Buy Lines: A place for small business in strategic outsourcing
Lately, I've been thinking about what role small businesses can play in the growing initiative to implement strategic sourcing across federal agencies. Are there specific activities they can facilitate between the federal agencies and technology manufacturers?
Lately, I've been thinking about what role small businesses can play in the growing initiative to implement strategic sourcing across federal agencies. Are there specific activities they can facilitate between the federal agencies and technology manufacturers?
A May 20 Office of Management and Budget memo to agency executives defined strategic sourcing as "the collaborative and structured process of critically analyzing an organization's spending, and using this information to make business decisions about acquiring commodities and services more effectively and efficiently."
To implement strategic sourcing, agencies need to analyze their "spend" data, identify key suppliers to establish strategic relationships and automate supply functions to collect even more precise purchasing data across the entire enterprise.
Instead of department buyers procuring goods and services as needed, all buyers are instructed to consider the strategic supplier first. Strategic sourcing turns the usual procurement process on its head.
Automating the supply chain has cut operating costs in large commercial corporations by as much as 30 percent. Therefore, Congress, the Government Accountability Office, the administration and many agency executives see it as a way to reduce acquisition, administrative and lifecycle costs while enforcing security and technical standards.
To identify the role for small business, let's look at the activities involved in strategic sourcing. The five elements of spend analysis defined in GAO's report to Congress, "Using Spend Analysis to Take a More Strategic Approach to Procurement," are a good place to start:
- AUTOMATION: Agency spend data is compiled automatically.
- EXTRACTION: Essential data is culled from accounts payable and other systems.
- SUPPLEMENTAL INFORMATION: Additional data is sought from internal and external sources.
- ORGANIZATION: Data is checked for completeness and organized into logical, comprehensive commodity and supplier categories.
- ANALYSIS AND STRATEGIC GOALS: Study data to support strategic-sourcing decisions and procurement management in areas such as cost cutting and streamlined operations.