How to build a procurement category strategy

Start with the decision you need signed off, then work backwards. Most category strategies fail review because they present research instead of a recommendation. Seven steps, in this order.

1. Baseline the spend

Pull 24 months of spend for the category, cleaned to supplier and sub-category level. You need three numbers before anything else: total annual spend, the share held by your top five suppliers, and the share under contract. If more than 30 per cent sits outside contract, that is your first recommendation regardless of what the market looks like.

2. Map the supply market

Name the credible suppliers, their relative size, and where capacity sits. Note whether the market is consolidating, because that changes your timing more than your negotiation skill does.

3. Understand the cost drivers

Break the price into its parts: labour, materials, transport, technology, margin. A category strategy that cannot explain what moves the price cannot defend a savings target.

4. Position the risk

Single source, geographic concentration, regulatory exposure, and switching cost. Record what would happen in the first two weeks if your largest supplier stopped delivering.

5. Build the opportunity list

Every opportunity gets a value, a confidence level and an owner. Group them into demand, specification, commercial and supply base levers so the pattern is visible.

6. Choose the sourcing route

Tender, negotiate, extend, consolidate or market test. The route follows the market conditions and your leverage, not habit.

7. Phase the plan

Twelve to eighteen months, quarter by quarter, with the benefit landing where finance expects it. Then write the one-page summary, and send that ahead of the meeting.

The strategy is finished when someone outside procurement can read the single page and repeat your recommendation back to you.