A Toolkit of Practical How To's

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Growing the Herd Using Spend Analysis for
Strategic Sourcing

• Description
• Acquisition professionals can increase their
  agencys purchasing
• power by leveraging strategic sourcing. Learn
  some of the tools and
• techniques and hear about agency success stories.
  
• Learning Objectives
• Define spend analysis
• Identify the benefits of spend analysis
• Understand the impact of strategic sourcing
• Learn how strategic sourcing goes beyond
  aggregating requirements

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Practical Applications

• Process for performing spend analysis and
  strategic sourcing
• Where can you begin?
• The outcome of using the process
• Links to more information on spend analysis and
  strategic sourcing

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Strategic Sourcing Process
Conduct opportunity assessment
Develop commodity profile
Conduct market analysis
Develop acquisition strategy
Implement strategy/conduct acquisition

• Manage and monitor performance

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Spend Analysis Process

• Spend Analysis Approach Used for Domestic
  Delivery
• Gathered existing shipping profile data from
  participating agencies
• - Most agencies did not have access to detailed
  shipment-level data through their current
  agreements
• - Utilized high-level spend reports to understand
  who the key customers were that should be highly
  involved in requirements development
• - Relied on using available datasets as a
  sampling of usage patterns on which we developed
  requirements and conducted the RFP pricing
  evaluation
• Conducted benchmarking of industry rates where
  feasible to understand competitiveness of current
  agreements

• Conducting a Spend Analysis as part of the
  Commodity Profile
• Keys to an effective spend analysis
• Developing a deep fact base of the commodity
  being sourced
• - How much are we spending?
• - On what types of specific goods/ services?
• - With which suppliers?
• - Who are the users?
• Generating a granular view of the commodity spend
  at the line-item level if the data is available
  or can be estimated
• Establishing a solid baseline against which
  tangible savings can be measured
• A detailed spend analysis helps in identifying
  sourcing opportunities/ potential strategies

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Defining and Communicating Requirements

• Approach Used for Defining and Communicating DDS
  Requirements
• Conducted one-on-one interviews with Agency
  various stakeholders of DDS services
• - Agency team participants, contracting
  representatives and mail managers provided
  insight into specific needs in order to develop
  requirements
• Developed hybrid Statement of Objectives (SOO)
  / Statement of Work (SOW)
• - SOO approach for areas such as business
  intelligence where suppliers have developed
  their own approaches and have unique ways of
  meeting needs
• - SOW approach for delivery times, etc. where
  customers know in detail what they require

• Requirements identification, definition and
  communication
• Keys to developing requirements
• Developing deep understanding of customer needs
• - Why do they buy?
• - What drives demand?
• - What are key priorities/needs?
• Developing understanding of Industry and
  commodity characteristics
• Determining optimal method for communicating
  requirements based on understanding of customer
  needs, along with understanding of industry

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Domestic Delivery Acquisition Process

• Hosted Industry Day, Spring 2006
• During acquisition planning, team explored
  acquisition methods and selected GSA Schedules to
  efficiently meet FSSI objectives
• Developed performance-based SOO with SLAs,
  evaluation factors and pricing matrix
• Issued RFQ and received offers
• Acquisition team leveraged agency expertise in
  technical and price evaluations
• Acquisition team debriefed stakeholders on
  outcomes immediately prior to award
• Developed streamlined task order process for
  participating agencies - GSA places orders and
  agencies obligate funds
• Managing the contract effectively and efficiently
  to realize identified outcomes
• December 2007, calculate and document actual
  spend to drive future tiered pricing

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Domestic Delivery Process Outcome

• Easy-to-use, flexible best value BPA that meets
  most agency express and ground domestic delivery
  requirements
• Tiered discounts increase as collective volume
  increases
• Avoidance of duplication of procurement and
  administrative processes
• Significant savings for participating agencies
• - Estimated 9M/year at Tier 2 pricing
• Business intelligence to improve processes and
  future procurement
• Transportation Consulting BPA available to
  reengineer business processes and obtain
  additional savings
• Community of sharing best practices and lessons
  learned

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Where Can You Begin?

• Partner with your CFO to analyze your agencys
  expenses
• Talk to your CIO where are most of the IT
  spent? Where can you gain efficiencies?
• Utilize FSSI initiatives to obtain quick, easy
  hits. Access the GSA Strategic Sourcing Total
  Solutions BPA to get assistance with Strategic
  Sourcing initiatives within your agency
• Talk to your colleagues in other agencies share
  best practices and lessons learned
• In short, dont worry about getting perfect data
  just start!

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Want More Information?

• To participate in FSSI, or to learn more,
  contact Tom Brady, GSA Federal Acquisition
  Service, FSSI Program Manager(703) 605-5656,
  tom.brady_at_gsa.gov
• Express and Ground Domestic Delivery Services
  (exGDDS), visit the GSA exGDDS website at
  www.gsa.gov/exgdds
• Strategic Sourcing training, visit The Defense
  Acquisition University website at www.dau.mil
  (CLC 108 Strategic Sourcing Overview CLC 110
  Spend Analysis Strategies)
• Strategic Sourcing Total Solutions BPA To learn
  more, contact Jennifer Goss, GSA Management
  Services Center, [phone],
  jennifer.goss_at_gsa.gov

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Other FSSI Initiatives

• Express and Ground Domestic Delivery Services
• - Currently 38 participating agencies with 75M
  spend
• - At Tier 2 pricing, 9M est. savings At Tier 3
  pricing, additional 2.9 savings over Tier 2
  for express service and 8.4 for ground service
• - Examples of annual agency savings GSA 1.3M
  VA 2.9M
• Wireless Telecommunications Expense Management
  Services
• - Government-wide contract award planned for
  8/28/07
• - Expected 10-25 savings
• - Inventory clean-up savings (identified to
  date) 520K - 1.5M
• Office Supplies
• - Government-wide contract award planned for
  6/29/07
• - Expected 5-30 savings
• IT (Printers/Copiers)
• - Recalibrating strategy