Procurement Needs a Zoning Plan

Imagine living in a city with no zoning laws.
A nightclub beside a hospital. A refinery next to a preschool, or even more common in Romania - bars selling alcohol next to schools.

The result? Gridlock, lawsuits, and infrastructure chaos.

That’s what your procurement function looks like without a real category strategy.

What Category Strategy Really Means

Too many teams treat category strategy as a glorified spend taxonomy:

• IT

• Marketing

• Facilities

• MRO

That’s not really strategy, more like labeling. A true category strategy takes into account:

• Intentional, long-term supply decisions

• Governance aligned to risk and complexity

• Segmentation of spend based on business impact—not department

Think Like a City Planner

Even in less developed cities, there is some sort of urban planning, at the very least making the difference between residential, commercial and industrial.

In simple terms, cities create zones thus avoiding lawsuits. Just like in procurement, segmentation is required.

Without segmentation, procurement gets maverick spend, vendor overlap, and value leakage.

What the Data Actually Shows

According to The Hackett Group’s 2024 CPO Agenda – Procurement Key Issues Study:

• Organizations that embed formal category strategies across most spend report 2–3x better performance in savings, cost reduction, and internal alignment

• Category management maturity remains #1 priority for professionals facing cost, risk, and transformation pressure

📚 Source – Hackett Group 2024 Procurement Agenda (registration required)

What Happens Without a Zoning Plan

Case in point:
A global FMCG firm had 31 creative agencies working across regions.

• No consolidation

• No visibility

• Redundant SOWs and overlapping scopes

By applying a zoning strategy:

• Standardized 70% of creative to 3 global partners

• Local agencies retained only for market-specific activations

• Achieved 19% annual cost reduction and accelerated time to brief

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Strategic Blind Spots to Watch

Even if you “have a strategy,” challenge these:

• Do category leads have commercial authority—or are they tactical?

• Are stakeholder objectives formally included in category planning?

• Is strategy reviewed yearly—or is it a dusty PPT from 2021?

• Is tail spend governed or completely ignored?

• Do contracts map to the same segmentation you report?

How to Build a Zoning-Style Category Strategy

1. Create Intent-Based Segments
   Don’t group by vendor name or GL code—group by sourcing risk, business sensitivity, and innovation potential.

2. Apply Governance per Zone
   Residential zones (tail) → light rules
   Industrial zones (strategic IT/logistics) → heavy playbooks
   Mixed-use → co-ownership with stakeholders

3. Use Data to Draw Boundaries
   Spend concentration, supply base fragmentation, performance variance, stakeholder dependencies

4. Redesign Procurement Roles Around Zones
   A tactical buyer shouldn’t own a strategic zone. Align role scope to category complexity.

5. Create a Living Document
   Review categories annually. Let strategy evolve with business needs—not stay stuck in your last reorg.

Final Thought

Category strategy isn’t documentation.
It’s design.

Without zoning, your procurement city is built on chaos.
If you want to scale value—start with better urban planning.

✅ Up Next:
💊 “Maverick Spend Is a Superbug: What Antibiotic Resistance Can Teach Procurement”

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