Federal Strategic Sourcing Initiative Express & Ground Domestic Delivery Services June 2009

1. Federal Strategic Sourcing InitiativeExpress & Ground Domestic Delivery ServicesJune 2009

2. Agenda • The FSSI ExGDDS Story • Managing FSSI ExGDDS at the agency/account level – The VA Story • Utilizing business intelligence to Drive Actions • Adopting Process best practices for reducing your shipping process cost • Your Next Actions?

3. The FSSI ExGDDS Story John Blanchard GSA Federal Acquisition Service 2200 Crystal Drive, Suite 300 Arlington, VA 20406 Office Phone: (703) 605-2887 Mobile Phone: (703) 268-6569 E-mail: john.blanchard@gsa.gov Website: www.gsa.gov/exgdds

4. FSSI ExGDDS Story - Overview • OMB implemented strategic sourcing in May 2005 • FSSI launched in November 2005 • Interagency involvement on four teams including ExGDDS • Established charter with three primary objectives • ExGDDS BPA awarded October 2006 to FedEx • Transportation Consulting BPA awarded to MEB/PRTM • Next Generation being Evaluated

5. FSSI ExGDDS Story – Key Outcomes • Grew from 9 to 60 participating agencies • High customer satisfaction scores for transition to FSSI • $50 million spend in FY07 • $100 million spend in FY08 • 68% off commercial rates • $54 million savings in FY07-08 off Multiple Award Schedule • Discounts increase as spend increases – Tier 2 to 3 • Business intelligence reports provided to agencies • Heightened awareness and sharing of best practices • Detail data and lessons learned for current procurement

6. Managing ExGDDS at the agency/account level William Bardwell/ John Blanchard Traffic Manager Department of Veterans Affairs 811 Vermont Avenue, NW, Suite 207 Washington, DC 20420 Phone: (202) 461-8914 E-mail: bill.bardwell@va.gov

8. Since last year we have cleaned up the account structures • Understand the business of VA shipping and the underlying data that supports our current processes • Understand the need for change and where change can occur • Realize our limitations on controlling change. Will be providing information to a new Logistics conference specific to VA June 23rd

9. Utilizing business intelligence to save more Grant Lock Principal, MEB Consulting LLC 24301 Empress Court Gaithersburg, MD 20882 Phone: (301) 482-2025 E-mail: glock@mebcllc.com

10. Interesting information about the database; • Approximately 150 million records in the database • Size of database is 45 Gigabytes • 60 National account/ sub accounts represented • 8 National Accounts represent 80% of the $ value of transactions (total $’s including Surcharges)

11. The cost of service; • On a quarterly basis 2.7million packages are shipped. 1.2 million of those are targeted to arrive by between 10 and 11AM. • If those same packages were to arrive 5 hours later the savings would be $4.7 Million. • Or in other words each hour of service costs $941,000 • Over the course of a year that would amount to $19M. Assuming that not all items can take the leisurely route we could still possibly achieve $9million saving? • In addition Saturday delivery accounted for $1.23M. Did the materials get read/used before Monday?

12. Utilizing business intelligence to save more • Analysis provided through the FSSI program gives insight to Agency comparisons, savings and accessorial charges • Further analysis of spend by service type, type of accessorial charges indicates where additional savings can be engineered through introduction of best practices, new/updated training and or implementing technologies to streamline the end to end process of mail management • Analysis of spend in each area provides a solid Return on Investment for any new program • Some samples….

13. Agency Executive Summary for FY 2007 FSSI Spending FSSI Savings • Total FY 2007 FSSI Spend: $3,027,095.91 (Express $2,888,025.37 and Ground $139,070.54) • This agency ranks as the 6th highest agency in total spend for FY 2007, and ranks 5th in total surcharge expenses. • Total FY 2007 FSSI Savings: $1,086,023.53 • Fuel Surcharge Savings alone accounted for $208,501.85 of total savings achieved. • FY 2007 FSSI Savings based on Tier 2 discounts from January 1st to July 14th and tier 3 from July 15th to September 30th. Summaries allow comparisons to other agencies…. ….and understand savings year to date FSSI Surcharges FSSI Performance • Total FY 2007 Surcharges: $512,848.32 (Express $474,802.39 and Ground $38,045.93) • Monthly Surcharge Expense represents 16.94% of FSSI Spend. This figure is right on the average of the Top-10 highest volume agencies for FY 2007. • Average Express on time performance for FY 2007 was 97.0%, exactly the negotiated service standard • Average Ground on time performance for FY 2007 was 100.0% • Service types below 97% service standard included: PO, IPO, FO, F1, IE2 and IF1

14. Utilizing business intelligence to save more – Understanding at the Bureau level • These type of reports come as standard on a quarterly basis for all participants of FSSI • Additional reports and or assessments and implementations of best practices can be contracted with MEB/PRTM through the GSA Blanket purchase agreement

15. Bureau 2 Bureau 3 Bureau 1 Bureau 4 Bureau 5 Bureau 7 Bureau 6 Bureau 7 Total Charges by Top Bureaus

16. Sample Recommendations from one specific study – • Total FSSI spend in FY 2008 was $5,284,000 in shipping charges and $1,340,000 in surcharges • $4,331,000 was spent on next day delivery accounting for a total of 497,849 packages or 69.6% of all packages (total of 714,517) • Highest surcharge was Bureau 1 for Residential and Delivery Area Surcharge (DAS) residential, totaling $678,000. • Understand your profile! • There is a $26,000 Fuel surcharge entry for FY 2008. • Declared Value of $50,000 seems high. Top Bureau’s identified should be targeted for education on the use of Declared Value • Are surcharges like this really necessary?

17. Adopting Process best practices for reducing your shipping processes Gurn Freeman Director, U.S. Government Worldwide Services FedEx Corporation 900 7th Street, NW, Suite 550 Washington, DC 20001 Phone: 202 292 2239 E-mail: ghfreeman@fedex.com

18. Steps to Cutting your Costs •  Study current processes/results • Establish specific objectives • FedEx Worldwide Account Managers (WWAMs) can help at the agency level • Bench mark commercial best practices • Select initiatives that will yield the best results • Establish measureable objectives and track results • Implement/refine your plan as needed • Summarize results

19. Example – Automate your shipping process Time Study Start to Finish Desktop and mailroom will have different time studies Establish employee hourly rate (fully burdened) FedEx Value quantification process FedEx Reporting Online (FRO) to determine daily volume Ask WWAMs for % automated for your location Design training program and improve efficiency FedEx can help!

20. Actual Agency – Mailroom example

21. The Way Ahead • OMB Considering Possible New Policy • Makes sense for Government • Mandatory w/waiver • Driving Process Re-engineering/Stewardship • Shipping Portal • Compare Cost, Service Levels, & Vendors • Business Intelligence • Seeking Best Value • Inclusive of other Agencies unique shipping profiles • Competition

22. What to do Next? • Ask Questions! • Member Organizations: • What can I do to improve my process? • What training, data, other assistance is available to my group? • Not a Member Organization: • Why Not? • Can we justify our current program as a best value from a government perspective? • How do I get started?

23. Point of Contact • Program Point of Contact: • Blaine Jacobs 703-605-2892 Website: www.gsa.gov/exgdds blaine.jacobs@gsa.gov