Case:
Driving growth through category management excellence for Danish distributor.
An assessment of category performance, costs, and profitability has revealed significant potential for a leading Danish distributor across +200.000 products. Enhanced category planning, product lifecycle management, and supplier negotiation strategies will ensure profit margin optimizations.
CoreConsult was brought in to map the existing product and category management processes and analyze performance and potential. The client has seen significant results.
Challenge: Lack of strategic alignment and category performance
The distributor faced significant challenges in category management. The company was highly dependent on its best-selling items, with a long tail of underperforming products and a lack of strategic alignment between commercial strategy and category management.
Additionally, a siloed approach across sales, logistics, procurement and marketing teams was limiting the collaboration and strategic execution.
Approach: From category health check to overview and implementation
The strategy work was structured into three phases:
Situational analysis and ‘health check’:
- A baseline performance analysis and maturity assessment clearly laid out which categories are driving revenue, where they bleed money, and which products are slow-runners. The Cost of Goods Sold also heavily influences the ability to make money across categories.
- Through interviews, we mapped the existing category processes and identified gaps in strategic alignment and governance between departments.
- A deep dive on customers and suppliers shows strong dependency on certain segments but contributing with lower margins.
Setting ambitions right
- We defined an enhanced Category Excellence framework with a focus on category planning, product lifecycle management, and supplier negotiation strategies.
- We developed a strategic roadmap to transition from product-centric to category-centric management.
- We’ve standardized category planning, supplier negotiations, and range reviews, thereby strengthening cross-department collaboration.
Implementation, tools, and new ways of working
- CATMAN tool: We introduced a data-driven tool to help category managers optimize assortment decisions based on “Good, Better, Best” segmentation and better reviews.
- A “New Ways of Working” framework with tools and templates has been developed, including pilot programs with three category managers to test the new processes. A “Train-the-Trainer” model empowered pilot category managers as role models.
- We created a standardized meeting structure to ensure alignment across operational, tactical, and strategic levels.
Results: Profit margin growth and clear strategic focus
First and foremost, strategic goal-setting, alignment, and governance based on thorough business insights are crucial for any company.
In terms of specific results, the expectations and business cases point to:
- Data-driven decisions: The CATMAN tool enables fact-based and faster decision-making across product lifecycle stages.
- Increased efficiency through better standards: The standardized processes reduce decision-making complexity, leading to faster and more strategic category adjustments.
- Profit margin stability: Effective cost control and CATMAN processes will make the profit margin more stable despite the volatile market.
- Clear strategic focus: Clear performance metrics will secure a greater alignment between category strategies and commercial objectives.
- Cultural shift: Improved cross-functional collaboration breaks down silos between sales, logistics, and category teams.
This transformation journey showcases how a structured approach to category management, emphasizing collaboration, data-driven decision-making, and clear governance, can lead to sustained business benefits.
By continuing to build on this foundation, the company is well-positioned for long-term growth and profitability.
