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Strategic Sourcing

Strategic Sourcing. Thomas W. Essig Director, Program Analysis and Business Transformation DASN Acquisition Management April 25, 2006. What is Strategic Sourcing?. DoD-Wide Strategic Sourcing (DWSS) Program. Vision. Program Objectives. Reduction in Total Cost of Ownership

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Strategic Sourcing

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  1. Strategic Sourcing Thomas W. Essig Director, Program Analysis and Business Transformation DASN Acquisition Management April 25, 2006

  2. What is Strategic Sourcing?

  3. DoD-Wide Strategic Sourcing (DWSS) Program Vision Program Objectives • Reduction in Total Cost of Ownership • Department-wide cross-functional acquisition strategies • Improvements in meeting socio-economic goals • Standardization of acquisition business process • Improved skills of DoD acquisition community To provide customers throughout the Department [of Defense with services acquired] in the most efficient and advantageous manner. Memorandum from Paul Wolfowitz, Deputy Secretary of Defense, “Acquisition of Services Review” 2/6/2003 Achieving DWSS objectives will require collaboration among the various DoD organizational components and senior level “buy in”

  4. Temporary Service Cost Drivers KELLY AND MANPOWER, AMONG THE LARGEST PLAYERS IN THE US MARKET, … … EXHIBIT A BREAK-EVEN MARK-UP OF APPROXIMATELY 20%, SUBSTANTIALLY LOWER THAN THE INDUSTRY AVERAGE CONTRACT LABOR SERVICES US REVENUE SHARE (MAY 2004) COMPARISON OF BREAK-EVEN MARK-UPS INDUSTRY AVERAGE VS LARGEST US PLAYERS (2004) LARGE PLAYERS EXHIBIT A SUBSTANTIALLY MORE EFFICIENT COST STRUCTURE COMPARED TO INDUSTRY AVERAGE TOTAL # SERVICE PROVIDERS = > 20,000 Source: IBIS, Temporary Help Services in the US, May 2004 Source: CSFB, Global Services, March 2004; CIBC, Manpower Equity Research, April 2004, Censeo analysis Do our incumbents have favorable cost structure to meet our requirements with high levels of service at comparably lower prices/ mark-ups?

  5. The Acquisition Strategy creates a collaborative method of interacting with small business suppliers while maintaining competition Place Competitive Orders RFI to understand cost drivers RFP for Initial Multiple Award Task Order Contracts Exercise Options with Final Group of Suppliers Conduct Supplier Development Workshops • Further consolidate spend to “preferred suppliers” and implement policy enforcements • Conduct competitive RFx to down select to initial supply group comprised of incumbent and new small businesses • Work collaboratively with suppliers to drive down costs of working together OVERALL OBJECTIVE(S) • Achieves/exceeds socio-economic goals • Includes a combination of set-asides for 8(a), Hub-Zone, and Service Disabled Veteran Owned • Enables fair market prices for DoD • Creates a collaborative approach to working with supply community – enhances capabilities of small businesses

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