Category Management of Services: A Methodology for Strategically Clustering DoD Installations

Abstract

In an increasingly budget-constrained environment, the Department of Defense (DoD) must maximize the value of fiscal resources obligated to service contracts. According to the Government Accountability Office (GAO) report Strategic Sourcing, published in 2013, over half of procurement spending between 2008 and 2013 was obligated to service contracts. Therefore, this research focused on identifying rate, process, and demand savings for common, recurring DoD service requirements. We developed a methodology to standardize analyses of service requirements to identify relevant cost drivers. Furthermore, a clustering continuum was created to organize services based on proximity between the customer and the supplier base. Utilizing commercial business mapping software, we analyzed the cost driver data, produced visualizations, and illustrated strategic opportunities for category management initiatives. Requirements for Integrated Solid Waste Management (ISWM) within the southern California area were evaluated using the software and methodology to demonstrate practical application.