Category Management Strategy: Frameworks, Examples and the 4 Ps 

Explore category management strategy frameworks and the 4 P’s of CM (Purpose, Position, Portfolio & Plan), with some typical examples. 

Introduction: Why Category Management Needs Strategy

You’ve probably already noticed: sourcing cycles are faster than ever. Contracts are more tightly governed, spend is more visible, and procurement execution has become markedly more efficient. Yet in volatile markets, with growing regulatory pressure and heightened scrutiny from finance and the board, execution alone is no longer enough. The critical question is not how well procurement delivers, but whether it is executing the right strategies in the first place. This is where category management strategy comes into play. It shifts the focus from tactical sourcing and isolated negotiations to strategic category management—a disciplined approach to translating business objectives, risk appetite, and market realities into clear, category-specific decisions. In doing so, category management strategy becomes the bridge between what the organisation needs to achieve and how procurement delivers it. 

 What Do We Mean by “Category Management Strategy”? 

A category management strategy is not a sourcing plan, nor is it a single negotiation or tender exercise. It is a deliberate, long-term plan for how an organization will manage a specific category of spend over time, taking account of business objectives, demand patterns, supply market dynamics, risk, and value opportunities. While sourcing events may form part of that strategy, they are only one of several levers available. 

What distinguishes category management strategy from tactical sourcing is its time horizon and scope. Rather than focusing on securing the best outcome from the next contract, it considers how the category should be shaped, governed, and supplied over multiple years. This requires cross-functional input from business owners, finance, legal, and operations, and a broader definition of value that extends beyond unit price to include total cost of ownership, resilience, compliance, sustainability, and performance. 

In practice, category management strategy provides the context and direction for procurement execution. It clarifies where competition makes sense and where partnership is more appropriate, where flexibility is required and where standardisation adds value, and how trade-offs between cost, risk, and control should be managed. In this sense, it is the connective tissue between organisational priorities and day-to-day procurement activity. 

Category Management Frameworks & Maturity Models

Over time, a small number of category management frameworks and maturity models have become widely used across industries. While terminology and emphasis vary, these approaches share a common purpose: to help organizations move from reactive sourcing towards more deliberate, value-led category strategies. Importantly, they are not mutually exclusive. Most mature procurement functions combine elements of several frameworks rather than following a single model rigidly. 

Classic Category Management framework 

The most widely recognised approach is the classic category management lifecycle, reflected in guidance from bodies such as the Chartered Institute of Procurement & Supply. While often expressed in different ways, it typically follows a logical sequence: spend and demand analysis, supply market analysis, category strategy development, execution through sourcing and contracting, and ongoing review and refresh. 

The strength of this framework lies in its simplicity and discipline. It reinforces the idea that category management is a continuous process rather than a one-off event, and that strategy should be informed by both internal demand and external market realities before execution decisions are made. 

Category management maturity models 

Many organizations also use maturity models to assess how far they have progressed in their category management journey. These models typically describe a progression from tactical, transaction-focused sourcing, through strategic category management, towards more value-led or outcome-driven approaches. 

At lower levels of maturity, categories are managed opportunistically, with limited cross-functional input and a strong focus on short-term cost savings. As maturity increases, category strategies become longer-term, more data-driven, and more closely aligned with business objectives, risk appetite, and value creation. Maturity models are particularly useful for setting realistic expectations, helping organizations prioritise capability development rather than attempting to adopt “best practice” in one step. 

Category portfolio approaches 

Portfolio-based frameworks are commonly used to differentiate category strategies rather than apply a one-size-fits-all approach. The most familiar example is risk-versus-value segmentation, often associated with the Kraljic model, which distinguishes between strategic, leverage, bottleneck, and routine categories. 

While often oversimplified, portfolio approaches remain useful as a starting point for thinking about where to prioritize management attention, resilience, and collaboration. In practice, many organizations extend these models to reflect additional factors such as supply volatility, regulatory exposure, or ESG risk, using them as a guide to strategy design rather than a rigid classification tool. 

Putting frameworks into perspective 

Taken together, these frameworks provide structure, shared language, and strategic intent, but they are not category strategies in themselves. Their real value lies in helping procurement teams ask the right questions, make explicit trade-offs, and adapt their approach to various categories and levels of maturity. This is where a more focused strategy design lens, such as the 4 Ps of category management strategy, can help translate frameworks into practical, category-specific decisions. 

The 4 Ps of Category Management Strategy

While category management provides the process and governance for managing spend, category management strategy requires a clear way of structuring strategic thinking before execution begins. The 4 Ps framework offers a practical lens for doing so. Rather than starting with sourcing tactics, it prompts procurement teams to work systematically from intent, through scope and market reality, to execution. The simplicity of the model is deliberate: each “P” answers a distinct strategic question, and together they provide a coherent structure for designing category strategies that are aligned, defensible, and actionable. 

Purpose: What is this category meant to deliver for the business? 

Purpose defines why the category matters and what success looks like beyond procurement metrics. This includes alignment to business objectives such as growth, margin protection, resilience, compliance, innovation, or sustainability, as well as any non-negotiables driven by regulation, brand, or risk appetite. Being explicit about purpose helps avoid generic strategies and ensures that trade-offs between cost, risk, and value are made consciously rather than by default. 

Portfolio: What is in scope, and how is demand structured? 

Portfolio clarifies the shape of the category itself. This includes defining scope, understanding demand patterns, identifying opportunities for aggregation or standardization, and mapping the supplier landscape. Decisions at this stage determine whether the category is managed as a single global strategy or segmented into sub-categories, regions, or demand clusters. A clear portfolio view prevents over-simplification and ensures that strategy reflects how the category is actually consumed and supplied. 

Position: How is the organisation positioned in the supply market? 

Position addresses external reality. It considers supply market dynamics, supplier power, capacity constraints, substitution risk, regulatory exposure, and broader geopolitical or ESG risks. This perspective helps determine where the organisation has leverage, where it is dependent on suppliers, and where resilience or partnership should take precedence over competition. Without a clear view of position, category strategies risk being aspirational rather than executable. 

Plan: How will the strategy be delivered and governed? 

Plan translates intent into action. It defines the sourcing and non-sourcing levers to be used, the governance model, timelines, and success measures. This may include decisions on contracting approaches, supplier relationship models, risk mitigation actions, and performance KPIs. Crucially, the plan ensures that the strategy is not only well designed, but also owned, monitored, and adapted over time. 

The whole is greater than the sum of the parts! 

Taken together, the 4 Ps provide a balanced and disciplined way of designing category management strategy. They ensure that execution is grounded in purpose, shaped by demand and market reality, and governed over time. Used consistently, the framework helps procurement teams move from tactical activity to strategic intent, and makes category strategies easier to explain, challenge, and refine across the wider organisation. 

A Couple of Examples of Category Management Strategies

Example 1: IT Services (global, knowledge-intensive category) 

Category context: IT services typically span application development, infrastructure support, cloud migration, cybersecurity, and specialist consulting. Demand is often fragmented across business units, projects, and geographies, with heavy reliance on a mix of global systems integrators, regional providers, and niche specialists. Skills scarcity and rapid technology change add further complexity. 

Spend profile and risks: Spend is usually significant and fast-growing, but poorly consolidated, with limited transparency on rate cards, utilization, or total demand. Key risks include supplier lock-in, cost escalation through change requests, dependency on scarce skills, delivery risk on critical programmes, and data security or regulatory exposure. 

Strategic objectives: The category strategy typically aims to improve cost predictability and transparency, reduce dependency on a small number of suppliers, secure access to critical capabilities, and support digital transformation without compromising security or compliance. Speed and flexibility are often as important as headline savings. 

Chosen sourcing levers: Rather than a single large tender, organizations often adopt a: demand rationalisation and clearer service definitions; tiered supplier models separating strategic partners from specialist providers; rate benchmarking and outcome-based pricing where feasible; and framework agreements that balance flexibility with control. Strong governance and stakeholder engagement are critical. 

Expected outcomes: The expected benefits extend beyond cost reduction to include improved resilience through diversified supply, better control over risk and compliance, greater transparency of spend and performance, and improved alignment between IT delivery and business priorities. 

Example 2: MRO (Maintenance, Repair and Operations) 

Category context: MRO covers a wide range of indirect goods and services required to keep operations running, from spare parts and consumables to tools and maintenance services. Demand is typically decentralized, driven by operational needs, and highly sensitive to downtime and service continuity. 

Spend profile and risks: Individually low-value items aggregate into a large and often poorly managed spend category. Risks include excessive inventory, maverick buying, supplier proliferation, inconsistent specifications, and operational disruption if critical items are unavailable. Price is important, but availability and reliability are often paramount. 

Strategic objectives: The primary objectives are usually to ensure continuity of operations, reduce total cost of ownership, simplify the supplier landscape, and improve visibility and control over demand and inventory, without constraining frontline operations. 

Chosen sourcing levers: Effective strategies often focus less on aggressive re-tendering and more on structural improvements: demand and specification standardisation; consolidation onto fewer, more capable suppliers; vendor-managed inventory; catalogue-based buying; and clear service-level agreements. Digital P2P enablement is often a key enabler rather than the strategy itself. 

Expected outcomes: Well-executed category strategies typically deliver lower overall cost through reduced waste and inventory, improved resilience and uptime, better compliance with preferred suppliers, and reduced administrative effort for both procurement and operations. 

Taken together, these examples show how category management strategy varies significantly by category, even within the same organization. In both cases, clarity of Purpose, a realistic view of the Portfolio, an honest assessment of Position in the supply market, and a pragmatic Plan are essential. The specific levers differ, but the strategic discipline is the same, demonstrating why a structured approach to category strategy design is critical across industries and spend types. 

 Connecting Category Strategy to Sourcing & Execution 

Of course, a well-designed category strategy only delivers value if it is translated consistently into sourcing decisions and day-to-day execution. This is where many organizations struggle: sourcing activity continues, but it is only loosely connected to strategic intent. Closing that gap requires clarity on how category strategy informs sourcing choices, how tactics are aligned to objectives, and how governance and stakeholder alignment are maintained over time. 

How strategy informs sourcing events and contracting 

Category strategy should determine whether, when, and how sourcing events are run, rather than sourcing calendars driving strategy by default. In some categories, this may result in formal competitive tenders; in others, it may point towards renegotiation, supplier development, demand management, or contract extensions to preserve continuity and reduce risk. Strategy also shapes contracting approaches, including contract length, flexibility, risk allocation, and the balance between standardization and bespoke terms. In this sense, sourcing events and contracts are execution mechanisms, not strategic decisions in their own right. 

Aligning sourcing tactics with category objectives 

Effective execution depends on aligning tactical sourcing levers with the objectives defined at category level. If resilience and continuity are priorities, tactics such as multi-sourcing, capacity reservations, or longer-term agreements may take precedence over aggressive price competition. Where cost efficiency or standardization is the primary goal, aggregation, specification alignment, and competitive bidding may be more appropriate. The key is consistency: sourcing tactics should reinforce category intent, not undermine it through short-term or opportunistic decisions. 

Ensuring compliance, governance, and stakeholder alignment 

Finally, category strategy must be embedded into governance and operating rhythms to ensure it influences behaviour beyond the initial design phase. This includes clear ownership of category strategies, defined approval and escalation paths for deviations, and integration with procurement processes such as contract management and procure-to-pay. Ongoing stakeholder engagement is essential, particularly where strategies require changes in buying behaviour or trade-offs between cost, risk, and flexibility. When governance is clear and alignment is maintained, category strategy becomes a practical guide for execution rather than a document that sits on the shelf. 

From Savings to Value: How Category Strategy Drives Outcomes 

So, what does “good” look like in practice? When category strategy is effectively connected to sourcing and execution, the benefits extend well beyond smoother procurement processes. Innovation and supplier collaboration improve as suppliers are engaged within a clear strategic context, enabling longer-term partnerships, joint problem-solving, and access to new capabilities rather than purely transactional exchanges. Risk mitigation and resilience are strengthened through deliberate choices on supplier diversification, contracting models, and contingency planning, reducing exposure to disruption and volatility. 

At the same time, ESG and compliance objectives are more consistently embedded into sourcing decisions and supplier management, rather than treated as add-on requirements, helping organizations manage regulatory, ethical, and reputational risk. Finally, long-term cost and value optimization becomes achievable: not through repeated price pressure, but through better demand management, total cost of ownership thinking, and sustained performance improvement across the category lifecycle. 

Conclusion: strategy as the multiplier for category management 

Designing and sustaining effective category management strategy is not straightforward. Common pitfalls include treating strategy as a static document, over-reliance on short-term cost savings, weak data and assumptions, limited stakeholder buy-in, and the absence of clear performance measurement. When these issues are present, even well-run sourcing activity struggles to deliver lasting impact. 

Leading-practice organizations approach category strategy differently. They treat it as a living discipline, regularly refreshed as markets, risks, and business priorities evolve. In this context, process enables execution, but strategy is what multiplies impact: aligning decisions, guiding trade-offs, and sustaining value over time. As category management matures, this strategic foundation increasingly relies on technology, analytics, and market intelligence to support better insight, faster adaptation, and more confident decision-making, setting the stage for the next phase of procurement capability. A forthcoming article will explore in more detail how AI-driven analytics and decision intelligence can support the design, refresh, and execution of effective category management strategies.