The time for category management is now
- By Jennifer Glazer, Meredith Barnard
- Jun 07, 2016
The federal government is the single largest buyer of goods and services in the world, with annual spending of approximately $450 billion. “Category management” is what the Obama administration calls its approach to capitalizing on the government’s buying power to save money and improve efficiency and performance.
Used by state and local governments and the private sector for many years, category management now seems to be catching on at the federal level. That is good news for American taxpayers.
Category management shouldn't be an initiative we watch go away with the passing of the current administration. It presents attainable and lasting benefits for all of government because of its focus on the entire acquisition life cycle. It’s time for agency executives to rigorously apply category management practices to demonstrate improvements that can be made in how the government operates, with particular attention paid to the talent and resources needed to support it.
Focusing on governmentwide procurement data. The administration’s initiative not only emphasizes increased use of existing data, but also acknowledges the need for more accurate and detailed governmentwide procurement data. The Office of Management and Budget and the General Services Administration are leading efforts to build a governmentwide spending taxonomy using product service codes.
Those codes don’t align directly with category markets, however, and we must define allocation rules to effectively divide spending between categories and subcategories. Modifying the Federal Procurement Data System to align with a category hierarchy based on market dynamics would make it easier for users to more effectively analyze procurement trends in categories and subcategories.
That action alone would likely accelerate category management planning and execution. The government’s category managers would enjoy data transparency similar to that in the private sector, giving them more influence over spending, demand, buying behaviors, acquisition solutions and supply management.
Professionalizing the procurement workforce. A nice by-product of category management is enhanced capacity among the acquisition workforce. Acquisition professionals now have access to data and market intelligence that help them do their jobs more effectively. Providing such intelligence and assigning acquisition professionals to categories based on their technical expertise enables the workforce to better use existing knowledge of contract types, terms and conditions, and best practices.
And it means acquisition professionals have the opportunity to specialize within a specific category and form trusted partnerships with program and category managers early in the acquisition process, which lends itself to new, distinct career paths.
Enabling enterprise buying. Some say category management mainly benefits GSA and other agencies that administer governmentwide acquisition contracts. The concept of buying as one and actively managing procurement spending across government, however, benefits the whole government, as well as taxpayers.
The focus on managing spending allows agencies to drive that spending to preferred buying channels and encourages continuous improvement of them. It also strengthens the partnership between categories and stakeholders so they can shape best-in-class vehicles, aggregate requirements and drive economies of scale through volume purchases. Agencies can then reinvest their savings to support agency-specific, mission-critical buys, reducing overhead expenses and expediting commodity purchases.
What’s needed now is buy-in from leaders to support the integration of key functions into daily operations. Now a cross-agency priority goal, category management has the platform and attention it needs for performance improvement officers, chief acquisition officers and CIOs to set the vision and criteria for buying as a single enterprise.
There is no “one size fits all” approach, but implementing even a few category management best practices will yield positive results for agencies. If adopted and integrated across the federal acquisition community, with a clear roadmap and centralized governance, category management could significantly transform federal procurement.
Jennifer Glazer is a senior manager at Grant Thornton Public Sector.
Meredith Barnard is a manager at Grant Thornton Public Sector.