In Category Management, we group spend into categories of similar products. This strategic approach allows us to consolidate areas of spend for greater efficiency.
With Category Management, we might split direct and indirect products and services, or look at them by value, supplier, type or volume. To do so, we use an analysis method like Pareto (80/20) where 80% of the spend involves 20% of the suppliers, or ABC Analysis which inventories categories from most crucial and tightly controlled (A) to those with most minimal records (C). These models help us see where high levels of spend are being accrued and where focus should be placed.