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Supplying Principles and Practices > United States Postal Service Supplying Principles > Postal Service Supplying Principles
Postal Service Supplying Principles
Authority and responsibility
The Vice President (VP), Supply Management (SM), is authorized to ensure
that all Postal Service supplying activities further the business and
competitive interests of the Postal Service. In doing so, the VP, SM, has both
a fiduciary and a business responsibility to (1) maximize the financial position
of the Postal Service and (2) to facilitate the business goals of internal clients.
The VP, SM, defines the overall business strategies of the Postal Service's
various supply chains, and, in concert with the Postal Service management
involved in the supply chains, manages them to promote the Postal Service's
overall business success. The VP, SM, is also responsible for the
effectiveness of supply chain collaboration and planning - internally, and
with the supplier community. Because supplier relationships are central to
supply chain success, the VP, SM is responsible for source selection, defining
supplier relationship strategies, ensuring that supplier relations are conducted
in a fair, objective, and business-like manner, and addressing and resolving
supplier relationship issues.
The Postal Reorganization Act provides purchasing authority to the
Postmaster General, who has delegated all purchasing and related policy
development authority to the VP, SM. In turn, the VP, SM, has delegated to
individuals the authority to negotiate, award, modify, and terminate contracts,
and, in some cases, the authority to redelegate these authorities. Individuals
delegated any or all of these authorities must ensure that all of their
contractual actions, including negotiations, contract awards, modifications,
and terminations, are within the scope of their delegated authority before
taking those actions.
The VP, SM, is also responsible for the effective management of Postal
Service material throughout its life cycle and the flow of materials through
supply chains, ensuring that the best business practices are employed in
fulfilling this responsibility.
When required by these Supplying Principles or supplemental guidance,
Contracting Officers must ensure that all required and appropriate reviews
and approvals are obtained before taking a particular contractual action.
Best Value
The Postal Service bases sourcing and material management decisions on
best value. Best value is defined as the outcome that provides the optimal
combination of elements such as lowest total cost of ownership, technology,
innovation and efficiency, assurance of supply, and quality relative to the
Postal Service's needs. In the sourcing area, best value is generally achieved
through competition, which brings market forces to bear and allows the direct
comparison of proposals and life-cycle costs, although market conditions may
dictate that a single- or sole-source strategy will be the best business
approach. Purchase/SCM teams are empowered to pursue strategies and
tactics that enable the Postal Service to achieve best value, and have broad
flexibility in (1) deciding which elements of value will be sought by the Postal
Service and expressed in solicitation evaluation factors and their weightings
and, (2) determining the most effective SCM business practices (early
supplier involvement, consolidating requirements, scope and method or
market research, etc.) to employ.
Ethics and Social Responsibility
The Postal Service is committed to maintaining its standing as a responsible
service organization, and understands that socially responsible behavior is
good for business. This principle solidifies this element of corporate culture
and enhances the trust factor in key business relationships.
Postal Service supplying professionals will act with the highest standards of
conduct, ethics and integrity. All Postal Service employees must adhere to
the "Standards of Ethical Conduct for Employees of the Executive Branch",
5 CFR 2635 and the "Supplemental Standards of Ethical Conduct for Postal
Employees" at 5 CFR Part 7001. In addition, Postal Service supplying
activities are guided by the Institute of Supply Management's "Principles of
Social Responsibility" available at http://www.ism.ws/ISMMembership/
Principles.cfm. The Postal Service will be fair, objective, and business-like in
its dealings with the supplier community, ensuring that business decisions are
driven by business considerations.
The Postal Service will seek to minimize both personal and organizational
conflicts of interest. Postal Service supplying professionals are prohibited
from establishing and maintaining relationships of self-interest with any
suppliers or potential suppliers. The Postal Service will attempt to avoid
situations in which a supplier has an unfair competitive advantage or other
interests that may impair the supplier's objectivity in dealing with the Postal
Service or in its ability to perform satisfactorily on Postal Service contracts.
The Postal Service does not contract with former Officers or Postal Service
Executive Service (PCES) executives or entities with which such individuals
have a substantial interest for one year after the date of their separation from
the Postal Service (whether by retirement or otherwise) if the contract calls
for substantially the same duties as they performed during their career with
the Postal Service, as determined by the Vice President of Human
Resources. The Vice President of Human Resources may grant exceptions to
this policy when he or she determines that doing so is in the best interest of
the Postal Service. Lastly, contracts with former employees (those who are
not former Officers or executives), or with suppliers proposing the use of
former Officers, executive or employees, are subject to the review and
approval of the VP, Human Resources.
Promoting an environmentally responsible supply base furthers the Postal
Service's business and competitive interests. Therefore, the Postal Service
complies with applicable environmental laws and regulations and is
committed to encouraging its supply chain partners to promote and enhance
environmental responsibility in their conduct of postal business.
People and Culture
To stay competitive in an increasingly complex and changing world, the
Postal Service requires supplying personnel who are world-class
professionals. A well-educated workforce with higher competencies to
perform the business practices essential to successful supply chain
management, including such things as strategic sourcing, demand
management, and supplier relationship management, is a prerequisite to
achieving the cost and operational efficiencies in the supply chain. Consistent
with this need, only individuals possessing baccalaureate degrees from
accredited colleges or universities will be considered for appointment as a
Postal Service contracting officer (CO). Additionally, Supply Management will
hire and promote individuals into management positions only if they have a
baccalaureate or post-graduate degree from an accredited college or
university. All supply management specialists must maintain professional
proficiency and remain qualified for their positions.
Postal Service supplying professionals are empowered to use their
professional judgment and creativity to arrive at innovative methods of
managing supply to create value for the Postal Service. Establishing what is
prudent risk requires the effective analysis of a business situation and
consideration of different business solutions followed by the adoption of
actions that, while posing some risk of failure, offer the chance of significantly
enhancing operational or financial performance. Postal Service supplying
professionals are encouraged to take prudent risks to achieve these goals;
when desired outcomes are not achieved, focus will be on lessons learned.
Examples of prudent risk-taking include:
• Trying a new supplier to get an advantage on a critical program
even though other qualified and experienced suppliers already
exist.
• Awarding a noncompetitive contract to gain an exceptional
advantage that is unattainable through competition.
• Forming a shared-savings or other innovative arrangement with a
supplier.
• Taking a calculated risk on new technology that has good
prospects of providing advantage to the enterprise in terms of
capability, cost, time to market, etc.
The Postal Service's Transformation Plan stresses the importance of
improving both individual and team performance through breakthrough
productivity initiatives and aligning recognition for individuals and teams to
their performance. Supply Management professionals will work with clients
on an annual basis to agree upon the goals they are committed to achieving.
These goals will be aligned with Supply Management's, the client's and the
Postal Service's goals; goals will also be the basis for metrics used to assess
and reward the performance of Supply Management professionals and will be
results-oriented, specific, measurable, and achievable.
Postal Service supplying professionals will strive to meet the Postal Service's
financial goals by adopting proven supply management tools and techniques.
The Postal Service has adopted continuous improvement as a strategic
business imperative, and is committed to continually analyzing and improving
its supplying practices to enhance its competitiveness, efficiency and
effectiveness. Postal Service supplying professionals will use a variety of
means, including benchmarking and other market research, participation in
professional organizations, etc., to ensure that the best business practices
are being used in the Postal Service's supplying operations.
Early, detailed, cross-functional strategic planning is an essential component
in meeting supply chain goals. Obtaining cross-functional involvement
ensures a more holistic view of the purchase and enables Supply
Management to better meet Postal Service and client goals. Strategic
sourcing is an important element in increasing the potential for achieving best
value and reducing transactional costs. Therefore, each Category
Management Center (CMC) and Purchasing Service Center (PSC) team is
required to develop and maintain a written supply strategy (including advice
from applicable clients) for each major spend category for which they are
responsible. The strategy will focus on planned objectives, as well as the
tactics and resources necessary to achieve client satisfaction and business
success in the supply category in the coming year. At a minimum, category
strategies will be reviewed annually by appropriate management levels within
Supply Management.
The Postal Service relies on market research as a best practice supplying
tool in order to enhance strategic thinking, research, analysis, and
decision-making and to sharpen its competitive advantages. All Supply
Management portfolios must perform and regularly update their market
research in a cross-functional and collaborative manner. Research will focus
on areas including, but not limited to: current and projected availability of
products or services; the extent of competition in the market; the range of
product or service performance characteristics; future industry, technology,
and macro-economic trends; price trends and current market prices; supply
base assessment; and types of available distribution and management
systems.
Early forecasting is a key component of supply chain management (SCM); it
can be a valuable mechanism for bringing the supply and demand for goods
into convergence, and for reducing inventory levels and associated costs.
Effective communication throughout the supply chain is essential to
successful forecasting. Therefore, Supply Management and clients will work
together to forecast future demand to the best of the organizations' ability and
to communicate this information throughout the supply chain to optimize
performance. Forecasts for core goods and services, those critical to the
Postal Service's business success, will receive priority focus. Similarly,
forecasts and changes to forecasts should be shared with suppliers, who are
also encouraged to share Postal Service demand forecasts with their
suppliers. Sharing relevant business information ensures that the Postal
Service and its suppliers can work together more effectively and efficiently.
The Postal Service recognizes the power of leveraging spend across the
enterprise through centralized procurement in facilitation of the achievement
of best value. Therefore, unless there are compelling business reasons to do
otherwise, all spend categories are centralized in order to maximize financial
benefits by reducing total cost, including transaction costs, and improving
quality and performance.
Category Management Centers must continually work with their clients to
reduce both the types and quantities of goods and services that they
purchase in order to reduce costs on existing and future contracts. The
Postal Service recognizes that product standardization is a powerful means
to achieve best value when dealing with suppliers. By driving product
standardization, the Postal Service will be able to negotiate better pricing,
reduce overhead costs, and focus on developing relationships with strategic
suppliers. Each Category Management Center (CMC) is responsible for
identifying candidates for product standardization within its commodity
category.
Statutory and Regulatory Requirements
In conducting its supply management activities, the Postal Service complies
with its statutory obligations and its obligations under the purchasing
regulations contained in the Code of Federal Regulations (CFR).
Supplier Relations
Suppliers are essential and valued business partners of the Postal Service,
and the Postal Service is committed to treating its suppliers in a fair,
objective, and business-like manner. Relations between the Postal Service
and its suppliers will be strong, mutually beneficial, and based upon sound
business practices, respect and trust, with both parties working toward a
common goal.
Within the relationship, both parties - Postal Service supplying professionals
and suppliers - are expected to act ethically, keep commitments, ensure the
delivery of high-quality goods and services, and focus on continuous
improvement of products, processes, and costs and prices. The Postal
Service will manage supplier relationships based on the potential impact the
supplier's performance will have on the Postal Service's operational and
financial position.
The Postal Service is committed to having a world-class supply base.
Therefore, the Postal Service will continuously measure, analyze, and
enhance supplier performance relative to contractual requirements and the
best practices of world-class supply organizations.
Postal Service supplying professionals will seek out methods to optimize its
supplier base in line with the specific characteristics of the market, the good
or service being supplied, and the goals of the Postal Service. In many
cases, optimizing the supply base will include efforts to consolidate
purchases among a smaller group of more capable and strategic suppliers to
reduce costs (including transaction costs) and to improve quality and
performance.
The Postal Service also understands that a diverse supplier base is important
from both a performance and business standpoint. Therefore, through
promotion, outreach efforts, and other means, the Postal Service will strive,
as a strategic business initiative, to establish and maintain a strong,
competitive supplier base that reflects the diversity of the supplier community.
Additionally, Postal Service suppliers are expected to use small, minority, and
woman-owned businesses as subcontractors to the maximum extent
consistent with effective contract performance.
The Postal Service is an establishment of the U.S. government whose
customer base is comprised mainly of American citizens and businesses.
The Postal Service understands its interest in promoting American industry
and a free market economy in countries with which the United States has
entered into trade agreements. Therefore, as a matter of both business
relations and effectiveness, and subject to the limitations set-out in the
implementing practice, proposals considered for selection and (1) offering
domestic end products or (2) proposals offering end products produced in
designated World Trade Organization Government Procurement Agreement
(WTO GPA) and Free Trade Agreement (FTA) countries are given preference
by the Postal Service when they compete with proposals of relatively equal
value containing end products from non-designated WTO GPA and FTA
countries.
Members of the Postal Service's unified supply chain, from the supplier's
supplier to the end customer, will work in an integrated and collaborative
manner to maximize the efficiency and effectiveness of the flow of goods,
services, and information. This collaboration will include communication and
feedback, knowledge-sharing, supply and demand planning and
management, product and service design, make vs. buy decisions,
production and scheduling, order fulfillment, warehousing, inventory control
and distribution, and disposal.
The Postal Service will explore innovative teaming, supplier-managed
inventory, strategic alliance, value-engineering, shared-savings, and other
non-traditional contracting arrangements with suppliers.
The Postal Service will provide offerors notification of and rationale for
contract awards; debriefings will be available if requested. In order to attract
and retain quality suppliers, develop true strategic relationships, and spur
communication of innovative solutions without the fear of suppliers'
capabilities and ideas becoming known to competitors, the Postal Service will
protect proprietary business information to the extent required by law and
good business practice. In turn, when requested by the Postal Service,
suppliers are expected to provide current, complete, and accurate cost or
pricing data or any other information to ensure reasonable pricing.
Lastly, in order to maintain effective performance and Postal Service-supplier
communication, contractual disagreements will be addressed by both parties
at the Contracting Officer or appropriate management level; if disagreements
are not resolved at this level, they may be pursued with the Postal Service's
Supplier Ombudsman.
Technology
Electronic commerce with suppliers is a major enabler of transactional cost
reductions and of moving the Postal Service toward SCM excellence. It is the
goal of the Postal Service to have an integrated electronic business solution
for all supply processes. This extends to the entire supply chain, including
communications and document exchanges between clients, Supply
Management, suppliers, and other Postal Service supplying stakeholders.
The Postal Service will attempt to automate the supply chain process -
particularly from order placement to disposal - as much as possible.
Inherent in this principle is an expectation that Postal Service suppliers will
become capable of conducting business electronically. New suppliers will be
enabled by electronic requirements, purchase order, and invoice and
payment processes, when an electronic business solution is available.
Additionally, commitments with existing suppliers using requirements,
purchase order, and invoice and payment processes will be transacted using
an electronic communications method whenever possible.
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