Report Finds Digitized Supply Chain Cuts Costs, Adds Efficiencies

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Report Finds Digitized Supply Chain Reduces Costs, Adds Efficiencies
The federal government can save money and streamline operations by substantially reforming the supply chain that consists of procuring goods, paying for them, and delivering them to users, according to a new report from the IBM Endowment for The Business of Government. By moving to a totally “digitized” supply chain, the government will also be able to decrease errors and boost efficiencies, according to the report, entitled “Digitally Integrating the Government Supply Chain: E-Procurement, E-Finance, and E-Logistics.”

With grants from the IBM Endowment, the University of Maryland School of Public Affairs’ Center for Public Policy and Private Enterprise brought together leaders from government, industry, and academia at three forums that examined the potential impact of moving toward an integrated system of e-procurement, e-finance, and e-logistics.

The report includes 50 recommendations that urge the federal government to develop a modernized, digitized supply-chain management system that promises to transform the way government does business. The report and its recommendations are based on 11 case studies of successful private-and public-sector experiences with e-procurement, e-finance, and e-logistics.

Jacques S. Gansler, former Under Secretary of Defense for Acquisition, Technology and Logistics, leads the team of report authors, which also includes William Lucyshyn, the Department of Defense Research Scholar at the Center for Public Policy and Private Enterprise, and Kimberly M. Ross, the Center’s Executive Director.

The federal government procured approximately $219 billion worth of materials and services in fiscal 2000, according to the report. Paper-based systems—which are labor-intensive and prone to error—cannot match information technology for speed and accuracy in coordinating, updating, and communicating the large volumes of data this massive flow of goods generates at every point along the supply chain. Among the key issues identified at the three forums are:

• The architecture that integrates logistics, procurement, and finance functions must be strategically planned and must create interoperability within the government and with the private sector.
• To make the transition to this new architecture successful, senior government leaders must develop incentives and metrics to change the culture of the logistics community and monitor the progress of that change.
• As the government moves to an automated and integrated supply chain, the nature of many government jobs will change, and agencies and departments must aggressively develop and provide training to reshape and sustain the workforce.

Forum participants recommended that the President, the Office of Management and Budget, and federal government department and agency heads take a variety of specific actions, including:

On E-Procurement:

• Set a strategy for implementing e-procurement and achieve some early successes to help build a sense of urgency;
• Integrate the entire supply chain, (not just procurement processes) to optimize both time and costs;
• Develop the required human capital through training, tools, and cross-fertilization opportunities between the government and industry.

On E-Finance:

• Develop a strategic plan that increases the value and relevancy of the finance organization;
• While existing financial management processes are being automated, they should also be evaluated, and those that are inefficient should be eliminated, streamlined, or reengineered;
• When developing integrated financial management systems, agency heads should use proven commercial-off-the-shelf (COTS) software which will enable them to focus on process reengineering, instead of product development.

On E-Logistics:

• To help employees, customers, and contractors understand that logistics can be performed both more efficiently and at a lower cost, leaders must create incentives to change the logistics culture;
• The government should use pilot programs to build trust between agencies and private-sector providers, and demonstrate the value of public-private partnerships.

“The findings of this report show that the digitally integrated supply chain has produced results in the private sector that can have dramatic results in the public sector,” said Robert E. Luby, Jr., Senior Partner, Public Sector Supply Chain, IBM Business Consulting Services.

“When managers read this report they will get a sense of what has worked in ‘real life,’ and what has not,” says Luby. “They will see that the report’s recommendations are based on experience, not on an academic exercise.”

The full report is available at http:// www.businessofgovernment.org/pdfs/GanslerReport2.pdf, or by calling the IBM Endowment at 703-741-1077.

Companies Team Up For Government Subcontracting Opportunities
Subcontract.com, Inc., a business-to-business staffing exchange, has signed an agreement with Onvia.com, Inc., which helps government agencies find suppliers online and businesses secure government contracts, to share government contracts.

The companies plan to leverage the relationship between government and commercial subcontracting and address the shift towards outsourcing.

“Over one million U.S. federal and armed forces jobs have been newly slated for outsourcing this year,” says Michael Sparks, President of Subcontract.com. “Those jobs are being replaced by competitive contractors who subcontract in turn to other commercial vendors. Together with Onvia, we will make both types of opportunities available to thousands of qualified vendors.”

Outsourcing Pioneer Jobs Out IT Services, Systems, and Administration
Dallas County, TX, has recently outsourced support of information technology (IT) services and systems, application administration and enhancements, as well as consulting services. As the county’s technology advisor, SchlumbergerSema will provide a customized approach to the existing IT environment.

The outsourcing arrangement will provide Dallas County with integrated support for its distributed computing and mainframe systems to minimize user interruptions, system downtime, and maximize employee productivity.

“SchlumbergerSema was selected based on overall value, technical prowess, a rich consulting heritage, and strong listening skills,” says John Hennessey, CIO, Dallas County, TX. “Dallas County believes the company will deliver operational benefits and cost savings through its technology and thought leadership.”

The five-year, $40 million contract is structured so that both the county and company work together to govern and administer 14 separate service level measurements. This collaborative approach will help ensure that the county’s Information Technology Services deliver the best service and value to their customers, the Dallas County taxpayers.

Cooperation Successfully Drives Transportation
St. Charles County—collar county to St. Louis, MO, and among the top two percent of the fastest-growing areas in the United States—has been a model for innovative and efficient local funding methods to finance transportation projects.

A half-cent county transportation sales tax passed in 1986 and renewed in 1996 has helped spur major road and bridge development and improvements in the county that has grown more than 460 percent since 1958 and attracted a variety of major corporations.

Local municipalities also contribute matching funds for projects and have advanced funding—called forward funding—to government transportation agencies for project work and studies. The government agencies then repay the money as the projects are completed.

A proven record of completing projects as promised has earned praise from St. Charles County residents and government officials and has created respect throughout the St. Louis region, according to Greg Prestemon of Partners for Progress, a business organization dedicated to enhancing the future of St. Charles County.

“There is a trust that’s been forged among the residents, and local, state, and federal government agencies that helps initiate projects and results in successful completion,” says Prestemon.

Regional transportation projects that St. Charles County has helped fund include improvements to a major east-west interstate, upgrading a U.S. highway to interstate standards, and development of a third bridge across the Missouri River.

March is Purchasing Month
March is Purchasing Month and in light of current budget shortfalls, there has never been a better time to highlight the impact of public procurement savings in relation to governmental spending. Research has proven time and again that educated and certified procurement professionals have the necessary skills and tools to get the most use from each and every taxpayer dollar.

The National Institute of Govern-mental Purchasing (NIGP) works year-round to provide highly customized services that promote the extraordinary value of public procurement to government officials, students, and the public. Purchasing Month is an international event that recognizes the significant contributions public purchasers make to the quality, efficiency, and effectiveness of small and large governmental agencies every single day—not only in the United States and Canada, but also around the world.

All public buyers and managers are strongly encouraged to take a proactive position to further the awareness of public procurement and materials management to government officials, the general public, business and corporate leaders, academia, and the media by proclaiming March as the month to recognize the work of the purchasing profession. NIGP members and Chapters should take this opportunity to plan and implement Purchasing Month activities in their respective area—involving their departments, agencies, and communities to the fullest extent possible.

To support member and Chapter efforts, the Institute has provided a special Events section within the NIGP Website where Purchasing Month information and promotional resource information can be obtained. Please visit this site at www.nigp.org/events/PurchMonth03/

Additionally, members and Chapters are encouraged to share their Purchasing Month activities with the NIGP family by contacting Cyndi Cooksey at 800-FOR-NIGP, ext. 232 or [email protected]