The importance of management categories in procurement function: The case study of Flexibles packaging in Lavazza

Nowadays, many companies are facing a complex macroeconomic scenario due to the COVID-19 pandemic and the unstable geopolitical scenario related to the conflict between Russia and Ukraine. These events are leading to high inflation resulting in an ever more significant increase in the cost of commodities. Rising commodity and utility prices have made major increases, driving up purchase costs by a large margin. These price increases cannot be passed on to the end customer as it would result in reduced demand, but they need to be diluted throughout the supply chain by collaborating and creating synergies between the parties. The procurement function plays a key role, as it is the glue between the various stages of the supply chain. The procurement function has had to evolve and adapt over the years to the rapid process of globalization and technological innovation. Initially, corporate procurement was often seen as a support activity, limited to price negotiation and contract management. Today the procurement function is seen as a strategic activity that contributes to the overall success of the organization. In companies that operate at a multinational level, as in the case of Lavazza, it is necessary to implement strategies to be more flexible and responsive to uncertain situations in the market, anticipating and mitigating disruptions in the supply chain. However, this is only possible if there is transparency, collaboration, and responsiveness at all levels of the supply chain. Therefore, the purpose of this thesis is to define Category Management, which is a plan of strategic actions in the medium term for a specific product category (i.e., flexible packaging). The first step in creating the category management plan was to analyze the supplier market in order to know the context in which the company operates and then determine the factors that impact the category, maximizing opportunities and minimizing risks. After understanding the industry in which the company operates, it was possible to analyze the current supplier base by assessing their dependencies, performance, risk assessment, and opportunities that each of them brings to the flexible packaging category. From the realization and analysis of the elements listed above, strategic actions emerged to be implemented in order to achieve a positive business result from several points of view. The first aspect that is improved is the financial one, thanks to an optimization of purchasing costs and an increase of bargaining power. Then, the company also achieves improvements from the point of view of sustainability through continuous attention to suppliers by involving them in innovative projects. Finally, these actions also have a positive impact on brand image, as we focus on customer needs by choosing high-quality suppliers and reliable food safety products.