Developing a Methodology for Category Management in Manufacturing Companies

Abstract

Category management' term has been used in manufacturing companies for over 10 years, but its methodology has not been clearly defined yet. Traditional category management (CM) originated in retail and it is obvious that the whole set of its tools is impossible to apply to the purchases of industrial companies due to a number of specific restrictions: some of the goods purchased by a manufacturing enterprise are modified in the process of production, and the others are acquired not for external, but for the needs of company internal consumer. Therefore, it is necessary to make a number of clarifications in the methodology of CM for manufacturing companies concerning the process framework, toolkit and implementation guidelines. In this regard, we proposed a fundamentally new concept of 'category approach'. By analyzing the theory of traditional CM, the practice of manufacturing CM and summarizing the experience of Russian industrial companies we outline the methodology of 'category approach' and its toolkit and implement these findings in a big Russian metallurgical company. The questions that arouse in the course of implementation made us develop a new strategic decision-making tool, which was successfully tested during the project.