Business to Business (B2B) markets have impacted the business community for a number of years now. Their positive impact on the economy is evident in several ways.
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.
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 […]
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.
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
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.
Last week, Matt Langan of Appian had an excellent post on the emerging use of Business Process Management (BPM) software in the government acquisition process. He stated that, “we are seeing government embrace Business Process Management (BPM) acquisition solutions (versus COTS) in order to gain process transparency, react quickly to change and improve process efficiency; thereby allowing federal purchasing organizations to successfully enhance the entire procurement lifecycle.”
BPM software can guide government acquisition officers through the complex rules of government procurement — saving time and reducing administrative overhead and paperwork. Each agency develops unique workflow and business-rule requirements, which in turn, are addressed by the application software.
With over 15 years of industry experience, Partnet understands the complexity of the business rules surrounding government acquisition, but also recognizes problems associated with implementing standard BPM applications.
Partnet’s BPM solution is a flexible and easy-to-use business-rules framework and workflow engine that directly addresses problems found in other BPM solutions. Quartz BPM uses simple, UI-based wizards that allow any end user to design and optimize business rules and workflow for approvals, registrations, permissions, and more. These wizards help non-developers easily identify application trigger points, data entities, users, and other critical process elements. The Quartz BPM interface also generates graphical workflow representations that allow users to see their processes as they’re defined.
In other words, Quartz BPM helps align and continuously improve government and commercial business processes.
Accuracy is an essential ingredient in supply chain management. Without it, managers have a more difficult time making the right decisions for their organizations.
There are three main ways organizations can improve the accuracy of their supply chain system. First, use barcodes and scanners. Second, use inventory management software to organize the data. Third, automatically update the accounting database at the same time as the inventory database.
1. Using Barcodes and Scanners
With the help of barcode software and portable scanners, organizations can easily keep track of their inventory levels, place orders and accurately assess their ever-changing inventory needs.
When new products arrive, workers can scan them in and instantly update their inventory database. This saves time and reduces the risk of errors creeping into orders and inventories. If employees have to type product numbers and quantities into a computer by hand, they are more likely to make errors than if they scan product barcodes.
2. Using Inventory Management Software
Barcodes and scanners are great tools, but unless they have an organized place to put their information, they are useless. Inventory management software helps companies stay up to date on their inventory situation. An electronic inventory database can be instantly updated via barcode scanners so that at any given time managers know how many products they have and how many they need.
Inventory management software is also a good tool for estimating future inventory needs. Based on past sale cycles and changes in consumer demand, the software can help managers order more or less of certain products to maintain a balance between being overstocked and out of stock.
3. Updating Accounting and Inventory Databases
If managers have to enter the same information into multiple databases, they have a higher chance of making a […]
When it comes to organizations’ finances, some years are better than others. It’s no secret that for many in the private and public sectors, the last few years have been on the lean side.
It requires creativity for a company or government department to tighten its belt without cutting its services or quality. With fewer goods being sold, companies earn less money and the government takes in less in sales and payroll taxes.
How can these organizations effectively cut costs and maintain their overall strength? One way is with inventory management software. Inventory management software is an automated system for keeping track of inventory levels, product shipping and sales.
Two typical inventory-management problems that can hurt organizations’ financial health are having too much or too little inventory. Many times, a company or government department purchases products or parts in bulk to ensure they have enough on hand to meet demand the moment an order comes through. They also may think the discount they get by buying a large number of products or parts will offset any potential risks.
However, this strategy leaves them vulnerable to product spoilage and obsolescence. An overstock of products or parts also prevents the capital that was spent on them from being used in more productive ways. Organizations have a finite amount of capital to work with, so it’s important that they spend their money as effectively as possible.
Being understocked on products is what most organizations try to avoid. Not having enough inventory on hand causes manufacturing delays, and it can drive customers away.
To find a balance between an overstock and an understock of products, many groups turn to inventory management software. Using barcode scanners to receive, track and sell products, organizations can know […]
According to recent reports from the Defense Logistics Information Service:
DOD EMALL has been instrumental in the Haitian relief effort by providing a purchase venue for much needed relief material. Many organizations, primarily the US Navy, has utilized the DOD EMALL Disaster Relief Corridor to procure relief items.
While most purchased items were medical in nature, other items included maps, clothing, and aircraft accessories, along with food and water.
To date, more than $2.25 million in disaster relief materials have been purchased through DOD EMALL for Haiti. During the height of the relief effort, sales averaged $300,000 daily. DOD EMALL remains at the vanguard of support as DLA’s premier eCommerce logistics support tool . . . ” DLIS-L (Logistics Systems, May 2010)
As the original developer and current operator of the DOD EMALL, Partnet takes great satisfaction in knowing its Government eCommerce solutions are helping the Haitian people in their time of need. Further, we applaud the Armed Servcies, as well as the Defense Logistics Agency, for leveraging eCommerce innovations in support of the DOD’s international, humanitarian mission.
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.
According to the United States Southern Command (US SOUTHCOM), over 6000 US military personnel — alongside six naval vessels and 20 aircraft — are currently deployed to Haiti in support of the humanitarian relief effort to more than three million Haitians affected by the January 12th earthquake.
Increasingly, the US military finds itself in this position. Because of its unrivaled ability to project and sustain large-scale operations over extended distances, the DOD is often called upon to support humanitarian assistance and recovery operations abroad—like those currently underway in Haiti, and now, Chile. And increasingly, DOD is confronted with the problem of finding effective and feasible contingency logistics strategies. In other words, finding fast, effective ways to supply our military personnel with the equipment and resources they need to carry out their missions.
In order to effectively manage its growing humanitarian commitments abroad, the DOD is looking towards IT-based solutions to facilitate its contingency contract process. In the 2009 Quadrennial Defense Review, the DOD states that current supply-chain management processes inadequately address its responsibilities abroad.
“The conventional acquisition process is too long and too cumbersome . . . the Department [of Defense] must improve how it matches [logistical] requirements with mature technologies and maintain disciplined engineering approaches [to] institutionalize rapid acquisitions capabilities.” –Page xiv, 2009 Quadrennial Defense Review (Department of Defense).
Partnet is busy developing new IT-based solutions that will achieve this “rapid acquisition capability” the DOD is rightfully pursuing. Among these innovations is an automated, contingency contract and planning tool that could be leveraged to enhance and support existing DOD logistical investments. The goal is to create an integrated system capable of implementing contingency contracts with global vendors—as well as local suppliers—that quickly locates and sources mission-critical supplies […]