Federal Acquisition Service U.S. General Services Administration Procurement Best Practices Optimizing Your Small Parcel Program March 22, 2012 Procurement.

Federal Acquisition Service

U.S. General Services Administration

Procurement Best PracticesOptimizing Your Small Parcel Program

GSA Transportation Forum

March 22, 2012


Today’s Topics

Small Parcel Best Practices & Agency Considerations

GSA PayPort Express – Maximizing Value for Federal Agencies

Brief Demonstration


Small ParcelBest Practices & Agency Considerations


Questions to Ask Yourself About Your Small Parcel Program

How do you know how you are doing/ what opportunities exist?

How do you measure it?

What are the largest opportunities/ elements you key in on?

Where and how do I get the information?


Managing Small Parcel Shipments is Increasingly Challenging

Cumbersome, complex contracts

Over 85 + billable accessorial charges

Some shippers do not (cannot) audit. “It’s such a small piece of my overall freight spend that it is not worth my time”.

Downward movement in Tier levels

Identification of “Landed Costs”.

What was a simple service has become an extremely difficult mathematical exercise


Information Provides a Better Approach

Break Transportation into least common denominators/ elements

Benchmark each element

Develop strategy/ tactics to capture costs-set goals

Tie goals to business plan

Implementation of strategy/ tactics

Periodic review of results internally and with carriers


Agencies Can Realize 3%-10%+ Cost Reduction in their Small Parcel Program

Process improvement:

order processing, optimization

Contract Management: information management,

financial workflow

Sourcing: assessment of current contract economics and

implications

Cost Reduction

2%-10% Reduction

2%-6% Reduction

3%-30% Reduction


3 Important Factors to Optimizing Your Small Parcel Program

Analytics and Contract Assessment

– Rate analyses– Terms and conditions– Contract structure

Measurement– Data Management and Formatting– Budget Level Measurement– Scenario Modeling

Current relevant market knowledge

– Carrier pricing trends– Negotiation success– Key Market cost advantages


Five Pillars that Reduce Agency Risk and Cost

Decision Management

• Contract Governance

• Mode Optimization

• Rate Optimization

• Network Rules

• User Authority/Rights

Audit

• Contract Terms• Rates• Rate Application• Logic/Rules

• Thresholds

• Alerts

Finance Validation

• Cost Allocation• GL Coding• Margin

Management• SKU Level Cost

Assignment

• Accounts Payable• Invoice Tracking • Account

management

• Accounts Receivable• Rebates• Credits

Interface

• Standard• EDI• PeopleSoft• Oracle

• Custom

• Data at the “base element” level

Data Warehouse

• Standard• Format• Archive Period• Reporting• Diagnostics

• Custom• Format• Archive period


Multiple billing events effect each transaction… creating “cost gaps” that effect the ability to determine true landed cost

• Partially Visible• Partially Predictable• Manually Administered

and error prone

• Unpredictable• Spans multiple invoice

cycles• Manual, employee

dependent, error prone

•WMS/TMS dependent•Static Table Driven• Contract dependent and

variable

• Net pay after credit• Pay in full and credit• Credit across multiple

invoice periods• Reconcile to original

order Billing Period Adjustments and Credits Pre-

Shipment Cost

Estimate

In transit Adjustments

and Accessorial

Post Delivery Adjustments

and Accessorial

Landed Cost


PayPort Express – Small ParcelMaximizing Value for Federal Agencies


GSA PayPort Express Automates Small Parcel Audit and Payment

Web based system designed specifically for the unique needs of auditing and reporting small parcel transactions

Comprehensive rate/service audit, detailed reporting, prompt and accurate settlement functionality

Actionable data that allows shippers to take full advantage of cost recovery and cost reduction opportunities

All processes are systemic and automatic – no user intervention is required


GSA PayPort Express Small Parcel

Prepares and Organizes invoices for Payment

Visibility to Accounts, Companies, Divisions, Customers

Contract Performance Auditing

Recovery of disputed charges

Financial: custom cost allocation, GL/ AR coding, matching

Information Management/ Data Warehouse

“You can’t Manage What You Can’t Measure”


PayPort Express Small Parcel Feature Benefit to Agency

Audit Exception Credit Requests

Systematic request for credit/re-invoicing of packages Reporting on credits received Reports on outstanding requests Systematic application of credits

Accounting, General Ledger Coding

Visibility to all fields present on a freight bill General Ledger can be assigned at the detail or summary level All payments are settled and GL assigned at the summary in

Syncada

Information Mangement

Enhanced Reporting 100 + Standard reports web accessible, developed “real time”. Can be systematically created and emailed Financial, Customer Service, Engineering based. Ad-Hoc Reporting Capabilities Global reports or location specific shipping reports/ ability to

build custom hierarchy.Financial Trend Analysis 13 months of rolling history Individual shipping location or global organization Cost Savings opportunities Forecasting and Budgeting

Payport Express Small Parcel Feature & Benefits to agency


Maximizing the Value: Reporting Examples

Report: Air to Ground Shipment Opportunities Air Service that could have shipped via Ground Service and still made the

same delivery date.

Report: Shipment Consolidation opportunities Savings associated with over packing/ banding.

Report : Allocation of Fully Landed Cost Provides breakdown of expenses comprising Fully Allocated Cost Per Package.

Report: Service Utilization Review summary or detail information of service used for a select period of

time.

Report: Accessorial Costs Review summary or detail information of accessorial expenses by category.


Contract Management: Six Ways You Save Money

Time to Process Invoices Small package invoice processing, accruals, information

Audit and Recovery Contract terms and conditions are met

Financial Validation Proper assignment of landed costs/ unit costs for profitability analysis

Decision Management/ Contract Governance

Information/ analytics for engineering opportunities

Customer Service Revenue tier management, mode optimizationImproved visibility – proactive response

Carrier management Tools for formal carrier review process


Brief Demonstration


Simple Administration


Quickly View Invoice Level Data


Quickly View Waybill Level Data


Quickly View Exception Causes

• Refunds are automatically corrected on invoice payment (FedEx), or contested for refund on future invoice (UPS)


GL Coding and Quick Corrections

• GL corrections are easily made at the waybill or invoice level


Query Tool


Small Parcel Reporting

• Delivery Reporting• Financial Reporting• Package Detail


Reporting- Trancode Summary


Reporting- Air to Ground


Manifested Not Shipped


Reporting- Summary By Service & Zone


Business Intelligence- Transportation Summary


Conclusion

Adam Jackson

Citi Global Transaction Services, Public Sector North America

703.234.7306

[email protected]

Federal Acquisition Service U.S. General Services Administration Procurement Best Practices Optimizing Your Small Parcel Program March 22, 2012 Procurement.

Documents

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