From the course: Purchasing Foundations
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Category management
From the course: Purchasing Foundations
Category management
- Buyers purchase a lot of different things for their company in a wide range from things like office supplies to corporate jets. It makes sense that the approach to purchasing can be very different based on what it is that you're buying. That's why I want to talk now about category management, a very special type of sourcing activity. Managing a category of purchases usually entails buying a commodity for the company. A commodity has three distinct characteristics that are significant to you as a buyer. First, there are a lot of suppliers of this item. Agricultural products are a good example of this because most products can be bought from producers and distributors all around the world. Second, the item you are buying is important to the company. Perhaps it's important because it's a key ingredient to your final product, as steel is important to an auto maker. Perhaps it's important because it's a very large purchase. And last, the total cost of the item is an important part of the…
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