How Private Sector Best Practices Can Save Taxpayer Money - Slide 3

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The federal government buys approximately $550 billion worth of goods and services each year. These goods and services are procured largely within agencies and departments with independent procurement processes. In 2005, OMB announced the Federal Strategic Sourcing Initiative, with the intent of reducing procurement costs through the application of strategic sourcing initiatives. But the anticipated benefits have not been realized – primarily because budget and procurement processes have not been reformed. The effort also focused too intensively on commodity purchasing and not enough on supplier management.

Motorola integrated its disparate supply chains at the end of 2004, bringing the entities that support $40 billion in annual sales under one leadership team. By consolidating sites (from 25 to 17), reducing headcount, leveraging its aggregate procurement scale, increasing supplier accountability, and reducing poor quality, Motorola saved an estimated $1.2 billion annually. Similarly, the USPS cut its supply chain costs by 20 percent ($2.5 billion) through a supply chain transformation effort.

Cost savings estimate: More than $500 billion over the next 10 years.

According to the Technology CEO Council, America’s growing national debt is undermining our global competitiveness. How we choose to confront and address this challenge will determine our future environment for growth and innovation. They suggest that by adopting commercially proven best practices to maximize operational productivity, the government can save over $1 trillion by 2020, while enhancing the services it provides citizens and laying a foundation for future innovation and growth.

This slideshow offers their list of seven specific initiatives where technology-enabled productivity solutions can make a material difference.

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