Spend Analysis & Category Management Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Spend Analysis & Category Management flashcards as text
What is the purpose of a category strategy document in procurement?
Answer: To define the sourcing approach, objectives, and action plans for a specific spend category
A category strategy outlines the goals, market analysis, supplier landscape, and tactical plans a procurement team will follow to optimize a specific category.
Which tool is most commonly used to segment suppliers based on supply risk and impact on profitability?
Answer: Kraljic Matrix
The Kraljic Matrix plots suppliers on axes of supply risk and profit impact, classifying them into four quadrants to guide differentiated procurement strategies.
In the context of spend analysis, 'maverick spending' refers to:
Answer: Purchases made outside approved procurement channels or preferred suppliers
Maverick spending bypasses established procurement processes and preferred suppliers, resulting in lost savings opportunities and increased compliance risk.
In category management, a 'category tree' is used to:
Answer: Organize all purchased goods and services into a hierarchical taxonomy
A category tree provides a structured hierarchy that classifies spend into families, categories, and sub-categories to enable consistent analysis and reporting.
What is the primary role of a category council in procurement?
Answer: To bring together cross-functional stakeholders to govern and align on category strategy
A category council ensures that procurement strategies reflect the needs of all internal stakeholders and secures organizational alignment and buy-in for category plans.
Which metric measures the proportion of an organization's total expenditure that is actively managed through formal procurement processes?
Answer: Spend under management (SUM)
Spend under management (SUM) quantifies what percentage of total spend is subject to procurement oversight, which directly correlates with savings realization.
Demand aggregation in category management primarily aims to:
Answer: Consolidate purchasing volumes across business units to increase negotiating leverage
By pooling demand from multiple departments or locations, organizations can present larger volumes to suppliers, resulting in better pricing and contract terms.