The purpose of a category plan is to define the category and the planned strategies to maximise value and reduce risk for your company.
A category plan should include:
- A profile of the category as it stands, and
- The strategy to effectively ensure and manage the ongoing supply of goods and/or services.
Development of the category plan should be led by the procurement category manager and should involve the key business stakeholders to ensure its relevance. Once developed it should be reviewed (and refreshed if necessary) on a regular basis ,annually in most cases.
The plan should extend past the length of a typical contract in that category (for example, many indirect categories have a 3 year average contract length in which case the plan should extend to at least 5 years in the future).
- Definition of what the category includes
(e.g. Travel category plan could include Hotels, Air Travel, Car Hire and Travel Booking Companies)
- Name of category manager
- Name of contract manager
- Historical spend and current contracts
(if possible spend mapped to contracts, for example spend in Hotels was $50M of which only $30M was with contracted hotel providers)
- Future demand and requirements
(in particular the potential changes in future demand and the rationale for them)
- Supply market analysis
(who are the major suppliers, what are the changes happening in the industry, substitute products etc)
- Opportunity areas (demand & supply)
- Sourcing strategies
(e.g. “tender for hotel accommodation”, “renegotiate air travel contracts”, “implement panel for car hire providers”)
- Implementation timeline
A few notes about category plans
A category plan should have a page at the front with a space for the physical signature of the head of procurement / senior finance stakeholders to ensure accountability.
Category plans can be used to measure the performance of category managers at the end of each year.
A well designed category plan should be used in daily / weekly planning by a category manager to ensure relevance of tactical activities.
Here is a category plan template for you to use as well as an example for you to see what one looks like once populated. Your feedback is very welcome and will help us to continue to refine these!