e-Procurement
Written by Karen E. Thuermer
supply chain management procedures and software.
From office supplies, computer, hardware and cleaning supplies, military operations require every imaginable item to keep warfighters well equipped. The General Services Administration (GSA) is working closely with the Department of Defense to ensure these supplies get to the warfighters quickly, efficiently and cost effectively. The coordination of the worldwide distribution process falls under the leadership of the U.S. Transportation Command (USTRANSCOM), and more details on GSA’s involvement are provided below.
Before products are distributed, however, they must be purchased or requisitioned. GSA’s advances in improving ordering/shopping experiences, including the use of Web-based, customer-friendly tools, are benefiting all GSA customers, including DoD. Both the up-front acquisition/order processing as well as the global distribution processes are experiencing great changes in the servicing information systems. Distribution processes relate to visibility, timeliness and consistency of the supply chain. Acquisition and ordering processes seek leverage of modern Webbased user environments and modern database technology to improve efficiency, lower cost and simplify user experiences.
Both DoD and GSA are in early stages of changing from a decades-old Defense Logistics Standard System to conformance with a design referred to as the Defense Logistics Management System. The goal of all the ongoing changes is to move to modern technology to improve efficiency in all aspects of the supply chain, including easier ordering, tracking and delivery of soldier-related supplies while also reducing inventory and costs.
GSA AND GLOBAL SUPPLY
GSA’s global supply one-stop source (www.gsaglobalsupply.gsa. gov) works to achieve this goal. The program is charged with supporting and providing a customer-friendly Website that sells commonly used nontactical commodities to military operations worldwide.
“Our goal is to create a pleasant shopping experience,” said Jeffrey Thurston, director, GSA Office of Supply Operations. “If we don’t make it easy to use and attractive, people will not use it.”
Its main shopping page offers several popular features: key word or category shopping, the ability to check the status of one’s requisition and/or order history, and links for quick reordering and credit card reconciliation.
“We provide the same features as a commercial Website,” Thurston remarked. GSA is working for a future where customers worldwide can go onsite like anyone state side.
“They can order through GSA Advantage, which ties to GSA’s automated supply system [FSS-19], or GSA Global Supply,” he said. GSA Advantage is the online shopping and ordering system that provides access to contractors and supplies (products) and services, including items from GSA Global Supply. (The Global Supply site displays and sells only its items, without schedule vendors’ products and services.) By using either site to buy from the GSA Global Supply program, users are not only assured that items they order meet regulatory compliance; they receive one bill and global delivery from a reliable government source. GSA also provides full accountability from order placement through delivery and billing.
“We do that by consolidating the government supply requirements, then leveraging demand, and supplying products at significantly reduced prices and favorable delivery terms,” explained Thurston. “By doing this, we perform a function that enables our customers to focus on their core mission.”
Overall, GSA manages 400,000 products. Some 5 million orders run through its system per year. In fiscal year 2008 sales totaled about $1.3 billion. About 80 percent of those orders come from DoD, GSA’s largest customer.
“We have over $900 million in sales directed for military readiness around the globe,” Thurston remarked.
Orders are placed through major distribution centers in New Jersey and California and four retail stores located in Alaska (1), California (1), and Hawaii (2). In addition, GSA has 25 retail partnerships located on military bases primarily in Europe, Asia and Africa. GSA purchases the commodities from three acquisition centers in New York; Fort Worth, Texas; and Kansas City. There are also three call centers, which are located in Philadelphia; Fort Worth, Texas; and Auburn, Wash.
“The heart of what we are doing in terms of the worldwide distribution supply chain improvement is in partnership with the USTRANSCOM,” revealed Thurston. “USTRANSCOM is really leading this effort for the supply chain improvement of DoD, along with the Army & Air Force Exchange Service [AAFES] and Air Force Global Logistics Support Center [AFGLCS].”
In 2003, USTRANSCOM was designated by DoD as the Distribution Process Owner (DPO) over worldwide efficiency, interoperability and execution of the Strategic Distribution System. This covers distribution-related activities: deployment, sustainment and redeployment support during peace and war. A tremendous effort has been focused on improvements to work processes, doctrine, business rules, information technology tools and procedures to make the DoD distribution pipeline more efficient and effective in meeting warfighter needs.
A current focus effort is embodied in the Distribution Process Owner Strategic Opportunity (DSO) effort. As a result, five enterprise-level challenges were designed to generate distribution logistics improvement. The five challenges are distribution process improvement and deployment (DPID), which removes unnecessary slack time in the distribution process; strategic surface optimization, whereby 40-foot containers are utilized for shipping overseas instead of 20-foot containers; strategic airlift optimization, in which decisions are made whether or not to ship by air; supply alignment, in which careful analysis is given regarding inventory management for supplies overseas; and strategic network optimization, whereby the best optimal location is determined for inventory locations. “These five span the whole DoD and GSA supply chain,” Thurston said. “DoD and GSA are more aligned than ever in how we conduct our supply chain measurements. In considering e-tools, these processes mean nothing unless they translate into getting products to the warfighter faster.”
Consequently, this year USTRANSCOM’s DSO team, of which GSA is a member, was selected as the 2009 Department of Defense Supply Chain Operational Excellence Award recipient. This DoD award provides a showcase for innovative management and technology tools being used to improve supply chain efficiency and effectiveness to enhance support to the warfighter. It also honors organizations that have made exceptional progress through development or adoption of best supply chain practices. USTRANSCOM’s DSO team engaged partners and stakeholders to identify and implement enterprise supply chain operational improvements including distribution process improvement and deployment, strategic surface optimization, strategic airlift optimization, supply alignment and strategic network optimization.
GSA is also proceeding with innovations that combine new ways of acquisition and distribution. This is occurring at the military service-level, especially in the U.S. Marines environment. “Overall, we are changing and evolving in how we are doing business,” Thurston said. “The whole area of logistics is becoming more virtual.”
Whereas third party logistics operators (3PLs) were/are used to run logistics systems, Thurston pointed out that now fourth party logistics operators (4PLs) are taking logistics to a different level. “This relies more on the vendor to own the material and the government to manage the process and outcome,” Thurston said. “It brings a new set of challenges.” Consequently, GSA is developing electronic tools (e-tools) as the evolution continues to more 4PL environments.
“When you have multiple vendors and multiple sources from which to obtain items, e-tools reduce the likelihood of failure in supply, as well as more opportunities for small and disadvantaged vendors,” Thurston said. “These tools enable us to manage multiple vendor catalogs while still presenting a single unified offering to our customer.”
Through the use of e-tools, customers can find information about the many leading-edge products and services GSA offers and how to do business with GSA. GSA expects to expand the number and transactional capabilities of e-tools on gsa.gov over the coming months.
“We need to take our system to the next level,” Thurston remarked. “We need a clear and simple-to-use system on our Website that can simplify multiple catalogs and identify all common items while displaying a single price. This will enhance and expand our Website with a wider, deeper array of products, while we hold onto the safety, security and simplicity that users count on with GSA as a reliable government source.”
Early next year, GSA hopes to make available a more robust expanded direct delivery system that will have the capability to make it clear to the customers what is being offered through its vendorsupplier network.
“GSA must be able to communicate with the vendors in an electronic e-procurement type of way so that we can transfer all of that data and turn it into information and make it easy to use for the customer,” he said.
OTHER TOOLS
Other tools have been developed and are being upgraded to help the warfighter obtain needed products and items. For example, the Army Computer Hardware, Enterprise Software and Solutions (CHESS) recently released its own upgraded e-commerce ordering system, dubbed IT e-mart.
CHESS gives Army customers the chance to buy computer hardware and software at significant savings. With more than 539,999 users, 40,000 products and 56 CHESS indefinite-delivery contracts, IT e-mart is the Army’s designated e-commerce site for IT products and services that streamlines the IT procurement process. Through the CHESS e-mart, users can search, browse and compare products. Like GSA Global Supply, the Website and its resources are available online 24/7. Customers can order commercial off-the-shelf IT products and services, request quotes from vendors, and search for or compare products across contracts.
The CHESS IT e-mart, released on May 6, features upgrades and new capabilities that offer more resources for online users. New features include updated user interface for ease of navigation, enhanced product search capability, newly added document search capability, a request for proposal tool that allows for modifications of RFPs, an “add to cart” feature after configuring a consolidated buy item, self-service for highly personalized answers to questions, and state-of- the-art equipment for increased Website performance.
INDUSTRY INVOLVEMENT
Various government contractors have been involved in developing systems like those mentioned above. Their involvement has been critical since public procurement organizations face the unique challenge of having to find ways to cut costs and speed delivery of goods and services despite labor-, time- and paper-intensive processes and a highly structured and regulated environment. SAP officials pointed out, for example, a lack of integration between contract management processes and financial and logistics software makes it difficult to manage complex procurement activities, such as budget checking, competitive bidding and tendering, and supplier certification. “These types of challenges increase the risk of noncompliance with internal guidelines and public regulations,” a SAP report stated. “They also make it impossible to gain full transparency into suppliers, demand and spending—insight needed to maximize purchasing power.”
Consequently, SAP has developed the SAP Procurement for Public Sector package that helps agencies address these challenges and support self-service and e-procurement requirements. The package optimizes the entire cycle from planning, tendering and awarding to contract monitoring and closeout for simple, ad hoc and complex procurement. Therefore, it helps increase purchasing power, improve efficiency and service levels, lowers costs and reduces the risk of contractual noncompliance. Even before starting a competitive procurement process, the package helps screen prospective suppliers to minimize bid and proposal costs.
The software also supports the collection of tender fees before suppliers can access tenders, such as requests for information and proposals. In addition, it helps collect big guarantees to help ensure eventual performance by a supplier. It can also separately evaluate technical proposals from price to eliminate respondents with weak technical approaches early on and avoid wasting time and resources on less optimal suppliers.
Tight integration with other SAP software enables this holistic approach to procurement.
“Additionally, SAP’s Public Sector solution includes a defense industry-specific solution that augments the core product, providing tailored functionality to meet the regulatory, security and business process needs of our defense customers,” stated Mark B. Roddy, industry principal for DoD and federal civilian agencies, SAP Public Services Inc.
The solution helps make ordering tracking and delivery of soldier-related supplies more efficient.
“Ordering, tracking and delivery of supplies for soldiers and civilian support personnel is optimized by the delivery of a deeply integrated holistic procurement and supply-chain solution that leverages mobile technologies; workflow automation; automated sourcing of external requirements, delivery order creation and distribution, notifications and alerts; and includes native integration to financials, funds management and budget planning functions,” explained Roddy.
SAP is coming out with next-generation technologies that can make these systems even more efficient. Recently released is SAP’s Business Suite 7, next-generation enterprise software that enables organizations to optimize the power of an integrated technology platform. (SAP’s technology platform is known as SAP NetWeaver.) “Today SAP belongs to multiple technology standards organizations to enable us to both influence future technologies and also to stay ahead of the game for our customers and with our products,” Roddy added. “Additionally, SAP employs teams of researchers and technologists whose job is to investigate emerging technologies and guide the inclusion of them into our products. SAP invests heavily in research and development to ensure that when customers are ready to take advantage of the latest technologies, SAP’s solutions are already there for them.” ♦