by: Samuel Greengard
The federal agency modernizes its logistics management system and achieves cost savings exceeding $319 million, while eliminating more than 25 archaic systems.
Few organizations face greater operational challenges than the U.S. Department of State. The federal agency, which has a presence in almost every country in the world and has deployed tens of thousands of workers representing American foreign interests, must track procurement and other processes across 264 sites. This includes more than 14,000 vehicles and 4,800,000 other items.
“When we first mapped processes in the late 1990s, we found that the system was ripe for improvement,” says Cecilia Coates, managing director for the Office of Logistics Management.
Among other things, cycle times for order fulfillment could take nine to 12 months—and up to 24 months for classified procurement—while overhead sometimes surpassed 150 percent of the cost of goods. In some cases, 15 or more organizations had their hands in the supply chain process.
What’s more, there was little or no status reporting, and financial reconciliation could take more than a year.
“People in offices would sometimes have to call three different continents to identify the status of their transaction,” Coates reports. “There were no global identifiers in place. The organization and process were very decentralized and stovepiped.”
The State Department began a transition to more modern technology in 2003, when it installed an Integrated Logistics Management System (ILMS). Since then, the platform has delivered approximately $319 million in cost savings, while eliminating more than 25 antiquated IT systems.
The ILMS, which supports more than 35,000 users in nearly 200 countries, handles more than $10 billion in annual procurement across more than 450,000 transactions. It also manages more than 200 million pounds of annual freight that’s valued at $170 million.
“For a global logistics system to work effectively, it must integrate many pieces and provide a seamless experience,” Coates points out.
Undergoing a Modernization
As a result, the ILMS is now undergoing a modernization that extends additional capabilities to more than 200 sites globally. Working with consulting firm Accenture, the agency has added fleet and expendables management modules that extend and enhance functionality.
Melissa Johnson, division director for Logistics Systems at the Department of State, explains that in addition to achieving huge direct costs savings, the agency also has eliminated a tangle of homegrown systems. “We’ve been able to incorporate and centralize numerous commercial software applications and include them in our portal,” she says. “This has allowed us to standardize business processes all across the supply chain and have much better data at our fingertips.”
But the benefits don’t stop there. The use of advanced analytics is driving further improvements and additional costs savings, she adds.
For instance, the agency previously had a significant problem with “dead stock” that had previously been purchased—in some cases years before—but had not been used. “Now we can spot the stock and take action,” Johnson says.
In 2012, the American Council for Technology and Industry Advisory Council (ACT-IAC) honored the State Department and ILMS with two Excellence.gov awards.
The initiative has ultimately made the agency far more efficient and helped it deal more effectively with the requirements and pressures of today’s environment.
“We have a full audit trail and an ability to understand transactional activity in a way that wasn’t possible in the past,” Coates concludes. “We are able to detect fraud and improve our global supply chain. The system provides enormous value.”
About the Author
Samuel Greengard writes about business and technology for Baseline, CIO Insight and other publications.
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