What is the process of dividing organisational spend and suppliers into logical groups called?

The process of dividing organisational spend and suppliers into logical groups is called categorisation. This approach allows organisations to better analyze their spending patterns and supplier relationships by organizing them into identifiable categories based on various criteria, such as the type of products or services, risk levels, or strategic importance.

Categorisation is crucial for effective procurement management as it enables procurement teams to develop targeted strategies that address the specific needs and risks associated with each category. By effectively categorizing spend and suppliers, an organisation can allocate resources more efficiently, negotiate better contracts, and ultimately enhance their procurement performance.

While the other terms like grouping, segmentation, and classification may seem similar, they do not capture the structured approach and strategic intent associated with categorising spend. Grouping might imply a broader assembly without the nuance, segmentation often refers to distinguishing different market segments outside of procurement, and classification can sometimes indicate a more rigid sorting that does not convey the strategic aspect of managing supplier relationships and spend effectively. Thus, categorisation is the term that most accurately reflects the organized, analytical, and strategic process required in procurement contexts.