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IPS Strategy

Previously, I spoke a little about the diverse and complex nature of the Industrial Products and Services Category.  I also mentioned that this category serves to keep our country’s vehicles, planes, and equipment functioning well, provides support to our nation’s firefighters, and even provides the basic materials that go into minting money.
 
Now it is time to discuss how we plan to move to spend under management (SUM).  Below are the 4 overarching strategies and value levers of SUM.
 
Strategic Sourcing - Leveraging purchasing power to reduce cost, increase quality and performance
Demand Management - Eliminating unnecessary purchases and inefficient purchasing behaviors
Supplier / Vendor Management - Aligning vendor priorities with agency priorities, developing mechanisms to monitor and address areas of supplier under-performance, and increasing information sharing / collaboration
Total Cost Management - Identifying and addressing inefficiencies in internal processes and drivers of total cost across the supply chain.
  
For strategic sourcing, we need to begin by getting a handle on the contracts we have and determine what we are paying for things now.  This will serve as our baseline, and we can use this information to measure the savings achieved after we make changes to help us buy smarter.  To do this, the subcategory teams are examining data to ensure proper mapping of category items, identifying open market spend, and determining if that spend can be moved to government-wide contracts.  They are also looking to determine if there are items in open market contracts that are not commercially available and removing that spend from the subcategory so we can focus on the commercially available items.  The teams are scouring data for duplicative contracts, so we can consider vonsolidation to take administrative costs out of the supply chain.  And they are determining which agency contracts are currently in effect and could possibly be modified to allow purchasing authority for multiple agencies.
 
Demand management is the next lever we will pull.  We start here by looking for good practices that can drive costs out of the supply chain.  For vendors, this might include having contracts that maximize predictability and stability, so they can better plan.  It might include modifying packing and shipping processes to help “green” the supply chain and save costs.  It could be changing processes that require less product to be used, or a less expensive set of raw materials that may have a neutral impact on quality such as a less expensive alloy to use in coining money.  Another hypothesis in this area is that we can gain efficiencies in the supply chain and make it easier for customers to make purchases by utilizing a concept called “FEDSTRIP,” which is similar in nature to the MILSTRIP program already used across DoD.
  
Supplier/Vendor management is another lever available.  This one has not been utilized much in the federal procurement space and offers opportunities for cost reduction, risk of supply reduction, and innovation.  For the initial part of our work in this area, we will reach out to top spend vendors and small businesses to form relationships and build trust and understanding.  Eventually, this might turn into supplier councils and forums for input and partnership.
 
Total cost management will not be pursued in year one.
 
We have a goal of maintaining the relatively high small business participation of 51% and stretching that goal to see 2% growth in our 3 subcategories of interest.  We will strive to reach this goal by first having a meeting with SBA and our team small business  representative.  From there we will look at creating a “Fast Lane” to allow for more small business contracting.   In addition, we hope to improve sustainability by including “green” clauses in our contracts, and we will focus on the two FSSI contracts – MRO and JanSan as a starting point.
 
So that is our strategy in a very broad context.  Please tell me what you think, or if you have ideas to implement the strategy or improve on it.  Thanks,g

George Prochaska

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