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

Federal Acquisition Service Today’s Topics  Small Parcel Best Practices & Agency Considerations  GSA PayPort Express – Maximizing Value for Federal Agencies  Brief Demonstration

Federal Acquisition Service Small Parcel Best Practices & Agency Considerations

Federal Acquisition Service 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?

Federal Acquisition Service 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

Federal Acquisition Service 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

Federal Acquisition Service 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

Federal Acquisition Service 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

Federal Acquisition Service 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

Federal Acquisition Service 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

Federal Acquisition Service PayPort Express – Small Parcel Maximizing Value for Federal Agencies

Federal Acquisition Service 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

Federal Acquisition Service 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”

Federal Acquisition Service 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  Standard reports web accessible, developed “real time”.  Can be systematically created and ed  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

Federal Acquisition Service 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.

Federal Acquisition Service Contract Management: Six Ways You Save Money Time to Process Invoices Small package invoice processing, accruals, information Audit and RecoveryContract 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 optimization Improved visibility – proactive response Carrier managementTools for formal carrier review process

Federal Acquisition Service Brief Demonstration

Federal Acquisition Service Simple Administration

Federal Acquisition Service Quickly View Invoice Level Data

Federal Acquisition Service Quickly View Waybill Level Data

Federal Acquisition Service Quickly View Exception Causes Refunds are automatically corrected on invoice payment (FedEx), or contested for refund on future invoice (UPS)

Federal Acquisition Service GL Coding and Quick Corrections GL corrections are easily made at the waybill or invoice level

Federal Acquisition Service Query Tool

Federal Acquisition Service Small Parcel Reporting Delivery Reporting Financial Reporting Package Detail

Federal Acquisition Service Reporting- Trancode Summary

Federal Acquisition Service Reporting- Air to Ground

Federal Acquisition Service Manifested Not Shipped

Federal Acquisition Service Reporting- Summary By Service & Zone

Federal Acquisition Service Business Intelligence- Transportation Summary

Federal Acquisition Service Conclusion Adam Jackson Citi Global Transaction Services, Public Sector North America