To better reflect commodity purchasing costs for its consumer automotive division, a firm separates inventory purchasing into "repairable parts" versus "consumable parts." This is an example of
Understanding the Context: The firm differentiates inventory purchasing into "repairable parts" and "consumable parts" for its automotive division.
Category Management Definition: Category management involves dividing products into discrete groups or categories and managing each category as a business unit.
Application to Inventory: By separating the inventory into repairable and consumable parts, the firm applies category management principles to better manage costs and supply chains tailored to each category's unique requirements.
References
CIPS. (n.d.). What is Category Management?
SCMDOJO. (n.d.). Benefits and Challenges of Category Management in Procurement.
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