    Instead of handling every contract or supplier separately, procurement teams define categories and build strategies for each. It enforces a category management plan for each portfolio and tracks demand shaping, sourcing practices, contracting, supplier performance, and risk reduction.
     

    Talk to our Expert

    Contact GEP

    What does a category management plan include?

    A strong category management plan defines the scope, targets, priorities, risks, market analysis, supplier management approach, chosen strategy and roadmap, KPIs, governance, and corresponding schedules.

    A successful category plan becomes the playbook for how sourcing events are run, how suppliers are reviewed, and how savings and performance are sustained over time. 

    Done well, it aligns procurement decisions with broader business goals, not just short-term savings.

    What does a category manager do? 

    The role of a category manager is to maintain supplier relationships, negotiate contracts, and ensure that they get the best value for purchases. 

    Category managers are often the primary point of contact for suppliers, managing relationships, performance, and negotiations. They analyze market shifts, map opportunities and risks, and develop and execute a category strategy. They work in collaboration with key business units to align the category strategy with company objectives.

    Types of categories in procurement

    In procurement, categories can be broadly classified into direct and indirect categories. Each category requires a different approach.

    • Direct categories

    These are critical materials and components that would end up in the final product or packaging: electronics, textiles, automotive parts, and plastics. These direct categories require close technical collaboration with operations and quality departments.

    • Indirect categories

    These are non-critical items that support the business but are not part of the final product: office supplies, software licenses, safety gear, utilities, and maintenance equipment. These favor standardization, catalog control, and channel rules.

    • Services

    These are external services that companies need. Companies prioritize deliverables, rates, and compliance over per-unit price for logistics, recruitment, auditing, IT support, training, and creative services.

    Each category requires a unique strategy to manage effectively. 

    Why category management matters (concrete outcomes)

    Good category work delivers measurable results beyond a single negotiated contract. Expect:

    • Lower total cost of ownership through consolidation, spec simplification, and smarter replenishment.
    • Fewer off-contract buys and shorter purchase order cycle times when catalogs and approvals mirror the plan in procurement systems
    • Better supplier performance because contracts include KPIs, quarterly reviews, and remediation paths.
    • Reduced continuity risk via multi-sourcing, safety stocks, or regionalization where logistics or trade rules demand it.
    • More actionable analytics when GL mapping and clean master data make spend visible.

    These gains are repeatable and measurable.

    The Agentic AI Playbook for Procurement Pros

    Your roadmap to moving from pilots to production, with AI that adapts, learns, and delivers.

    Download Free PDF

    Strategic Sourcing vs Category Management

    Strategic sourcing is the process of identifying and selecting suppliers that can provide the best value for a specific category. It is a critical component of category management.

    Category management takes a broader view by not only focusing on sourcing but also on managing the performance and value of the entire category over time.

      

    Strategic sourcing is an event-driven process: running RFIs, RFPs, or auctions to secure supplier terms. Category management decides when to run those events, which levers to use, how to segment suppliers, and how outcomes translate into contracts, catalogs, and workflows. 

    Types of category management strategies: When to choose them, and why

    There is no universal solution. The right strategy depends on two questions you need to answer upfront: How important is the item, and how risky is the supply? 

    Those answers shape the game. Below are some of the most useful category management strategies for you to choose from:

      

    • Supplier consolidation

    Strategy:  Buy more from fewer suppliers when items are standard and lots of suppliers exist in the market. That simplifies contracts and often improves price. 

    Risk:  If one supplier fails, you’re exposed.

    Keep a contingency plan ready in volatile markets so you don’t sacrifice continuity for a small unit cost saving.

    • Dual or multi-sourcing

    Strategy:  Critical items shouldn’t sit with one supplier when the item is critical. Splitting volumes between two or more vendors reduces single-point failure risk.  

    Risk:  Slightly higher average cost because you lose scaling benefits. Use competition between suppliers to keep pricing sharp and align contracts with clear performance benchmarks.

    • Specification simplification

    Strategy:  Reduce the number of product variants when the organization is buying too many similar parts or materials. Cut down on similar parts and shift to standard Stock Keeping Units (SKUs) to make purchasing, inventory, and quality management cleaner.  

    Risk:  Pushback from stakeholders who want specific features or legacy variants. You can show should-cost analysis and quality performance comparisons to justify changes.

    • Demand shaping

    Strategy:  Change how the business consumes the category when usage behavior is driving costs and not supplier pricing.

    Risk:  Resistance from users who feel they’re losing flexibility or control. Build service-level agreements with clear availability targets. 

    • Regional sourcing

    Strategy:  Regionalize the supply chain to source materials to where consumers are when imports result in long lead times, increased inventory, and customs risks, or when customized products are needed.

    Local sourcing lowers shipping and logistics expenses, avoiding import duties, tariffs, and taxes. It can also lead to shorter supply chains and more sustainable sourcing.

    Risk:  Higher landed cost compared to global low-cost suppliers. Critical resources might not be available locally. Run a total cost of ownership (TCO) model and opt for hybrid sourcing for items that are better off being sourced globally.

    • Long-term agreements 

    Strategy:  Use multi-year contracts when suppliers need assurance before scaling for your demand. In volatile markets and when supplier costs spike, tie raw material prices to a published index (e.g., steel, oil, chemicals) to keep costs fair. 

    Long-term agreements work when you want stability over multiple years, where you commit to volume and the supplier invests in capacity. Indexed pricing ensures continuity without burning through your budget as prices adjust monthly or quarterly with the index. 

    Risk:  If market prices fall, you may be locked into above-market rates, or index swings may create budget volatility. Build flexibility with price adjustment clauses, volume bands, review checkpoints, and guardrails like floors and ceilings.  

    • Auctions and unbundling 

    Strategy: Break down packages and run reverse auctions online when specifications are clear and the market is competitive.

    Breaking packages apart helps, too. Splitting labor from spare parts in a maintenance contract and auctioning each part increases contestability and opens up more supplier options. 

    Risk: Overemphasis on price can hurt quality or service. Prequalify suppliers thoroughly before the auction and apply weighted scoring for non-price factors.

    • Supplier development and Innovation

    Strategy: Help suppliers improve when a supplier is weak but critical. Build supplier capability in quality and uptime. Address quality issues with audits, corrective actions, and kaizen workshops. 

    Pilot new materials or services with startups, but clear legal and security gates first so pilots scale quickly when successful.

    Risk: Requires an investment of time and money without a guaranteed payoff. Define clear improvement targets upfront, use phased milestones, and exit if progress stalls.

    Each category needs its own plan that prepares for different market scenarios.

    The Kraljic Matrix sets the direction by showing how each category should be managed based on business impact and supply risk.

      

    It answers key questions like which suppliers have the most volume, where the quality or continuity risks are, what can be optimized, and how purchases will be kept on-contract.

    That insight feeds directly into your category management plan. 

    How to Build a Category Management Strategy using Advanced AI Capabilities?

    An intelligent category management plan works as a structured roadmap. It brings together spend data, purchase volumes, market trends, and supplier profiles, while also setting out the ideal sourcing approach and RFx methods for each category.

      

    A good category plan answers three questions: what to buy, who to buy from, and how to respond if conditions shift. 

    1. Scope and Objectives

    What it delivers

    A signed one-page scope with KPIs and targets for cost, continuity, quality, sustainability, and compliance.

    Natural language pulls key points from meeting notes and briefs. Intent classification ranks competing requests and highlights trade-offs. Upload minutes, and you get a draft scope with three to five targets ready for sign-off. That single step cuts weeks of back-and-forth.

    2. Analyze Current Spends and Demand

    What it delivers

    A clean spend baseline and a reliable view of demand.

    Monitor category spend and identify trends by commodity, business unit, region, and supplier. Clean 12–24 months of data. Leverage intelligent spend views: global supplier regional spend, actual vs. budget, contracted vs. non-contracted spend by category, and more. Normalize units and flag one-offs and recurring demand patterns.

    AI classifies spend into the right taxonomies, like the United Nations Standard Products and Services Code (UNSPSC), standardizes units, and links fragmented data back to their parent groups. It also flags outliers, separates recurring demand from one-offs, and generates demand forecasts with more accuracy than manual trending. The result is a consolidated ledger, monthly forecasts, and a flagged list of unusual transactions.

    3. Segmentation and Market Scan

    What it delivers

    Prioritized categories and supplier segments with market signals built in.

    Map items on a Kraljic matrix. Review supplier capacity, cost drivers, and regulatory or geopolitical risks.

    AI clustering tools can place items and suppliers into a Kraljic matrix, while natural language processing scans filings, press reports, and regulatory updates to enrich supplier profiles.

    Forecasting models project commodity or freight indices up to two years ahead. With those signals in hand, you can see which categories need extra attention and which are stable enough to leave as they are. 

    4. Evaluate Cost and Risk

    What it delivers

    Cost benchmarks you can test against and supplier risk scores you can trust.

    Predictive models flag delays or quality risks before they become visible in delivery reports. Build should-cost models for high-value items and test vendor quotes against the model.

    Should-cost models break an item into inputs such as material, labor, freight, and tariffs, showing what a fair price range should look like. Scenario engines then stress-test the numbers — for instance, what happens if energy costs double or if wage rates rise sharply.

    Risk scoring combines financial health indicators with compliance findings like Service Organization Control 2 (SOC 2) audit exceptions. With this, you can compare quotes against the benchmark, score potential failure modes by likelihood and impact, and record escalation points with clear ownership. 

    5. Stress-Test and Choose a Strategy That Fits 

    What it delivers

    Compare scenarios, select strategies, and document what the plan will and will not do.

    Total Cost of Ownership (TCO) models test different scenarios. It could be single supplier versus split awards, fixed-price contracts versus spot buying, or make versus buy, depending on what matters most for that category. Optimization engines test mixes under constraints like supplier capacity or diversity requirements. 

    The output is an automated scoring that shows the cost impact, risk exposure, and operational complexity of each option. You review three to five scenarios, select the best path, and carry those assumptions into the plan for governance.

      

    6. Develop an Executable Plan and Operationalize 

    What it delivers

    An executable plan with a sourcing calendar, key performance indicators, and preloaded contract obligations.

    Jot it all down: scope, targets, sourcing calendar, KPIs, and governance. Then load contracts, publish catalogs, and align approvals. AI tools can pull threads together quickly. Generative models write the plan narrative and calendar in a consistent format. 

    Contract analytics lift renewal dates and obligations straight out of documents using OCR and natural language processing. The result is a plan that’s published with key dates already locked in, plus a sourcing calendar that operations can act on immediately instead of waiting around. 

    7. Plan Supplier Selection and Onboarding 

    What it delivers

    Find the right RFx types (RFIs/RFPs) that apply, followed by structured AI evaluation for supplier onboarding.

    RFx assistants suggest event types and scoring weights. Response summarization condenses supplier bids. Automated verification and scoring models speed up prequalification and onboarding, flagging outliers. The supplier onboarding process includes automated document capture and data enrichment. 

    Negotiation recommendation engines can suggest price targets and realistic negotiation pointers based on current market shifts. Catalog engines convert sourcing outcomes into entries and approval flows. 

    8. Measure and Adapt 

    What it delivers

    A category plan that keeps a record of every decision and is updated in real time.

    Track KPIs monthly, refresh market intelligence, and update the plan after major shifts.

    Dashboards show how things are running in real time: scored shortlists, award recommendations, KPI tracking, and early alerts when metrics start slipping. That gives managers the chance to step in early and prevent expensive misses.

    Whether monitoring supplier metrics and spend patterns or using anomaly detection for automated change logs explaining why decisions were made, AI keeps you in the loop at all times. It also learns from outcomes to improve forecasts and future award recommendations.

    Conclusion

    An effective category management plan provides category managers a buffer when markets fluctuate, suppliers change courses, and costs climb. It prepares you for the worst and sets expectations right from the start. Everyone can get on the same page, as stakeholders know the scope, strategy, and deliverables early on. 

    And yes, expect friction. But that’s part of the process. If you track every change made and what led to it, it will help you optimize for when you hit similar hurdles in the future.

    With GEP’s Intelligent Category Management software, the only AI-driven, end-to-end solution, category managers gain real-time visibility and control across every category activity.

     

    Tags: category management , Procurement , Source to Pay , Procure to Pay

    Add Comment +

    GEP Outlook 2025: Procurement & Supply Chain Key Trends, Challenges and Opportunities

    Read More

    FEATURED POST

    ...
    Risk Management

    Act Now or Play Safe? Here’s How to Respond to Tariff Uncertainty

    ...
    Supply Chain Strategy

    The AI Race Isn’t Just About Tech — It’s About Supply Chain Agility

    ...
    Source to Pay

    From Vision to Execution: Why GEP Is a Leader for S2P Suites in Gartner 2024-25 Magic Quadrant

      BLOG CATEGORIES

    • Procurement Strategy
    • Supply Chain Strategy
    • Risk Management
    • Sourcing Strategy
    • Cost Management
    • Supplier Management Strategy
    • Miscellaneous
    • M&A
    • Inventory Management
    • Supply Chain Risk Management
    • Sustainability
    • Digital Supply Chain Transformation

    TAGS

    sustainability
    Procurement Software
    supply chain strategy
    Inflation
    Russia-Ukraine War

    By checking the box below, you consent to GEP using your personal information to send you thought leadership content – such as white papers, research reports, case studies – and other communications. GEP representatives may contact you to provide additional information or answer questions.

    If at any point in time you decide to withdraw your consent, you may unsubscribe by emailing your request to us at privacy@gep.com.

    Please refer to the GEP Privacy Statement to understand how we manage and protect your personal information.

    Terms of Use | Privacy Statement

    SEND US YOUR QUESTION(S)

    Terms of Use | Privacy Statement

    Breadcrumb

    1. HOME
    2. BLOGS
    3. STRATEGY
    4. EFFECTIVE CATEGORY MANAGEMENT STRATEGY: A PRACTICAL PLAYBOOK FOR CATEGORY MANAGERS IN PROCUREMENT

    Contact Us

      Demo Schedule a live demo of our software
      RFP Request for a business proposal
      Ask Us Send us your question(s)
      Feedback Share your comments and suggestions
           
    STRATEGY
    Strategy
    •   Procurement Consulting
    •   Digital Procurement Transformation
    •   Strategic Cost Management
    •   Opportunity Assessment
    •   Supply Chain Risk Management
    •   Supply Chain Consulting
    •   Supply Chain Strategy
    •   Supply Chain Diagnostics
    •   Inventory Optimization
    •   Procurement Transformation
    •   Sustainability and ESG Consulting
    SOFTWARE
    Software
    •   Procurement Software
    •   Supply Chain Software
    •   Source-to-Contract
    •   Procure-to-Pay
    •   Supply Chain Planning
    •   Supply Chain Collaboration
    •   Supply Chain Visibility & Execution
    •   Supply Chain Control Tower
    •   Should-Cost Modeling
    •   Inventory & Warehouse Management Software
    •   Source-To-Pay Software
    •   Midsize & High Growth Enterprises
    MANAGED SERVICES
    Managed Services
    •   Procurement Outsourcing
    •   Strategic Sourcing
    •   Tail-Spend Management
    •   Category Management
    •   Procurement Support Services
    •   Supply Chain Outsourcing
    •   Supply Chain Planning & Forecasting
    •   Inventory Management
    •   Logistics Management
    COMPANY
    Company
    •   About Us
    •   Leadership
    •   Customers
    •   Sustainability at GEP
    •   Careers
    •   News
    •   Awards
    •   Partners
    •   Contact Us
    Stay Connected

       
      

    Download the GEP GO App

    Stay connected with cutting-edge procurement and supply chain insights – anytime, anywhere.

    app store
    play store
    © Copyright GEP 2025. All rights reserved. Terms of Use | Privacy Statement | Cookie Policy |  | Quality Policy | GEP Logo