This post, written by Raj Sharma, originally appeared on Public Spend Forum.
World-class private-sector corporate purchasing departments wield significant clout. By building strong capabilities, corporations are able to help set standards, deploy critical capabilities (such as cost modeling), facilitate knowledge-sharing, and manage the sourcing of noncritical common categories.
Benefits include reduced duplication, improved buying power, and enhanced coordination. Unfortunately, the federal government has failed to realize many of these benefits. Often, federal agencies’ purchasing offices, located in headquarters, are weak or powerless and provide limited capabilities beyond writing and administering policy. In cases where some operational capability is present within headquarters’ purchasing offices, it often does not have the power to enforce compliance due to decentralized organizations and budgets.
Going forward, the role of headquarters’ purchasing functions within departments should be redefined to go beyond policymaking to include centralized management of noncritical common categories, management of supplier performance and relationships, and centralized capabilities in key areas such as cost modeling. Merely redefining the role will not be enough, however.
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