Category management can come in handy in anticipating regulatory changes

In collaboration with Dhivya Anand, Senior Research Manager, Pharmaceuticals.

In my last blog post, I had discussed the concept of category management from the point of view of Gelatin market. To recap: Category management is not just about managing costs. It means having access to innovation, information on industry capacity utilization, supply availability as well as risk management; it also involves managing supplier relationships and aligning procurement priorities with that of organizational goals.

Now let us explore how category management could help procurement teams to stay ahead of the regulatory curve.

In the pharmaceutical industry, new market entry and new product launches are completely regulated. Companies need a good understanding of current and future regulatory structures regarding APIs, Formulation and Filling to help them plan their sourcing strategies.

Certain countries prefer that a part of the value chain is actually engaged in the local market in order to encourage local business.  Such regulatory framework triggers regional sourcing, which ends up increasing the number of local suppliers. Procurement teams need to be aware of such factors before entering a market.

On the face of it, trade policy issues might not sound like a "procurement issue" - but it does have a direct bearing on procurement decisions.

If category managers view the function of procurement through the prism of PPV, then for sure regulatory affairs won't be factored in while making procurement decisions. However, this is not the desired state.

The world does not operate in silos. Along with price paid, if category managers also begin to take note of the happenings north and south of the supply chain, then they will begin to develop a holistic view of their respective categories. This is what category management is all about.

Category management would require procurement teams to go beyond the PPV and take into account what's happening in adjacent markets.  Analyzing the whole supply chain and identifying the right regulatory touch points thus becomes critical for most businesses.

Continuous tracking of trade policies and duty structures can potentially offer fresh perspectives to category managers. Policy shifts brought about by various governments creates opportunities for companies to derive value out of informed procurement decisions. And this is possible only through category management.