A path is made by walking on it. Mart.coms plan for implementation of Essay

A path is made by walking on it. Mart.coms plan for implementation of Category Management - Essay Example In recent years both large and small organizations are seeking to define an appropriate operating model, to establish a strong foundation for execution. The two key dimensions in defining an operating model are process standardization and process integration. As described in Ross et al (Ross 2006), 4 general types of operating models are 1. Diversification (low process standardization, low process integration) 2. Coordination (low process standardization, high process integration) 3. Replication (high process standardization, low process integration) 4. Unification (high process standardization, high process integration) Mart.com’s decision to implement Category Management reflects a significant organizational change in its Procurement process, a strategic decision made by Senior Management, to effectively compete in global market. The focus of this paper is on organizational change and management of the same, when a business undergoes, a significant process change as a result of corporate strategic decision (in our case Category Management). In this paper, we define ‘Category Management’, and its impact on Procurement in the organization’s Supply Chain Management (SCM) process. We briefly define and describe what is under the scope of this study and what primary processes and activities are of importance. We conclude this paper by defining the fundamental principles behind effective Category Management practice, and the process Mart.com need to undergo.... the fundamental principles behind effective Category Management practice, and the process Mart.com need to undergo, considering its current state and what management expects by implementation of Category Management process. Category Management In the overall Source To Pay process, Sourcing has two components – Category Management RFP and contracting In the context of this paper our focus is on Category Management, and what its impact on contracting. RFP process is not in scope for this discussion. As organizations have grown in scale and have become more global, need for Category Management arose from repetitive purchase of products and services with common characteristics. Category Management was introduced as part of strategic procurement needs for the global organization to remove inefficiencies from tactical procurement done by local divisions of an organization. The basic motivation for implementing global sourcing is to achieve synergy in purchasing. This synergy is achi eved when two or more business units combine their buying of similar items to gain higher purchase volumes, better prices and, as a result, competitive advantage through cost efficiency. Synergy is realized as business units exploit their interrelationships, share know-how and resources, coordinate strategies and pool negotiating power (Faes et. al. 2000, Vizjak 1994). The main question in achieving purchasing synergy is how to manage and organize purchases on a corporate level, without losing the proximity benefits of decentralized purchasing. There is a need for balanced approach which takes into consideration the need for having problem-solving capabilities close to where problems occur, cost containment in profit centers, and close relationships in selected collaborative supplier