Category management is an approach to the organisation of purchasing within a business organisation. Applying category management to purchasing activity benefits organisations by providing an approach to reduce the cost of buying goods and services, reduce risk in the supply chain, increase overall value from the supply base and gain access to more innovation from suppliers. It is a strategic approach which focuses on the vast majority of organisational spend. If applied effectively throughout an entire organisation, the results can be significantly greater than traditional transactional based purchasing negotiations, however the discipline of category management is sorely misunderstood. The concept of Category Management in purchasing originated in the late 1980s. There is no single founder or originator, but the methodology first appeared in the automotive sector and has since been developed and adopted by organisations worldwide. Today Category Management is considered by many global companies as an essential strategic purchasing approach. Category Management has been defined as “an evolving methodology that drives sourcing strategy in progressive organisations today”. The Chartered Institute of Procurement & Supply defines Category Management as: Jonathan O'Brien, author of Category Management in Purchasing, defines Category Management as: Mark Webb of Future Purchasing makes three statements in defining Category Management: Peter Hunt, partner at ADR International, writes Many public sector organisations have recently adopted category management as a strategic transformation tool. Sir Philip Green, in his “Efficiency Review” of UK government spending, recommended that “centralised procurement mandated for common categories to leverage... buying power and achieve best practice”. In the United States, the federal General Services Administration, working with the Office of Management and Budget'sOffice of Federal Procurement Policy, adopted Category Management as an operational tool for purchasing in April 2014.
