How to Ensure Your Category Strategy Covers 99% of the Category Expenditures

Jim Bergman

Creating an effective category strategy is no small feat, and ensuring it captures 99% of your category expenditures can feel like aiming for perfection. But with the right approach, it’s an achievable goal that drives significant value for your organization. Here’s how you can ensure your category strategy is comprehensive, impactful, and leaves no expenditure uncovered.

1. Understand Total Category Spend

Begin by conducting a thorough spend analysis to identify all expenditures within the category. This includes direct and indirect costs, one-off purchases, and even rogue spend that may fall outside of standard procurement processes. Use data visualization tools and dashboards to map out the spend landscape, ensuring no expense goes unnoticed.

2. Segment Your Category

Break your category into subcategories or spend segments. This granular approach makes it easier to manage and ensures that every element of the category is addressed. For example, in the IT category, you might segment by hardware, software, services, and maintenance. Each subcategory then gets tailored strategies aligned with your overall goals.

3. Engage Stakeholders Across Functions

Collaboration with stakeholders is crucial. Work closely with finance, operations, and any other teams involved in category spend to ensure their needs and insights are captured. Cross-functional engagement helps uncover hidden expenditures and ensures alignment on priorities, budgets, and objectives.

4. Leverage Technology for Visibility

Invest in procurement tools and software that offer real-time visibility into spend. These tools can help track supplier performance, monitor compliance, and identify areas of improvement. By leveraging technology, you can stay on top of your category expenditures and ensure no area is overlooked.

5. Identify and Address Maverick Spending

Maverick spending—when purchases are made outside of approved procurement channels—can derail even the best category strategies. To tackle this, create clear procurement policies and educate stakeholders about the importance of compliance. Regular audits and reporting can also help identify and address maverick spend.

6. Build Supplier Relationships

Your suppliers are key partners in ensuring category coverage. Collaborate with them to identify potential cost-saving opportunities, improve service levels, and align on long-term goals. Strong supplier relationships ensure that you have complete coverage of all expenditures within the category.

7. Monitor and Optimize Continuously

A category strategy isn’t a one-and-done effort—it’s an ongoing process. Regularly review your strategy’s performance against key metrics, such as spend coverage and cost savings. Be prepared to adjust and optimize your approach as market conditions and business priorities evolve.

Conclusion

Ensuring your category strategy covers 99% of category expenditures requires diligence, collaboration, and the right tools. By understanding your total spend, engaging stakeholders, and continuously optimizing your strategy, you can achieve this ambitious goal. A comprehensive category strategy not only maximizes value but also positions your organization as a leader in strategic procurement.

Achieving near-complete coverage is no longer just a lofty ambition—it’s a must-have for organizations committed to staying competitive and driving innovation. Ready to tackle the 99%?

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Published by Jim Bergman

Jim Bergman is a commercial contract professional with global experience spanning the USA, Latin America, UK, Europe, China, South Korea, Japan, India, SE Asia, the Middle East, Africa and Australia. He has worked on a wide range of direct and indirect spend categories in numerous sectors, developing a deep knowledge of services, goods and technology procurement and sales. Across this wide array of commodity and services experience, Jim has found the keys to success in maximizing value for money through customer-supplier relationships founded on innovative category management and strategic sourcing practices, key performance metrics and measures, as well as Total Cost of Ownership principles and collaborative contracting tenets. He has shared his knowledge through advisory engagements, as well as in developing and delivering training programs both on-line and in classrooms, in both open-enrollment and internal environments. Jim has assisted his clients through all phases and steps of contracting, negotiation, strategic sourcing and bidding processes, demonstrating value generation in excess of $250 million. His audiences and clients have included over 7,000 attorneys and commercial professionals students from over 1,000 corporations and public-sector entities.

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