CATEGORY MANAGEMENT has benefited the consumer through improved assortment, lower prices, reduced out of stocks and ease of shopping. This is made possible by the collaboration between retailers and suppliers to improve the effectiveness and efficiency of demand/supply chain management.
The overall business process flows through seven steps: category definition, role, assessment, strategy, tactics, plan implementation and review. While the overall process is similar across different retail formats, it requires adaptation for different merchandise characteristics and data availability.
Category Management has been a topic of growing importance to the consumer products industry ever since point-of-sale (P.O.S) scanning allowed an accurate assessment of product movement. Starting with shelf space allocation in line with product movement, category management has evolved to include a variety of concepts for managing the demand chain.
The term describes an emerging organizational design for distributors. The distributors buying and merchandising functions are integrated through teams responsible for developing category business plans both internally (procurement, merchandising and operations) and with suppliers. These plans are aimed at improving the overall performance of the category.
The process also describes the reorganization of the suppliers customer interface and internal profit centers. It represents organizing around customers and categories instead of geographers and brands.
And most importantly, Category Management allows distributors and suppliers to partner while creating and managing consumer-focused plans to manage the entire demand chain.
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