Copyright 2014
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Copyright 2014
Purchasing Mega-TrendsPurchasing Mega-Trends
Federal Strategic Sourcing Initiative Federal Strategic Sourcing Initiative (FSSI)(FSSI)
FSSI Impact on 8(a) ProgramFSSI Impact on 8(a) Program
Supplier Assessment ProcessSupplier Assessment Process
How to Confront FSSI ChangesHow to Confront FSSI Changes
OVERVIEWOVERVIEW
2
OVERVIEWOVERVIEWTactical (“Best Price”) Purchasing Strategic (Integrated) Purchasing
Focus in on:Leverage volumeCompany agreementsGoals for price, quality, and deliverySupplier reduction programsSupplier meetingsIntelligence gatheringSupplier cost estimatingTechnical planning for negotiationsConducting negotiationsFunctional skill development
SOURCE: Alan R. Raedels, The Supply Management Process, NAPM, 2000
Focus in on:Total life cycle costStrategic suppliersOptimizing supply baseSupplier developmentAligning with business strategies
Developing organizational strategies to meet future needs
Developing commodity and supplier strategies
Participating in long-range business planning
Supply performance and relationship management
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KEY DEFINITIONSKEY DEFINITIONS
Strategic Sourcing •Re-Engineering. Changing purchasing from a transaction-orientated process, (i.e., three bids and a buy) to an integrated supply chain management process.) •Integrated Procurement. Includes planning, sourcing, and management. •Cross Functional Sourcing Teams. Used to select suppliers.•Total Cost of Ownership (TCO). New focus.•Supplier Diversity. Part of the strategic sourcing process.
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KEY DEFINITIONSKEY DEFINITIONS
Strategic Supplier1.A supplier that provides key supplies and/or services in a particular commodity area.
2.Strategic suppliers add a high degree of value to the supply chain management process by reducing costs, aggregating demand, etc.
NOTE: Typically top 5% of supply chain.
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Federal Strategic Sourcing Federal Strategic Sourcing InitiativeInitiative
FSSI• Started in 2005• Being Implemented Gradually• Starting with GSA Schedules• Uses similar private sector practices
“Buy Smarter and Save Act”• Implements FSSI on a Broad Scale• Proposed Legislation
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REASONS for FSSIREASONS for FSSI
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1. Strategically source across Federal agencies
2. Establish mechanisms to increase total cost savings, value, and socioeconomic participation
3. Collaborate with industry to develop optimal solutions
4. Share best practices5. Create a strategic sourcing community
of practice
FSSI ImplementationFSSI Implementation
8
FSSI• Being implemented gradually• Program to “modernize” Federal
procurement• Starting with GSA Schedules• Part of GSA FY2014-2018 strategic plan
Proposed New Law “Buy Smarter and Save Act”
• Implements FSSI on a broad scale• Pending
FSSI ImplementationFSSI Implementation
9
GSA Schedules (Done / In Work)1.Express and Ground Domestic Delivery
Services2.Maintenance, Repair & Operations (MRO)
Supplies3.Office Supplies (GSA Schedule 75)4.Print Management5.Telecommunications Expense Management
Services6.WirelessProposed New FSSI Areas • Building Maintenance Operations (BMO)• Consolidated Furniture Management
Supplier AssessmentSupplier Assessment
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Rep
laceability
Strategic Value
Hard
Easy
HighLow
Strategic Supplier•Capacity•Technology•Long-Term Contracts•Brand Power
I
IIIIIV
10
11
Supplier AssessmentSupplier Assessment
11
Rep
laceability
Strategic Value
Hard
Easy
HighLow
Strategic Supplier
I
IIIIIV
11
Vendor“Commodity Hell”
II
1212
Supplier AssessmentSupplier Assessment
12
Rep
laceability
Strategic Value
Hard
Easy
HighLow
Strategic SupplierI
IIIIIV
12
Vendor“Commodity Hell”
Brand /
Niche
Capac
ityM
ento
r-Pro
tégé
Growth
Pla
n
Contract
Veh
icle
sPro
activ
e
FSSI Impact to 8(a) CompaniesFSSI Impact to 8(a) Companies
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IMPACT AREA DESCRIPTIONContract Bundling Smaller contracts being combined
Reduces 8(a) set-aside opportunities
GSA Schedule Contracts
Schedule Holders being targeted For FSSI contracts
Capacity Need more capacity to handle larger scale contracts
Increased need for Federal partners
Period of Performance
FSSI contracts can be long-term (More than 5 years)
FSSI Impact to 8(a) CompaniesFSSI Impact to 8(a) Companies
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IMPACT AREA DESCRIPTIONMentor Increased need for 8(a) mentors to
build capacity
8(a) Marketing Need to target niche areas of the FSSI supply chain
Standard Specifications
Can potentially limit the ability of 8(a) firms to offer innovative solutions
Complexity FSSI contracts can be more complex making them harder to price and proposals more expensive to prepare
How to Confront FSSI ChangesHow to Confront FSSI Changes
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1. Pain. Look for new and/or underserved niche market areas in your industry. Target the ones where you are strong. Avoid challenging a strategic supplier directly.
2. Niche. Develop your “brand” as a leader in your niche.
3. Partners. Find partners who can provide you with additional capacity to meet FSSI-type contracts.
4. Change. Review your business model annually to ensure it is still effective.
5. Contracts. Find the right contract vehicles to work in FSSI environment, e.g., GSA Schedules, ID-IQ contracts, 8(a) / WOSB / HUBZone set-asides, subcontracts, etc.
6. Communicate. Provide inputs to the Feds on how to implement FSSI in your area without harming small firms.
IMPORTANCE of BRANDINGIMPORTANCE of BRANDING
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• Makes it easier to get set-aside contracts• 8(a) Sole Source• WOSB – SBA 8(m) Program• HUBZone• SDVOSB
• Helps Identify FSSI Niche Area(s)
• Reduces marketing / sales time
• Encourages repeat business (loyalty)
• Generates referrals
• Lower marketing expenses
• Able to charge higher prices
SummarySummary
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• FSSI is a major change to Federal procurement
• Consolidation (bundling) of supply chain will make it harder to find 8(a), WOSB, HUBZone, etc. set-aside contracts unless specifically targeted by FSSI
• Large businesses tend to win FSSI contracts
• Small businesses can be successful with FSSI in niche areas
• Recommend Federal partners and/or mentor to help small business be successful with FSSI
• FSSI evolving so expect more changes
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• Former U.S. Air Force Contracting Officer (PCO)
• Certified Professional Contracts Manager (CPCM)
• Co-Author of book:
“8(a) Survival Guide”
312-404-2224 (Phone)www.E-MBE.net [email protected]
Richard J. Hernandez, CPCMRichard J. Hernandez, CPCM
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