6 Benefits of Category Management to Grow Your Business

Category management is the optimization of resources for inventory from a strategic standpoint. It involves the process of typecasting products based on the category. Without category management, the whole concept of warehouse business can be a chaotic nightmare for the people processing the orders. The steps in category management can include procurement, branding, and sales in a single category.

Importance of category management

Be it a brick-and-mortar store or an online website for a brand, without category management in place, finding the right product is a tough call for both enablers and customers.

Imagine a customer is looking for a black dress suitable for a cocktail party, and the store has numerous black dresses but none suitable for the occasion. The same customer walks into another store that takes category management initiatives. The store attendant can understand what the customer wants and immediately locates a few dresses in the evening cocktail dress category in black color. Out of the lot, the customer likes a dress but the size is too small. Then within a few minutes, the store can locate the same dress in the correct size from the warehouse and offer to ship it to the customer. The impact the customer has when leaving the second store after entering the first store is created by effective category management.

When category management is not in place, both buyers and vendors will try to arm-twist your business to work as per their terms. Buyers will end up with no or single agreements. Suppliers will try to use the situation to their advantage and jack up the prices to show an imbalance of supply and demand. It is not a good situation for a business. To overcome these issues, a business should consider using category management solutions that can automate the process and map the available merchandise.

Impact of category management on businesses

  • Buying inventory

When you establish a buying consistency as per the patterns of demand, you can prepare and negotiate the terms with the vendor. Enough time at hand will ensure proper supply without any lapses and help in maintaining the days of supply. Prior agreements ensure that suppliers cannot take any undue advantage of the situation.

  • Data extraction

The automation of category management ensures that data is extracted through optical character recognition. Data is ensured to be stored and protected without corruption using productivity tools of automated category management solutions where none of the employees involved can miss the details. With unified storage and easy share transfer, data analytics also becomes easier.

  • Elevated roles

When a category management solution is working in the background, a business or store owner can concentrate on engaging their customers and developing better relationships with their vendors.

  • Unified negotiations

A single category may have numerous items that need not be negotiated for better terms on an individual basis. All of them can be negotiated at the category level instead of a single item or unit level.

  • Track and monitor

Using category management tracking the inventory insights for the fastest moving, most requested but rejected, and least moving items are identified within the category. These details offer multi-lens objectives that decide the future course of action. With help of category management solutions, the decisions related to asset and resource allocation are more well-defined and prominent. It helps in organizing the time and employee allocation required to fine-tune the objective of a category. 

  • Effective changes

Whenever products in a category change due to changes in trends, or suppliers, category management solutions ensure that initial shocks can be absorbed without causing much disruption.

  • Prices

Category management solutions run the algorithm through the variables and integrate it with pricing models and data analytics based on AI-driven metrics before recommending the final price ranges at the category level. It helps the business analyze the category prices and at the cost center level to determine the overall profitability


Category management is not the same as strategic sourcing. Albeit it is a more evolved function and requires complete automation that requires both robotic and AI-driven analytical automation to reduce the errors and aid the category managers to negotiate better deals with the suppliers for the best fit.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.