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Organizations with Category Management Programs Have Shorter Supplier Lead Times
Organizations with category management programs in procurementhave significantly improved supplier lead times as well as faster purchase order (PO) processing. APQC Open Standards Benchmarking in procurement shows that organizations that have initiated categorymanagement programs have a median supplier lead time of only six days compared to 28 days for those organizations that have not initiated category management programs (Figure 1). For PO processing,those organizations that have initiated category management programs show a median turnaround time of eight hours versus a median 72 hours for those organizations that have not initiated categorymanagement programs (Figure 2).
Investment in Category Management and Average Supplier Lead Time
Average supplier lead time
35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Percentile 25 4.0 14.0 6.0
28.019.0
30.0
Median
Percentile 75
Have initiated category management
Have not initiated category management N = 71
Figure 1
Page 1 of 3 Research provided by APQC, the internationalresource for benchmarks and best practices K02693 ©2011 APQC. ALL RIGHTS RESERVED
Investment in Category Management and Cycle Time to Place a Purchase Order
Cycle time to place purchase order(in hours)
120.0 100.0 80.0 60.0 40.0 20.0 0.0 2.0 Percentile 25 24.0 8.0 Median 24.0 72.0
96.0
Percentile 75
Have initiated category management
Have not initiated category management N= 73
Figure 2
CATEGORY MANAGEMENT AS A SUCCESSFUL PRACTICE
Category management involves strategically developing, assessing, and monitoring procurement and supplier performance in specificsupplier categories. These categories are then more manageable from an organization’s procurement perspective because each category requires similar market intelligence, sourcing strategies, and...
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