ICG Commerce – Confidential and Proprietary InformationICG Commerce – Confidential and Proprietary Information

Lori Kelley

Category Management COE Lead, ICG Commerce

Key Elements of Category Management

ICG Commerce – Confidential and Proprietary Information

Agenda

• What is Category Management?

• Key Elements of Category Management

• Category Management Lifecycle

• Category Management Workbench

• Category Management Value

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1. Ensure Delivery and Tracking of Realized Savings

ImplementationCategory

Planning

Spend and

Savings

Management

Compliance

Management and

Reporting

Continuous

Improvement

-Develop and maintain Annual Category Strategy

- Monitor contract expirations and develop action plans

- Ensure vendor enablement is complete prior to go-live

- Communicate relevant data to field and relevant functional groups

-Identify and manage gaps in reported spend/savings numbers versus projections

-Report commodity spend with non-preferred suppliers

-Develop methods to drive field spend to preferred supplier for commodity

Price

Management

- Work to ensure suppliers are complying with contracted pricing terms

- Drive process improvements to help lower the cost of business for client

2. Maintain and Improve the Performance of the Supply Base

Supplier Performance ManagementContinuous

Improvement

-Track applicable KPIs for each supplier

- Conduct end-users surveys regarding supplier performance

- Review performance data with suppliers and develop action plans to resolve issues

Re-Sourcing

- Drive process improvements to reduce total cost of ownership for client

-Identify areas or sub-categories where service needs are not met under current agreement

-Work to optimize the delivery platform to ensure service levels are acceptable

What does Category Management do?

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Key elements of Category Management

Service

Providing price control services, including supplier price audit, price file management, price impact analysis, e-catalog content management

Price Management Higher degree of certainty that

identified savings will be realized

Delivers monthly spend/savings reporting for sourcing & CI projects; compliance visibility by location/unit; corrective action plans

Compliance Management & Monitoring

Objective, auditable, visibility into spend, savings, & compliance patterns, attainment of realized savings

Developing annual plans, specifying the sourcing & category management projects w/ realized savings forecasts

Category Planning

Sets the category direction and goals. Can help measure procurement’s impact on department budgets

Description Ensures

Providing site specific implementation and contract rollout support post sourcingImplementation

Higher degree of realized savings through higher adoption

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Review & analyze spend & savings; uncover underlying issues that create variances; develop action plans to address root causes of variances

Spend & Savings Management

Higher degree of certainty that identified savings will be realized. Understanding of spend

Identifying and implementing ongoing, post sourcing, continuous cost improvement programs

Continuous Improvement

Ongoing TCO improvement, sustainability

ICG Commerce – Confidential and Proprietary Information

Key elements of Category Management

Service

Project based re-sourcing of category spend, including sourcing, negotiations and/or renegotiation of PO/contract terms, pricing, etc.

Re-sourcing Ongoing cost competitiveness

Description Ensures

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Developing & implementing action plans to address stakeholder concerns and opportunities.

Stakeholder Management

Awareness of potential systemic issues; opportunity identification

Day to day management of the supplier relationship; resolution of tactical issues, score carding performance, contract management, etc.

Supplier Performance Monitoring & Management

Increased supplier performance which yields lower total cost of ownership

ICG Commerce – Confidential and Proprietary Information

Category Management Lifecycle

ImplementationSpend & Savings

ComplianceRe-Sourcing

Supplier Performance Management

Price Management

Category Planning

Compliance Management

Continuous Improvement

Stakeholder Management

CM Lifecycle for Typical CategoryEarly Lifecycle

0 – 6 Months Post Sourcing

Late Lifecycle

18 + Months Post SourcingOngoing

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Category Management Workbench

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Category Planning

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Implementation

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Spend, Savings & Compliance

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Price File Management

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Continuous Improvement

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Supplier Performance Management

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Stakeholder Relationship Management

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ICG Commerce – Confidential and Proprietary Information

Through CM your organization can

experience 5 - 30% gains post sourcing

Improvement Opportunity

SolutionSavings

Potential

Specification changeSubstitution of lower cost, product with equal fit/function

5 – 20%

Specification substitution & standardization

Implement new product across company 10 – 25%

Compliance ImprovementRe-implement targeted low adopting locations

5 – 10%

Decrease number of suppliersLeverage additional product lines & services

5 – 20%

Demand/TCO managementReduce monthly air filter change to quarterly w/ higher price filter

10 – 30%

Transaction / Service Level process improvement / rationalization

Increase average order size and achieve discounts

3 – 6%

Inventory analysis, rationalization

Supplier buyback of “C” or “B” items, VMI

5 – 20%

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