DOD EMALL as a Price Analysis and DLA Inventory Level Research Tool

DOD EMALL is a valuable tool used by prime contractors and responsible Government officials to perform market research, price analyses and researching inventory levels of these repair parts within DLA. Of the 1,600 parts on the follow-on contract which had sufficient DLA inventory to cover the annual requirement, over 50% of the DLA prices were lower for a potential savings to the government of $8M.

New Security Rules for the Electronic Health Care Record Incentive Program

In 2009, the Ways and Means committee put forth the Health Information Technology for Economic and Clinical Health Act or HITECH Act. The bill states that Health information technology helps save lives and lower costs. One of the four major goals of the legislation is to “Strengthening Federal privacy and security law to protect identifiable health information from misuse as the health care”.

Stage  1 of the program required hospitals and eligible professionals (physicians) to conduct or review a risk analysis and implement security updates as necessary to correct identified security deficiencies.

The proposed Stage 2 rule includes the identical requirement. But it adds that the assessment must include “addressing the encryption/security of data at rest.”

The proposed rule specifically states: “We do not propose to change the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule requirements or require any more than would be required under HIPAA. We only emphasize the importance of an eligible professional or hospital including in its security risk analysis an assessment of the reasonableness and appropriateness of encrypting electronic protected health information as a means of securing it, and where it is not reasonable and appropriate, the adoption of an equivalent alternative measure.”

Recommended Security Changes

The proposed rule would not alter the HIPAA Security Rule’s requirements on encryption. Under that rule, encryption is “addressable,” which means it must be implemented if doing so is reasonable and appropriate – which stops short of an outright mandate.
Office of the National Coordinator for Health IT, proposes ” that Electronic Health Record [EHR] vendors … by default enable encryption of data on end-user devices if any data is kept on user devices after the session ends”.
That Secure Messaging is used when doctors communicate with […]

DOD Getting the Message on Reverse Auctions

As with all of government, the Department of Defense is facing slimmer budgets and looking at ways to save money. Basically as Ashton Carter, Deputy Secretary, Department of Defense, put it: “To do more, without more.”

In December 2010, John Young, a senior fellow at Potomac Institute for Policy Studies and a former U.S. undersecretary of defense for acquisition, technology and logistics wrote an article for Defense News encouraging the Department of Defense to use reverse auctions to save money. Young stated in his article,”There is constant debate about acquisition practices, with simple and obvious steps frequently overlooked. Reverse auctioning can save money, increase competition, cut contract officer workload, reduce procurement complexity, provide transparency, and help prevent fraud and graft. Reverse auction tools should be added to the DoD and defense industry acquisition tool kit and used whenever possible to get maximum value for each taxpayer dollar.”

In October 2011, David C. Wyld, Professor of Management at Southeastern Louisiana, published a report for the IBM Center for the Business of Government titled “Reverse Auctioning: Saving Money and Increasing Transparency.” In this report, Dr. Wyld recommends that the government  adopt an auction first policy. Wyld estimates that the federal government could save  $8.9 billion by increasing use of reverse auctions. He estimates that the Department of defense alone could save over $6 billion. In addition to increased savings, his report indicates that there is increased transparency of the acquisition transactions. A case study of the Department of State found that increased use of reverse auctions also increased the competition among suppliers, and dramatically reduced the acquisition contract time for department staff.

Over the last decade the DOD has made a few attempts at using reverse auctioning, but has […]

Why Strategic Sourcing Savings Plans Don’t Always Work Out

There has been an ongoing discussion in Linked-In about why some procurement saving initiatives or strategic sourcing plans fail to realize the savings they are projected to have.  The comments to the questions have revealed a few likely reasons so many projects fail.  I work primarily with government agency buying groups, but the following comments pertain to both public and private buyers.

Many buying groups operate in isolation and are not always aware of the enterprise-wide opportunities and/or mandated vendors.
Because these groups operate independently, they don’t understand the value of buying from the corporate contract. This may result in buys made to the contracted vendor, but outside the corporate contract, making effective tracking difficult.
Sometimes the contracted vendor may not have the preferred items and local vendors may provide better or additional services to the customer. If many people are buying outside the strategic supplier, there may be a problem with the supplier and the program should be looked at or possibly an additional supplier should be added to the authorized list.

Several things have to happen to counteract these “Buy Around” behaviors.

Senior stakeholders have to make sure the buying units understand the importance of the enterprise projects. Making sure that the information filters down from the top to all the buying units can be a challenge. Often a single memo from the top is not enough to get the message out.  Some type of an extended Corporate  Marketing Campaign  may be required.
They have to adequately market to the enterprise that these contracts exist, that they are mandated for use, what the benefits of using these contracts are, and how much money will be saved by the business/agency.
Headquarters also has to make sure that the enterprise-wide contracts […]

Online Shopping: Nine Benefits to the Government Buyer

As is the case with commercial shoppers, government buyers can also benefit in a number of ways from shopping online.

1. Convenience and time saving

From the Contracting Officer’s perspective – writing a general purpose contract one time and letting buyers make purchase orders against that contract saves a lot of time. A number of federal agencies have used this strategy to save both time and contracting dollars.
From the Buyers perspective – A buyer does not have to travel to a store site or adjust his schedule around the store’s hours. No longer does the buyer have to wait on hold for a customer service representative to answer the phone. Without leaving the office, government buyers can access thousands of websites, or their own agency specific website, to research products, and purchase items which have been approved and made available through agency wide contracts.

2. Broader selection – By writing broad based contracts for vendor catalogs, the contracting officer can make more items available to the buyers without knowing the exact requirements. This prevents the contracting officer from having to go back and amend contracts. This policy is especially good for consumable products like office supplies and building supplies where the requirements vary greatly from day to day.

3. Global choice – While the federal government is restricted to multiple procurement regulations, online shopping can make Buy American Act products more easily available overseas. It can also give government personnel access to locally approved vendors worldwide.

4. Better information – Access to a fuller range of information about product availability, descriptions, reviews and pricing.

5. Lower prices – By writing multiple broad based contracts, the government can take advantage of their buying power and negotiate better prices […]

Why Strategic Sourcing Works

I saw a discussion recently on LinkedIn discussing why companies are turning toward having a few preferred suppliers rather than selecting items on price alone. This strategy is known as Strategic Sourcing. The question spurred quite a discussion.  Here are some of  the key points.

Price alone has nothing to do with material standards, product quality, or timeliness of delivery. Most often a manufacturer can excel at two of three key things…price, quality or service. A savvy buyer develops relationships for their company that balance all three.
Consolidating vendors helps reduce costs, and increases price leverage opportunities. A reduced vendor base can also help focus the procurement department’s ability to focus on quality, service and pricing.
Once you have developed a relationship with a supplier and know that they are reliable, you are often able to negotiate better pricing than they would offer to others. Another reason is that they know that you can deliver, such as paying on time,  which further solidifies their willingness to do business with one company over another. It goes both ways.
The simple answer is “Value.” Preferred suppliers are chosen for many reasons including: pricing, quality and service.  Some companies sell strictly on pricing and the notion that “you get what you pay for” usually holds true. I suggest that you demonstrate value and you may get more results than strictly pricing.
With a few preferred suppliers you can develop a kind of partnership which means long-term benefits for both parts, a win-win situation. Along with your supplier you can sometimes even develop or change products by using your joint knowledge and other things that you are unable to affect if you are frequently changing suppliers.
The movement toward fewer preferred suppliers is a […]

Online Shopping: Eight Benefits for the Consumer

There are a number of arguable benefits to the consumer of online shopping verses traditional brick and mortar stores.

1.  Convenience and time saving – Shopping on the Internet can save time. A consumer does not have to travel to a store or adjust his schedule around the store’s hours. No longer does a consumer have to wait on hold for a customer service representative to answer the phone. Without leaving their home or office, consumers can access thousands of Web sites to become informed about breaking news and events, research products, and purchase everything from groceries to books to insurance policies.

2. Broader selection – The opportunity to find specialty items not readily available in ordinary retail outlets. This is especially true for consumers who live in small towns or rural areas where retail shopping is limited.

3. Global choice – Shopping is no longer limited to the stores within a reasonable driving or walking distance or to the catalogs they receive in the mail. Online, customers can shop at stores in other states or in other countries.

4. Better information – Access to a fuller range of information about product availability, descriptions, reviews and pricing.

5.   Lower prices – Some Internet retailers offer discounts from traditional channels (online booksellers, buying and selling stocks through the Internet). Some Internet retailers are starting to swallow shipping fees to capture customers. Users can access most online news and information free of charge. This element is of greatest power and appeal in influencing the habits of consumers.

6. Rapid response time to needs – eCommerce allows traditional supply chains to be shortened (direct shipping from the manufacturers) or even completely eradicated (digital goods such as software, music, info). This […]

By |November 11th, 2011|General|0 Comments|

The Impact of eCommerce

Over the last 15 years, eCommerce has fundamentally changed the way we buy things. Before the advent of eCommerce,  individuals and businesses looking to purchase items were forced to either shop from store to store, or search through stacks of paper catalogs and then call the merchant to order.

Now you can sit at a computer in the convenience of your home or office and purchase things from all over the world.  They will arrive at you home or office in 2 to 7 business days or overnight for a little extra money. This has been a boom for the both the consumer and the business person, particularly the small business owner. Instead of setting up a brick and mortar storefront, many small businesses start with an online store. They have immediate access to millions of customers who might need their wares. Consumers who live in smaller communities have easy access to goods and services that might not be available locally.

Although online sales have steadily increased since the advent of the internet and are expected to increase into the future, event more sales are influenced by on-line research. The Forrester Research Group did a resesent study of s web-influences sales. While $155 billion worth of consumer goods were bought online in 2009, a far larger portion of offline sales were influenced by online research. Forrester estimates that $917 billion worth of retail sales last year were “Web-influenced.” It also estimates that online and Web-influenced offline sales combined accounted for 42 percent of total retail sales and that percentage will grow to 53 percent by 2014, when the Web will be influencing $1.4 billion worth of in-store sales.

There is a lot of room for improvement in helping […]

Transforming Government Supply Chain Management

While re-arranging my office space, I came across a book on government supply chain management. In 2004, the Honorable Jacques S. Gansler, former Under Secretary of Defense for Acquisition, Technology and Logistics, and Robert E. Luby Jr., Vice President, Supply Chain Management at IBM published a book titled: Transforming Government Supply Chain Management. In the book, among other things, they document two government eCommerce initiatives; DLA’s Medical eCAT and the DOD EMALL.

They state in the book that the Medical eCAT program, which at that time allowed web-based ordering of 650,000 medical items, “saved the DOD customers over 25 % of the product and handling costs  involved in obtaining the items through other means like local purchase.”

In Chapter 15, they document the benefits of the DOD EMALL in the following way.

Customer Benefits:

Assurance of ordering against establish contractual vehicles and compliance with federal regulations
Desktop access to product information and availability
Single point of entry , search and ordering across all electronic sources
Convenient payment mechanisms
Increased buying office productivity
Security

They conclude that web based ordering from commercial distributors using standard eCommerce transactions allows customers to receive products in a fraction of the time at a fraction of the cost.

Though this book was published some years ago, the benefits and cost savings are still true today. In fact, both of these systems still exist and are saving the government money every day. It just goes to show that there are ways for the government to save money and every little bit helps.

Future-Proofing Enterprise IT with SOA

Continuing our discussion of Service Oriented Architecture, let’s look at some of the chief benefits.

SOA is designed to eliminate dependencies on a particular implementation technology. When services are accessed through a common interface, the underlying implementation can change without changing the systems that build upon them. The implementation of the service can change for many reasons, such as:

Replacement of aging hardware
Changes to operating systems or application servers driven by security policy or cost considerations
Selection of a more productive software development platform

One or more of these components can change without impacting any of the dependent processes if implemented within a proper architecture.

This is valuable when trying to leverage legacy systems for new applications. Perhaps there are many potential clients for the legacy system, but the respective clients might use different software development platforms. Hand-writing the software necessary to integrate with a system of moderate complexity can take several weeks.

Rather than asking each client to duplicate this effort, the legacy system can provide a web service adapter with a machine-readable description. Then, each client or business process can automatically integrate with the service—skipping the time-consuming, expensive, and error-prone process of manual integration.

Reliability is enhanced as well, since there is only one piece of software to be tested (the web service adaptation layer) rather than an integration layer within each client.

There are cases when an entirely new system is being designed, and an architect might have the power to mandate a particular implementation technology. Even then, accessing the constituent services through a standard interface is a wise choice for two reasons:

1)       It provides a measure of “future-proofing” to the system. As new implementation technologies emerge, they can be adopted piece-meal by different services and their dependent processes.

2)     […]

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