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CIPS Level 5: Category Management (L5M6)

The CIPS Level 5 Category Management (L5M6) unit is designed to equip procurement and supply professionals with a comprehensive understanding of category management strategies and sourcing approaches. This unit focuses on differentiating strategic sourcing from conventional procurement methods, analyzing key models for category management, and identifying the technical and behavioral skills required for effective implementation. By mastering these concepts, learners can drive procurement efficiencies, optimize supplier relationships, and create value within their organizations.

Learning Outcomes

The significant learning outcomes of the unit CIPS Level 5 Category Management (L5M6) are demonstrated below:

LO1: Understand approaches that can be used to develop category management strategies

This learning outcome focuses on developing an understanding of strategic and conventional sourcing processes and their role in category management. Learners will explore the differences between strategic sourcing, category management, and account management, along with various models such as AT Kearney’s 7-Step Model and CIPS Category Management Model. Additionally, learners will identify the technical and behavioural skills required for effective category management, including financial management, cost analysis, risk management, communication, and negotiation. By mastering this learning outcome, learners will develop the ability to design and implement strategic procurement and sourcing processes that align with organisational goals.

LO2: Understand the concepts, tools, and techniques associated with managing expenditure

This learning outcome equips learners with knowledge about different types of expenditures relevant to category management, including direct and indirect costs. Learners will explore various tools and techniques such as Pareto analysis, supply chain mapping, Porter’s Five Forces, SWOT, STEEPLED analysis, and market share models to effectively categorise and manage expenditures. By achieving this outcome, learners will enhance their ability to analyse procurement spending patterns, apply strategic tools for expenditure mapping, and optimise procurement decisions to improve efficiency and cost-effectiveness.

LO3: Understand the strategic impact of a category management process

This learning outcome focuses on the data, planning, and supply market factors essential for developing a category management process. Learners will examine historical and forecasted spending data, demand patterns, supplier contracts, and market trends to make data-driven procurement decisions. They will also explore the steps required to introduce category management, including creating category hierarchies, forming cross-functional teams, and ensuring compliance with legislative requirements. Furthermore, learners will analyse supply market dynamics, competitiveness, financial data of suppliers, and sustainability factors to understand their impact on procurement strategy. By mastering this learning outcome, learners will be equipped to drive category management initiatives that enhance supplier relationships, improve procurement performance, and support organisational objectives.

Assessment Criteria

1.0 Understand approaches that can be used to develop category management strategies

1.1 Critically compare strategic and conventional sourcing processes and their role in category management

• 1.1.1 Defining strategic sourcing and category management
• 1.1.2 The stages of a conventional sourcing process
• 1.1.3 Transactional and strategic sourcing activities
• 1.1.4 Differentiating account management and category management

1.2 Critically compare models for the adoption of category management

• 1.2.1 Models of strategic sourcing such as AT Kearney’s 7 step model
• 1.2.2 Models of category management such as the CIPS Purchasing and Supply Model and CIPS Category Management Model
• 1.2.3 Analysis of similarities and differences between models for strategic procurement, strategic sourcing and category management

1.3 Identify the technical and behavioural skills required to implement category management

• 1.3.1 Technical skills such as financial management and cost analysis, supply chain analysis, supply base research, sourcing processes, risk management, legal aspects and negotiation
• 1.3.2 Behavioural skills such as communication, influencing, working with teams, cross functional working and change agents

2.0 Understand the concepts, tools and techniques associated with managing expenditure

2.1 Contrast the types of expenditure that can be analysed for category management processes

• 2.1.1 Expenditures that are related to direct costs
• 2.1.2 Expenditures that are related to indirect costs
• 2.1.3 Applying Pareto analysis to expenditures and key suppliers

2.2 Compare and contrast the tools and techniques that can be applied to map categories of direct and indirect expenditure

• 2.2.1 Matrices
• 2.2.2 Supply chain mapping
• 2.2.3 Porter’s 5 forces model
• 2.2.4 Market share/market growth
• 2.2.5 STEEPLED and SWOT
• 2.2.6 Technology route maps

3.0 Understand the strategic impact of a category management process

3.1 Analyse the data required for the development of a category management process

• 3.1.1 Historical and forecasted data on categories of spend
• 3.1.2 Demand patterns for category groups
• 3.1.3 Current contracts with suppliers and terms that are being applied
• 3.1.4 Reviews of existing relationships and performance
• 3.1.5 Market trends

3.2 Examine the requirements for initiating and preparing the introduction of a category management process

• 3.2.1 Producing category hierarchies for both direct and indirect expenditures
• 3.2.2 Applying portfolio tools to map the categories of expenditures
• 3.2.3 Creating total cost models for category management
• 3.2.4 Conducting stakeholder needs analysis
• 3.2.5 Forming cross functional teams and preparing responsible, accountable, consultative, and informing roles within the team
• 3.2.6 Reviewing the implications of existing legislative requirements and standards

3.3 Analyse supply market factors that impact on the development of a category management process

• 3.3.1 Analysing industry dynamics, competitiveness, and pricing behaviour
• 3.3.2 Analysing financial data on potential suppliers
• 3.3.3 Using requests for information (RFIs) to assess market factors
• 3.3.4 Conducting impact assessments of CSR/sustainability factors
• 3.3.5 Conducting supply chain and value chain analysis
• 3.3.6 Analysing supplier perceptions

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