Procurement classification: the blind spot draining your performance

Too often perceived as an administrative exercise, spend classification is in fact a strategic lever. Poorly designed or outdated, it distorts reporting, clouds data, and prevents teams from effectively managing their markets.

In many international groups, internal growth and diversification have created a patchwork of categories—sometimes hundreds, rarely consistent with one another. Each Business Unit (BU) then improvises mappings with the central classification to produce reports… at the cost of transformed, distorted, and ultimately unusable data for building a true strategy.

But without a consolidated and reliable view, how can Category Managers be expected to develop solid purchasing strategies?

Rethinking Classification as a Strategic Tool

An effective classification must be:

• Intuitive and operational for field teams

• Robust and consistent for central management

• Structured at the right level (ideally level 3, where purchasing strategy becomes relevant)

Building this foundation requires a clear approach: defining “golden rules”, involving Category Managers in a guided co-construction, and anticipating often underestimated IT constraints (multiple ERPs, implementation schedules, transitional solutions).

Case Study: When Harmonization Unlocks Purchasing Strategy

We recently supported a large international group facing this challenge. With more than 50 Business Units resulting from significant diversification, purchasing classifications had proliferated to nearly 750 categories. The problem? Barely 20% were actually useful for new business activities, while the rest were never used.

Each BU submitted quarterly reports to central management, which was forced to impose a common structure. Without a unified system, teams performed mappings between local and group classifications, transforming the data twice before consolidation. The result: distorted reports, impossible to use for building a viable purchasing strategy.

Our mission consisted of:

• Restructuring the classification into four levels, making level 3 the strategic foundation.At this level, purchasing strategy truly takes shape: it enables Category Managers to identify relevant levers, manage performance, and ensure consistent spend visibility across entities. Level 3 must also mirror the supplier market structure — each segment should correspond to a real market as perceived by suppliers. This alignment between internal classification and external reality makes the strategy operational and comparable across the group.

  
  

• Establishing “Golden Rules” to guide the new classification design and ensure long-term consistency.These guiding principles acted as a shared compass for all Category Managers directly involved in redefining segments. They helped ensure uniform granularity, clear hierarchy, and simple naming conventions, while setting governance rules for future evolutions.

  
  

• Organizing collaborative workshops gathering Category Managers and a representative panel of BUs.These sessions helped align strategic vision with operational realities, refine segment scopes, and ensure the new classification met both field needs and group coherence.

• Conducting an in-depth IT assessment of each BU to identify ERP environments, local constraints, and implementation capacity.This analysis also helped pinpoint entities with misaligned classifications and map systems to plan deployment waves. BUs sharing the same ERP and similar configurations were grouped together for smoother integration. Conversely, entities with no classification or flexible systems were prioritized in the first implementation wave.

• Building a pragmatic and sequenced macro-roadmap, aligned with local calendars and priorities, integrating these deployment waves and temporary mapping solutions for entities undergoing ERP migration.

• Securing implementation within an ambitious timeline, ensuring technical and operational feasibility at each step.

This collective effort — involving central teams, Category Managers, and local entities — resulted in a clear, robust, and operational classification, a common foundation now used to reliably consolidate reporting, manage spend, and restore purchasing teams’ strategic impact.

Turning Data into a Competitive Advantage

Rethinking classification is not a cosmetic project — it’s what transforms data into a competitive edge. A clear and shared classification empowers buyers to build their strategies, strengthens executive decision-making, and establishes effective purchasing governance.

What if the performance of your purchasing strategy depended not only on your teams or suppliers, but… on the quality of your foundations?

Every organization faces its own challenges, but all share the same goal: turning procurement into a performance engine.

Contact us to discuss your priorities.

_Youssra MAJID, Purchasing Manager at KLB France