As director of Category Management Strategic Execution, Steven Krauss is charged with formulating the General Services Administration's plans to implement new best practices when it comes to acquisition. Krauss spoke with Senior Staff Reporter Carten Cordell about how GSA is improving how it spends on procurement, manages its supply chains for better efficiency and will navigate the future of category management.
So you've been with GSA for a year now, can you talk about how things have progressed since you arrived?
So yeah I just passed my 10-month mark here and it's been a very exciting time to be here at GSA and in the federal government. When I say that it's been very exciting, part of the reason for that is you have to remember as we talk about these things today that most of what we're talking about doing are things that have never been tried at this scale here in the federal government or anywhere in the public sector, so it's been very exciting from that standpoint.
So, to take a step back and walk through what we've done over the last 10 to 12 months, we basically defined 10 large categories of spend that account for about $272 billion in annual spending across the federal government. OMB then went ahead and named category managers for those 10 super categories, if you will, and those category managers in turn built teams of experts from across the rest of the federal government to begin the process of analyzing the spend and looking for opportunities within that spend portfolio. And those category teams accounted for about 350 people across 46 different departments and agencies getting involved in this process.
So one of the things that's been really exciting about this is just the level of collaboration that's been occurring across government, which is really relatively unprecedented. Those category teams in the category managers then went ahead and developed category plans, basically they took a look at the spend across government within those categories. They developed initial strategies, policies and ideas for ways that we could do a better job spending taxpayer dollars. Those category plans have been approved by OMB and by a governance body called the Category Management Leadership Council that is chaired by OMB and the Office of Federal Procurement Policy.
We're now in the process of starting to implement those plans. Along the way, we've already developed and implemented a number of policies that are showing promise and in some cases delivering real savings for the taxpayer. That includes policies like the laptop desktop policy that OMB released late last year that essentially standardizes the configurations of laptops and desktops that most agencies should be buying as well as things like the consolidation of the professional services schedule that makes it easier for our industry partners to do business with the government, but also makes it easier for the government to specify and buy professional services and other things like new vehicles that have been awarded in the area of human capital and facilities and construction.
If you had to explain category management in layman's terms, how would you define it and its benefits for the federal government?
So in terms of explaining category management in sort of lay terms, there's a couple of things that I think are important here. The first is that category management is really about getting our hands around the data. It's about understanding how we're spending taxpayer dollars, what we're spending it on and then taking a thoughtful look at it, analyzing that and understanding how we can spend that money more effectively.
First of all there's a couple things that are really fundamental to category management. One is that we're trying to get our hands around the data that's associated with how we're spending money trying to take a thoughtful and analytical look at the way that that money's being spent and figure out ways to spend it better or make better use of it on behalf of taxpayers. One way of explaining this in ways that that I think a lot of non-procurement people would understand is to think about even the way that you and I as consumers spend our money. I don't know about you but a lot of people like myself have credit cards and work with credit card companies that send us reports at the end of the year about how we spend our money through that credit card. So I get a reporting on an annual basis that shows how much money I spent on groceries, how much money I spent on clothes, how much money I spent on travel and things of that nature. And I'm oftentimes a little surprised at how exactly I spent my money.
The other thing about category management that I think is important for people to understand is that it's really about developing constructive more meaningful and better aligned relationships with industry and with the markets that we're buying from. So that's a big part of what we're trying to do, the opportunity to change the relationship that the government has with its suppliers from being one that is primarily adversarial or combative in nature to one that is more collaborative is something that we take very seriously and that's important aspect of what we're trying to do with category management. I guess the last thing that I would say is that it's important to understand and realize and keep in mind that when we talk about category management, we're really talking about an industry best practice. We're talking about something that has been implemented across most Fortune 500 companies over the last 20 to 25 years. It's something that was implemented are broad scale within the U.K. government about 10 years ago. And so it's a proven process and a proven organizational framework for procurement operations.
Can you talk about what role the Office of Strategy Management plays in determining the category management strategy and helping shape the federal government's approach?
So here at GSA, what we've done is we've stood up a program management office within the Office of Strategy Management. What we do within that PMO is we support OMB and we support the 10 category managers, what that means is that we do a lot of the data analysis, helping to support the development and recommendation of strategies. We're helping to facilitate category team meetings and all of the outreach and the operations required to make the category management program run.
So you've had a lot of experience in the private sector in improving supply chain management. What's it been like applying theses best practices to the federal government, which is an entirely different animal?
Well, I would say first of all that a lot of the challenges that exist in the federal government are the same challenges that exist in private industry when it comes to improving supply chain operations, getting your hands around the data, getting stakeholders on board to buy into new strategies and ways of doing business, just being able to fundamentally understand what you're spending money on and how that relates to the business objectives that you're trying to achieve.
The key difference between doing this in government versus doing it in the private sector is just the size, the scale and the complexity of the environment that we're talking about. I mean, to put it in context here within the federal government, as I mentioned, we're operating on a scale about $275 billion in annual spend. Companies like IBM and Johnson & Johnson — who do this on a regular basis — are operating on spend scales that are one-tenth to one-fifth that size. So in the federal government, we also have a very complex set of stakeholders and a variety of missions and people who need to be informed and kept abreast of what's going on. There's also some differences between the federal government and private sector with regards to our focus on different types of socioeconomic interests. So our focus on small business and how category management affects small business and affects small disadvantaged businesses and the like within the federal government is fairly intense. It's something that is one of the five key metrics that we focus on in evaluating the success of any of our categories in the category of management strategies.
Can you talk about some of the new strategies that you are hoping to roll out over the course of the year?
Well absolutely. So as I mentioned, one of the things that we've already done is we've had all 10 categories get a Version 1.0 of their plan developed, collected and approved by OMB and the Category Management Leadership Council. We're already starting to take a look at Version 2.0 and longer range plans. But there's a number of things that we're really focused on over the balance of this year.
So one of the things that we're really trying to do is find ways to simplify the supply chain, both for government and for industry partners. When I say simplify the supply chain, what I really mean is finding ways that people can reuse solutions that already exist, whether they be contract vehicles that are in place, statements of work and other things that people already find success with. And a lot of our industry partners have expressed an interest as well in this kind of simplification because a lot of our industry partners spend a lot of their time chasing after a lot of solicitations and contracts that are oftentimes duplicative and sometimes don't even really get used very much by the government. So we're really looking for ways to simplify the supply chain.
Another thing that we're going to do is we're really going to focus on inviting more people to join the dialogue associated with category management. So this is both on the industry side and on the government side. What people can expect to see is that we're going to be publicizing the elements of these category plans, we're going to be making them available for public comment, we're going to be engaging in industry events as well as events with government agencies to explain the reasoning and the logic and to engage in a dialogue about what we're doing and why we're doing it and what we think the benefits are to all parties involved.
The final thing that we're also working to do is improve our data and improve our ability to analyze and assess that data. So as I said earlier, everything that we're doing related to category management comes back to the data, getting our hands around it and understanding what the data is trying to tell us. We know that there's a lot of things that we can do to improve the quality of the data and our analysis of that. Some of that involves getting additional data feeds into what we're analyzing, different types of data including purchase car data, including data from transportation and logistics tenders and other things that we don't find currently in the [Federal Procurement Data System]. But also there's opportunities to do a better job of cleaning and classifying the data so that we can make sure that we're making the right decisions and then tracking the right results based on those decisions. So those are the kinds of things that we're looking to do over the course of the next six months and probably on into 2017.
So with a new administration coming in January, where is category management headed next and what benefits will it provide the next president?
So as you can imagine, we're spending a lot of our time thinking about this and where we need to be by the time the next administration takes over. So there are a few key things that we're working on right now. One is that we're really aiming to have a solid track record of delivering on the things that we say we're going to deliver on. So, when I say that we've got Version 1.0 of the plans sort of baked and done, right now what we're really focused on is making sure that we're executing against those plans across all 10 categories and that we're achieving the results that we say that we're able to achieve with those plans.
Now, at the same time, we're also actively developing longer range plans. So the initial plans that we developed were really focused on what you might call the low-hanging fruit — things that we felt that we could implement and achieve over the course of calendar year 2016. But now we're starting to turn our attention to what things can we add to that and what that might that look like in 2017 and what might that even look like over the course of a two- to three-year-period. You know, at the end of the day, as we look at transitioning to a new administration, I don't think any of us are really afraid that category management is not going to be a part of the next administration's agenda. Because it simply makes good business sense. It's an industry best practice. It's something that people are doing throughout the procurement world already, and it's something that is integral to being able to manage the business of government better.
But I do think that as we transition to a new administration, there may be tweaks, there maybe some changes in priorities and so one of the things that we're going to do is just make sure that we keep an open mind and that we are ready to help the next administration achieve whatever objectives they want to achieve using the toolset that we're building right now.
