# Category Strategy: [Category name], [Period]

> Multi-year plan for one spend category: spend analysis, internal
> requirements, supply market analysis, portfolio positioning with the
> Kraljic matrix, sourcing strategy, savings and risk levers, and an
> implementation roadmap. Built from established category management
> practice and the purchasing portfolio model in Kraljic (1983).
> Replace every `[bracketed]` value and every row marked *Example*.

<!--
Guidance: How to use this template
- Purpose: decide how to buy a category for the next [2 to 3] years
  so that individual sourcing events follow a deliberate plan instead
  of reacting to each renewal.
- Work in order: data first (sections 1 and 2), then market (3), then
  positioning (4), then the strategy (5 and 6). Writing the strategy
  before the spend analysis is the most common failure.
- Use segments inside the category: one category usually contains
  strategic, leverage, bottleneck and non-critical items, and each
  needs a different approach.
- Worked example: the fictional Corvanna Instruments Ltd, electronic
  components category, total addressable spend GBP 44.9 million of
  which electronic components are GBP 11.8 million. Figures are
  computed and marked *Example*.
- Related templates: Procurement Policy (`procurement/procurement-policy`),
  Contract Register (`procurement/contract-register`), Supplier
  Performance Review (`procurement/supplier-performance-review`), RFI
  (`business/rfi`), RFP (`business/rfp`), Five Forces card
  (`mba/mba-five-forces-card`), PESTLE Analysis
  (`business/pestle-analysis`), TCO Analysis (`architecture/tco-analysis`),
  Sourcing and Procurement card (`mba/mba-sourcing-procurement-card`).
-->

## Document control

<!-- Guidance: A category strategy is approved by the budget owners who will live with it, not only by procurement. -->

| Field | Value |
|---|---|
| Document ID | [CAT-NNN] *Example:* CAT-ELEC-2027 |
| Category | [Name] *Example:* Electronic components |
| Strategy period | [Start to end] *Example:* 2027 to 2029 |
| Category manager | [@name] |
| Stakeholders | [@engineering], [@operations], [@quality], [@finance], [@sustainability] |
| Approved by | [@cpo], [@coo] |
| Status | [Draft / Approved] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential] |

### Revision history

| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@name] | Spend analysis and market review |
| 1.0 | YYYY-MM-DD | [@name] | *Example:* Approved with dual-sourcing plan for sensor modules |

## 1. Spend analysis

<!-- Guidance: Use 12 to 24 months of invoice and PO data, cleaned for supplier duplicates and classified to one taxonomy. Questions: who buys, from whom, how much, under which contract? Pitfall: analysing PO data only and missing card and no-PO spend. -->

Organisation-wide view (*Example*, last 12 months, GBP thousand,
excluding VAT):

| Category | Spend | Share | Cumulative share |
|---|---|---|---|
| Machined and cast parts | 14,200 | 31.6% | 31.6% |
| Electronic components | 11,800 | 26.3% | 57.9% |
| Logistics and freight | 4,600 | 10.2% | 68.2% |
| IT software and cloud | 3,900 | 8.7% | 76.8% |
| Packaging | 3,100 | 6.9% | 83.7% |
| Facilities services | 2,700 | 6.0% | 89.8% |
| Professional services | 2,400 | 5.3% | 95.1% |
| Travel | 1,300 | 2.9% | 98.0% |
| Office and MRO supplies | 900 | 2.0% | 100.0% |
| **Total** | **44,900** | **100%** | |

Electronic components by supplier (*Example*, GBP thousand):

| Supplier | Spend | Share of category | Contract |
|---|---|---|---|
| Daskivo Electronics GmbH | 5,300 | 44.9% | CTR-002 framework, notice deadline 2027-01-01 |
| Fennick Components Ltd | 2,600 | 22.0% | Supply agreement |
| Arlowe Distribution Ltd | 1,500 | 12.7% | Distributor terms |
| Long tail, 34 suppliers | 2,400 | 20.3% | Mostly POs without contract |
| **Total, 37 suppliers** | **11,800** | **100%** | |

Electronic components by segment (*Example*, GBP thousand): custom
sensor modules 3,900; microcontrollers and memory 2,700; printed
circuit board assembly (PCBA) 2,400; standard passives 1,900;
specialist connectors 900. Total 11,800.

## 2. Internal requirements

<!-- Guidance: Interview the stakeholders. Record what they need and what they fear, and the constraints they cannot change. -->

| Stakeholder | Need or constraint |
|---|---|
| Engineering | *Example:* Sensor modules are designed in; changing supplier requires 9 to 12 months of requalification |
| Operations | *Example:* 12-week lead time on microcontrollers; buffer stock at 8 weeks |
| Quality | *Example:* Components must be traceable by lot; counterfeit risk from brokers |
| Finance | *Example:* Cost reduction target of 3% on category spend per year |
| Sustainability | *Example:* RoHS and REACH declarations on every part; Scope 3 data from top suppliers |

## 3. Supply market analysis

<!-- Guidance: Describe the market from the supplier's point of view: capacity, concentration, cost drivers, and how attractive your business is to them. Use Five Forces and PESTLE for structure. Pitfall: listing suppliers without any view of their power or cost drivers. -->

| Factor | Finding |
|---|---|
| Market structure | *Example:* Sensor modules: two qualified producers globally. Microcontrollers: several manufacturers, sold through authorised distributors |
| Cost drivers | *Example:* Wafer capacity, precious metals in passives, freight and energy |
| Capacity and lead times | *Example:* Lead times normalised in 2025 after the 2021 to 2023 shortage; allocation risk on specific nodes remains |
| Supplier power | *Example:* High for sensor modules, low for passives and PCBA |
| Regulatory and geopolitical | *Example:* Export controls and sanctions screening on dual-use items; forced labour import rules for upstream minerals |
| Our attractiveness | *Example:* Mid-size buyer; core customer for Fennick, minor customer for Daskivo |

See `mba/mba-five-forces-card` and `business/pestle-analysis` for the
full analysis.

## 4. Portfolio positioning (Kraljic matrix)

<!-- Guidance: Score each segment on profit impact (spend, effect on product quality and margin) and supply risk (number of suppliers, switching cost, scarcity). Agree the scores with stakeholders. The quadrant decides the playbook. -->

```mermaid
quadrantChart
    title Electronic components segments, Corvanna example
    x-axis Low supply risk --> High supply risk
    y-axis Low profit impact --> High profit impact
    quadrant-1 Strategic
    quadrant-2 Leverage
    quadrant-3 Non-critical
    quadrant-4 Bottleneck
    Sensor modules: [0.85, 0.85]
    Microcontrollers: [0.35, 0.7]
    PCBA: [0.4, 0.65]
    Passives: [0.25, 0.2]
    Connectors: [0.75, 0.25]
```

| Segment | Spend (GBP k) | Profit impact | Supply risk | Quadrant | Playbook |
|---|---|---|---|---|---|
| Sensor modules *(Example)* | 3,900 | High | High | Strategic | Partnership, long-term agreement, joint development, second source qualification |
| Microcontrollers and memory *(Example)* | 2,700 | High | Low | Leverage | Competitive tender among authorised distributors, volume consolidation |
| PCBA *(Example)* | 2,400 | High | Low | Leverage | Tender, should-cost model, multi-year price agreement |
| Passives *(Example)* | 1,900 | Low | Low | Non-critical | Catalogue, consolidate long tail into one or two distributors |
| Specialist connectors *(Example)* | 900 | Low | High | Bottleneck | Standardise designs, safety stock, qualify alternatives |

Kraljic positions are relative and change over time; reposition at
each annual refresh.

## 5. Sourcing strategy and levers

<!-- Guidance: For each segment state the lever, the expected benefit and how it was estimated. Savings are estimates until contracted. Pitfall: counting the same saving twice across two levers. -->

| Lever ID | Segment | Lever | Addressed spend (GBP k) | Estimate | Benefit (GBP k per year) |
|---|---|---|---|---|---|
| LEV-01 *(Example)* | Passives and long tail | Consolidate 34 long-tail suppliers to two authorised distributors | 2,400 | 6% | 144 |
| LEV-02 *(Example)* | Sensor modules and Daskivo framework | Renewal negotiation of CTR-002 with index-linked pricing and volume tiers | 5,300 | 3% | 159 |
| LEV-03 *(Example)* | Specialist connectors | Standardise connector families across products (design-to-value) | 900 | 12% | 108 |
| | | **Total** | | | **411 (3.5% of 11,800)** |
| LEV-04 *(Example)* | Sensor modules | Qualify a second source to reduce supply risk (no saving counted) | 3,900 | Risk | n/a |

LEV-01 spend includes the passives bought from the long tail; LEV-02
covers Daskivo spend across segments. The two do not overlap because
Daskivo is not in the long tail.

## 6. Risks, sustainability and supplier relationships

<!-- Guidance: Name the risks that would break the strategy and the mitigations. Link sustainability commitments to sourcing criteria. -->

| Risk ID | Risk | Mitigation |
|---|---|---|
| CR-01 *(Example)* | Sole source for sensor modules | LEV-04 second source, 16 weeks safety stock, last-time-buy clause |
| CR-02 *(Example)* | Counterfeit parts from brokers | Buy only from manufacturers or authorised distributors; broker purchases need quality approval |
| CR-03 *(Example)* | Missed CTR-002 notice deadline (2027-01-01) | Decision at the November 2026 category board; tracked in `procurement/contract-register` |
| CR-04 *(Example)* | Forced labour in upstream mineral supply | Supplier Code of Conduct flow-down and smelter due diligence questions in the RFP |

Sustainability criteria for the RFPs in this category: material
declarations, product carbon data and code of conduct acceptance,
weighted at 10% as required by the procurement policy for high-impact
categories.

## 7. Roadmap

<!-- Guidance: Turn levers into dated sourcing events, owners and approvals. Align dates with contract notice deadlines. -->

| Milestone | Date | Owner |
|---|---|---|
| *Example:* Category board decision on CTR-002 (renew or re-tender) | 2026-11-20 | [@category-manager] |
| *Example:* Notice or option exercise on CTR-002 | By 2027-01-01 | [@legal] |
| *Example:* Distributor RFP for passives and long tail (LEV-01) | 2027-Q1 | [@buyer] |
| *Example:* Connector standardisation workshop (LEV-03) | 2027-Q1 | [@engineering] |
| *Example:* Second source qualification start (LEV-04) | 2027-Q2 | [@quality] |
| *Example:* Strategy refresh | 2027-Q4 | [@category-manager] |

## 8. KPIs and references

<!-- Guidance: Track the strategy, not just the savings. -->

| KPI | Baseline | Target |
|---|---|---|
| Suppliers in category | *Example:* 37 | 12 |
| Spend under contract | *Example:* 79.7% | 95% |
| Contracted savings | *Example:* 0 | GBP 411k per year by end 2027 |
| Segments with two qualified sources | *Example:* 3 of 5 | 4 of 5 |

*Example* baseline: spend under contract = (11,800 - 2,400) / 11,800 =
79.7%, treating the long tail as uncontracted.

References:

- Kraljic, P. (1983). Purchasing must become supply management.
  *Harvard Business Review*, September 1983 issue.
  https://hbr.org/1983/09/purchasing-must-become-supply-management
- Caniëls, M. C. J. and Gelderman, C. J. (2005). Purchasing strategies
  in the Kraljic matrix: a power and dependence perspective. *Journal
  of Purchasing and Supply Management*, 11(2-3), 141-155.
  https://doi.org/10.1016/j.pursup.2005.10.004

## Standard and licence note

Based on established category management practice and the purchasing
portfolio model published by Kraljic (1983), described in original
words; no publisher text is reproduced. Corvanna Instruments, its
suppliers and all figures are fictional. The text is original.
Template licence: MIT.