The purpose of this coursework is to address the value of category management in the success of customer focused supply string management. How suppliers and suppliers contribute to the success of the idea. This review also focuses on discussing the pros and cons from the same to attain maximum efficiency.
Supply chain giving an answer to the market needs is market oriented supply chain, simply the implementation of marketing concept in supply string. Market oriented firm, segments their markets and differentiates their product and services to keep up and create new customers to defeat the challengers. Scholars describe market focused organizations are those who put customers first, create, eliminate and respond to market brains and the majority of all the actual to exploit their resources towards prime customer value.
Category management is basically a marketing strategy where the complete lines of products, are cured as Strategy Business Device (SBU). This strategical implication helps the administrator, understand and evaluate customers buying behaviour, routine and market trends by focusing on an entire product category. Andy Striefel, now senior vice chief executive of merchandising for Thrifty PayLess, offers his meaning of category management as:
"I see category management as" a person responsibly taking care of the category and every item in the category, from time to time and decision was created to add that item until the last part has left the store, "
Category management is the most known procedure for Efficient Consumer Response (ECR). ECR was initially developed in 1995 to fulfil consumer needs in a better, faster approach at the minimum cost by partnering with the participants in a person oriented supply chain. It helped the stores and provider in eradicating inefficiencies which may have accumulated in programs of supply chain during 80's. ECR was defined as,
"A couple of improvement initiatives has been performed to help food stores and their suppliers to work together, to fulfill consumer wants better, faster and at a less cost" (Jeorg Hofstetter, 1995).
ECR has notion has considerably developing over the past fifteen years and it includes enabled the supply chain partners opt for "low hanging fruits" purging glaring inefficiencies. It optimizes the market oriented supply chain by lessening the inventory levels, optimizes product availableness and address the merchandise quality. The complete conception of ECR depends on relationship that company and retailer share, to optimise stock level. Information showing plays an extremely vital role to its success. The retail campaign, includes regular stock replenishments to meet up with the demand of the buyer rather than turning up by either of two. This is attained by showing of information and knowledge in specific, every once in awhile. End results of effective ECR provide consumer value, eliminates costs that do not add value, maximize value and minimizing inefficiency throughout the source chain.
ECR strategies are performed through both resource and demand part strategies. The essential objective of the source area is to get the merchandise through supply chain to get rid of customers faster and cheaper. For demand side strategies category management is put in place to choose which products should be viewed and sold by the sellers, it doesn't matter how smooth the supply string is. CM deals with a number of what to take in a category, on the basis of type, size, flavours, packages and the region of space to be assigned for every single product. This practise permits the retailer and its own supplier to accomplish critical cost savings and gives more attention on strong customer oriented marketing and merchandising practises. Category management can be well exercised if there is collaborative pooling of complementary knowledge to satisfy customer needs, for which partnering is the essential of effective Category Management. For simple relationship between the retailer and provider they have to contribute equally. Dealer and Retailer have to revise their strategies while partnering for CM to be fruitful.
In the situation of distributor, the professionals in marketing, sales and IT office have to are a team. The aim of CM does not end in extensive knowledge of consumer needs and appropriate promotional programs rather worthwhile retailer's strategies and franchise building efforts. To attain this, Supplier's sales manager has to concentrate not only on building their brand but establishing mutually beneficial strategies through negotiating promotional activities and pricing agreements with sellers. Supplier's manager should assess the whole category and their impact by analysing scanning, demographic, promotion and other information.
With case to retailer, the organizational framework should be altered for CM implementation. This starts with revising their buying, promotional, space and inventory management and each needs to be assigned to separate category managers. These professionals should be authorised to use their certain categories as small company in strategic setting up and execution. Their advances have to evaluated, charted and adjusted if necessary and really should be accountable for the results.
According to Araujo and Mauzas (1995, 1998), CM becomes institutionalized in the context of a supplier-retailer romance, in three periods.
In stage 1, the central focus is brand around which managerial tasks and functions stayed defined. In the next stage, CM emerges as an unbiased staff functions and trial runs of the projects are done. In this process the main function of the staff is to supply the professionals with data and evaluation of data from the trial run. The collected data is scrutinised by the suppliers in headquarters and engaged in further trial runs which replaces the traditional hierarchies and practises are redefined to control whole categories. In the ultimate level, CM becomes the hub of the formal framework between the dealer and merchants. Finally, CM also becomes the functional practise that moulds the whole relations between your supplier and dealer. Such associations are well carried out in the case of large vendors like Carrefour, Wal-Mart etc, to the success of their Category management.
However, it is difficult for shop to built such collaboration with suppliers, they range in power and are situated along a 'relationship continuum' (Gronroos, 1994; Webster, 1992) - with strictly transactional market romance at one end of the spectrum and long-term cooperative relationship at other end. The risk involved with such relations are, better suppliers might respond within an opportunistic manner by compelling self brands within the certain category at the expenses of weaker suppliers, which is unethical and not in line with 'ideal' CM practises. Such situation can be avoided by so called 'category-captain', where suppliers take part in management role. Chosen distributor manages the brands of rivalling supplier simply the entire category. Category captains are prone to bring in all the merchant relevant information such as RFID, RFID etc. At exactly the same time, high chances of dealer misuse their capacity to exempt or erode their rivals, thus restricting competition, price climb, lack of variety etc. Again, to avoid such situations other produces were involved in to the process to be 'category advisors' and 'category validators'. These made cross-checks the recommendations and recommendations set up by the category captain to ensure neutral decisions to be prompted. Suppliers have groups assigned to help sellers with advice and planograms, the diagrams that depicts where in fact the products to the positioned in the shelves for optimum sales and the space assigned for each products.
CM contributes to a ecological competitive advantage because of the increased customer value, loyalty, sharing of information, advanced inventory management etc. Following circumstance have been analysed and it includes helped to comprehend that CM will promise a distinct lasting competitive edge. That is been evident in cases like this wherein, the operation of Nolan's finer food in the San Francisco bay had been threatened with a fresh intruder/competitor in today's market. Who was simply Valumart grocery chain, to open 10 new food and medicine combo centres throughout Nolan's market. Pore over Nolan's recent general market trends and financial consequence shows Category Management as a defence resistant to the encroachment of Valumart. Pilot test initiated by Nolan's on shampoo category uncovered increased in sales. However, further test needed to be run, to execute category management in the most appealing means. Roberto, the tactical administrator of Nolan's produced a set of slow vendors in the category and replaces them with fast moving or new products. The conclusions that may be drawn from the above analysis are CM can be put in place as a competitive strategy.