Strategic Sourcing on the DOD EMALL

In 2006, the Office of the Secretary of Defense added Strategic Sourcing to the Defense Procurement and Acquisition Policy’s (DPAP) list of standing initiatives.  According to DPAP, strategic sourcing is defined as:
. . . a proven best practice [representing] how the DoD will acquire goods and services moving forward. It is the collaborative and structured process of analyzing an organization’s spend and using the information to make business decisions about acquiring commodities and services more effectively and efficiently.”
Though the government continues to struggle with strategic sourcing as a practical matter, there are success stories that can help inform guidelines for a future, government-wide strategic sourcing policy.

Take Government eCommerce, for instance.

In 2004, the US Army established 20 blanket purchase agreements for office supplies on DOD EMALL, and subsequently issued a Service-wide policy that all office supplies were to be purchased online through these established contracts.  By negotiating their own strategic contracts, the Army saved 15% on office supplies, while ensuring that all online purchases were compliant with Ability One, the Buy American Act, and other procurement regulations.  In addition, the DOD EMALL provided Level 3 processing data on all of its office supply purchases.

Over the next two years, the Navy, Air Force, and Department of Homeland Security implemented similar strategic sourcing contracts for online office supply purchases.

The potential for strategic sourcing through online applications, like the DOD EMALL, is virtually limitless.  If the DOD was able to save 15% on the cost of buying office supplies, consider the savings of implementing similar measures for all commodities  throughout the Federal government . . .

The Practical Value of Government eCommerce? -Ask NAVFAC.

A few years ago, a Naval Commander arrived in port at Norfolk, VA needing some repair work done on his ship.  It took the Naval Facilities Command (NAVFAC) 14 days to arrange for the required services.  The Commander thought this was completely unsatisfactory — why would it take so long to make arrangements for something that takes place on base all the time?

The Commander had a point.  Why did it take so long?  NAVFAC turned to Government eCommerce for a solution.

NAVFAC needed a way to support collaborative eCommerce between the facility manager, vendor, and base financial office. And so,  NAVFAC attempted a pilot buy using DOD EMALL .  Pre-negotiated service contacts were placed on DOD EMALL, so that when the facilities manager needed a repair done, he went online and ordered it.

The vendor received the request, provided the service, and notified the facilities manager.  Then, after inspecting the provided service, the facilities manager went back to DOD EMALL and notified the financial office to pay the vendor.

The result?

Regular services were arranged within 3 days (11 days fewer than the previous standard).  Consequently, NAVFAC has instituted use of DOD EMALL for services in 110 naval bases worldwide.

Another instance where Government eCommerce (specifically, DOD EMALL) has helped save time and taxpayer money.

Supply Chain Inventory Management: Turning Methodology into Strategy

I’ve uncovered an interesting article by Chris Stephenson—writer for Manufacturers’ Monthly.  It was written a few months ago, but reads like a perfect companion piece to Terryl Benson’s post on supply chain inventory management—featured on this blog a few days ago.

Stephenson’s article talks about lean logistics methodologies as a primary improvement model for manufacturers, and how most enterprises fail to apply these methodologies across their supply chain networks.

The article provides a number of good recommendations, but three in particular stood out:

Invest time in back-end business planning, up-to-date enterprise and supply chain planning, and execution applications.
Review outdated legacy IT and traditional ERP systems to ensure they fit with your networked supply chain model.
Embrace technology to help meet customer demand for service through an increasing number of [service] channels.

What struck me about the article (aside from its reinforcement of sound, supply chain inventory management principles) was the way it outlined challenges currently facing the industrial private sector, and how they so closely parallel the logistical problems our government wrestles with.

At least, they are both uniform in their need for tighter integration, new enterprise-planning resources, and access to timely, reliable data sources.

Over the past year, Partnet had the opportunity to meet with government logisticians and planners from across the globe, and several highlighted these same concerns.  This is precisely why Partnet is developing new, integrated applications that improve supply chain visibility and reduce the need for planners and manufacturers to manage market variability with surplus inventories.

We feel it’s a step in the right direction.

New IT investments, however, are only part of the solution.  It’s up to manufacturing and logistics communities—whether private or public—to decide how to take lean methodologies and turn them into functional strategies.

(And […]

Why Government eCommerce Over Traditional Procurement?

There are several good reasons.

It has long been known that traditional procurement processes, whether public or private, are often arduous and time consuming. By establishing long-term purchasing contracts with strategic companies and letting junior buyers place delivery orders against those contacts from an online marketplace, senior acquisition professionals are freed to work on major acquisitions. Government eCommerce is also much more economical because online ordering is quick and easy once those contracts are enabled, and establishing multiple contracts for a given commodity also ensures competition and price competitiveness.

Government eCommerce also provides potential visibility into vendor inventories. Using a distributed architecture, online marketplaces can communicate directly with vendors using application integration tools. This allows secure, reliable messaging and data transmission; including elements like order status, back-order information, stock-on-hand, and stock-out data.

The DOD EMALL is an example of Government eCommerce in action. The Defense Logistics Agency’s (DLA) distributed architecture system allows Department of Defense and other Federal Agencies to house long-term contracts and leverage the government’s buying power. DOD EMALL currently maintains over 2000 individual contracts to support more that 60 million items—helping DOD EMALL to exceed $800 million in FY09.

As the world becomes more integrated online, its only logical that governments take proactive measures to keep pace with the private sector. Government eCommerce ensures that Federal, state, and local purchasing stays ahead of the curve.

IT Software Strategies for Reduced Supply Chain Inventory Management Budgets

IT budgets for Supply Chain Inventory Management investments have shrunk considerably during the most recent economic downturn.  This is true of both Government and commercial enterprises.   Industry research shows that appetites for large scale projects have all but disappeared as enterprises look for targeted and cost-effective solutions that will provide immediate value.  Instead of throwing large amounts of money up front at expensive and often excessive SCMS and ERP systems, enterprises are now looking at alternative methods to solve their most pressing supply chain challenges.

One alternative strategy that is receiving a lot of attention is Software as a Service (SaaS).  While this software model provides some benefits, including the reduction of upfront costs, it also has some disadvantages that enterprises should consider.  These include the loss of control over data, limited customization options, and an inability to integrate with additional services.  Furthermore, this delivery model requires ongoing payments for the service, often times prolonging the budget shortfall by committing future IT dollars to an unproven solution.

A second strategy being taken by enterprises is to purchase lightweight and highly targeted off-the-shelf applications that can be easily plugged in and configured to address a specific Supply Chain Inventory Management problem. This class of application normally incorporates Service Oriented Architecture (SOA) principles, thereby enabling them to be extended, scaled, and incorporated into a larger IT vision at some point in the future—once more funding is made available.

Partnet sees great potential in leveraging this second strategy.  Government, as well as commercial enterprises, need to look at smarter IT solutions—not necessarily larger, more comprehensive ones.  Simple integration tools—targeting critical data sets within the supply chain—often bring more value than cumbersome enterprise systems.

DOD EMALL, which currently employs an enterprise integration […]

Government eCommerce — What is it good for?

Some discussion has arisen on Government eCommerce this winter and we are glad to see renewed interest in one of our favorite topics. President Obama’s 2011 Federal Budget states that . . .
“OMB will work with agencies to expand the use of online eMalls for Federal purchases in 2010 and monitor these efforts for further expansion in 2011 and beyond based on lessons learned.”
—2011 FY Budget (Special Topics, Information Technology)
As the primary developer of the DOD EMALL—DOD’s largest online marketplace—we are well aware of the savings potential government ecommerce provides.

Federal Chief Information Officer, Vivek Kundra, recently announced an Federal IT consolidation plan that strongly backs remote or cloud computing; consolidation of 1,100 data centers throughout government; and pushes the use Federal EMALLS for supply acquisition and purchasing.

Partnet had the opportunity to comment on this plan in a nextgov.com article this past January.

Partnet has been supporting Government eCommerce for over 15 years. Further, Partnet’s application of distributed architecture in its systems has made it possible to catalog the 60+ millions items (yes, it really is 60 million, and growing) DOD EMALL offers its DOD, Federal agency, and state government users.

Partnet believes the Federal IT consolidation plan is a step in the right direction, and hopes that its savings potential will lead to expanded use of government eCommerce websites.

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