Prime program helps depots save time, money

Prime program helps depots save time, money


Launched in 1997, the Defense Supply Center'Philadelphia's Prime Vendor Program has recently been gaining favor as it becomes an electronic-government success story.

'The Prime Vendor initiative is tied into the same world-class practices that have been adopted within the commercial sector,' said Air Force Col. George O'Neal. 'It has demonstrated considerable savings throughout the industry in terms of reduced infrastructure, reduced inventory, and reduced personnel and resource requirements by tapping into an already robust distribution marketplace.'

A recent study by KPMG LLP of New York found that the program helped Defense Department sites reduce inventory levels and cut costs in half. Further, the report revealed an increase in on-time delivery rates.

Order brand names online

Chet Evanitsky, the Philadelphia center's program manager for maintenance, repair and operations (MRO), said the program's best features include cutting delivery times to days rather than weeks or months, and the capability for center customers to order by brand name and place orders online.

Defense Supply Center'Philadelphia's
Prime Vendor Program provides interactive electronic catalogs on the Web at
How does it work? The Prime Vendor system streamlines procurement by giving government purchasers a single place to shop and consolidate deliveries.

Instead of dealing with hundreds of vendors, the prime vendor is the only point of contact for buyers.

The Philadelphia center's Prime Vendor Program came about because of the unique challenges of the MRO market.

Typically, MRO procurements are characterized by extremes: high transaction volumes, high labor costs per transaction and the need for a large supply base, while at the same time involving low transaction values, low service levels and low inventory turnovers.

One of the largest prime vendors is ProcureNet of Great River, N.Y. Since 1997, the Philadelphia center has awarded it six electronic-commerce contracts to support government MRO requirements. ProcureNet provides online requisitioning and buying applications, an electronic catalog, a customized buying portal, as well as logistics and fulfillment capabilities.

At Fort McPherson, Ga., more than 60 percent of all purchasing is done through prime vendors, Army officials said.

The fort provides administrative and logistical support to major Army commands.

In the past, personnel at Fort McPherson had to fill out a supply requisition, get it approved, then send it to a depot. The depot would deliver an item if it was in stock. If not, it would call around, locate a vendor and order the item. The typical lead time was 45 days, and each item required separate billing.

At first, Fort McPherson only used the Prime Vendor Program to procure construction supplies. But with growing evidence of its advantages, its use spread to the acquisition of other MRO goods.

The achievement of the program is summed up in its savings on labor, lead time, costs and storage space. For instance, procurement time plummeted from 45 days to 10 days for many items. By evaluating the labor involved in sending employees to find things, run warehouses, store inventory, process paperwork and do other tasks, an analysis by Fort McPherson's Installation Support Service Center found a 32 percent overall labor reduction.

Instead of having to phone numerous vendors, the fort's center deals only with prime vendors and their registries of products.

'We have one unified and comprehensive catalog that is shared by the Army, Marines, Air Force, Navy and National Guards,'

said Carol Grossnickle, the center's deputy director.

Because the catalog is shared, it contains more items than catalogs maintained by individual bases or services. As a result, volume discounts can be extended to a wider range of goods.

Simple buy

To make the process as easy as possible, a purchaser accesses the MRO Internet site for information regarding a product, including a price quote, then orders it online.

Grossnickle said there have been no security problems. She also noted that the Prime Vendor Program has eliminated repetitive paperwork because the system consolidates bills and receipts monthly.

Why is the program working at the fort but not in other areas? 'Although Prime Vendor is by no means perfect, I'm very much an advocate,' Grossnickle said. 'But making it work requires close collaboration between the contractors and the government units involved.'


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