Category management is a fascinating component of spend strategy in distribution, and one that seems to be considerably under-utilized by the industry at large.

This was the topic of our latest MDM Podcast episode, which kicked off our ninth season of the series.

It featured a conversation with Steve Gettleman, who has 30 years of experience in distribution, including 18 at MSC Industrial Supply (2001-2019), with the last 8 of those as its Senior Director of Category Management. Today, Gettleman leads SG Consulting Services, which provides category strategy, supplier management, and private brand development consulting for distributors and manufacturers.

We explored the ins and outs of category management, which Gettleman emphasized most distributors aren’t taking nearly the advantage of that they should — thus leaving profits on the table.

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It was a great follow-up to MDM’s Virtual Profitability Summit on July 19, which our entire audience can now view on-demand. Personally, it was also a great learning conversation for me, as my knowledge about category management was quite limited. So, I really appreciated Gettleman breaking down category management to its basics.

To put it at its most simple, Gettleman described category management as the process of developing and executing a category-specific spend strategy or purchasing plan, but goes far beyond the historical purchasing role. He made the distinction that although it is a spend strategy, category management is a very forward-facing one that is it is centered specifically on the customer and the market. And developing these plans involves developing a thorough understanding of the customers — who they are, how they buy, what they buy currently, what they will be buying in the next few years, and other elements of the category landscape.

Overall, it involves having a very considered thorough understanding of the customer and the market, which is then translated back to a purchasing strategy.

And the benefits of all of this?

“The payoff for taking this approach is really huge in terms of the increased supplier investments that can be achieved; the process of optimizing your selling mix selling more of what you make the most money on; and ensuring that companies are capitalizing on their full pricing opportunity,” Gettleman detailed. “As you might imagine, taking this approach to engage with the supply base creates considerably more value than the traditional purchasing role, which is primarily considered with inventory terms and fill rate, which are critically important, but fairly limited in their scope.”

Gettleman spent a year as Vice President of Global Private Brands at electrical products distributor ADI Global Distribution before starting SG Consulting in July 2021.

His passion for the topic of category management was apparent in our discussion, which covered the ins and outs of what it is and why having a formal program for it can be a lucrative margin-growing opportunity for distributors.

“Most (distributors) simply have not dedicated any significant amount of time to developing these category strategies,” he said. “And as a result of that, they are leaving a huge amount of profit dollars on the table. Profit dollars that exist in the supply chain, but that are being claimed by others, not the distributor.”

Check out the full episode via the audio player above, and see all of our previous MDM Podcasts at our webpage for them here.

Want to learn more? Contact Steve at steve.gettleman@sgsglobal.com and check out SG Consulting Services here.