The Pareto Principle, also known as the 80/20 Rule, states that around 80% of outcomes are

generated by 20% of inputs. In category management, this means that a small number of categories

often account for the majority of total spend. Identifying these high-impact categories allows

procurement professionals to focus resources where they deliver the most value. For example,

managing a few strategic or high-spend categories rigorously may yield more savings and risk

reduction than spreading efforts across all categories equally. The principle reinforces the need for

prioritisation and focus in procurement strategies. While Six Sigma and Porter’s Five Forces are

useful tools in other contexts, they are unrelated to spend distribution. Applying Pareto effectively

helps organisations achieve better results with limited resources by focusing on what matters most.

Reference: CIPS L5M6 Study Guide, p.22