Nov 25, 2022
Tactical Equipment Procurement Strategies: A Brief Overview
Tactical Equipment Procurement Strategies: A Brief Overview
What is a Procurement Strategy?
A procurement strategy is a long-term strategy aimed at choosing the best suppliers for the right price that will deliver quality and timely products. It considers the complexities of the supply market, including monopolies and barriers to entry, and strives for operational excellence.
A procurement strategy is the foundation of your organization's priorities and objectives. Cost reduction, total quality management, and supply chain management are common targets. In 2021, Deloitte’s CPO survey discovered that 78% of respondents said that “driving operational efficiency” was their first priority, while cost reduction came in as a close second.
While low-cost procurement may save money, it can also lead to poor quality and missed opportunities for cost savings. Furthermore, it doesn’t foster long-term vendor relationships.
A value-based strategy is better, which considers the overall cost of ownership, including the purchase price, installation costs, delivery time, and maintenance and repair costs. This option leads to significant savings when it’s implemented correctly.
Your procurement strategy must be flexible since your company's needs are likely to change. A strategy that doesn’t consider these changes will fall short of your objectives.
MRO Procurement Strategy
Implementing a maintenance, repair and operations (MRO) procurement strategy is essential to ensure that spending is managed at the highest possible level. Streamlining your MRO procurement strategy is crucial to controlling costs and optimizing production. MRO purchasing can consume as much as 40-60% of your company's budget, making it essential to streamline processes as much as possible.
With the right supplier-buyer relationship and inventory-management system, you can reduce inventory costs and improve end-to-end production efficiency. This strategy also promotes preventative maintenance, reducing stock locations and write-offs, and improving overall equipment effectiveness and production stoppage.
The first step in streamlining your MRO procurement strategy is to create a detailed inventory of all MRO items purchased. We should categorize these MRO items into commodities and specialty parts. Tracking inventory levels helps you allocate funds to the right parts. Additionally, it allows you to identify suppliers and take advantage of bulk discounts.
The process costs associated with MRO procurement are twice as high as product costs, making it a potential area for cost savings. This means that a good MRO procurement strategy focuses on increasing revenue while decreasing processing costs. Developing a strategic sourcing approach that optimizes your MRO procurement can help you improve your bottom line and reduce costs significantly.
Effective Tactical Equipment Procurement Strategies
Tactical procurement for equipment is a vital part of the military supply chain. We often refer it to as tactical sourcing and it focuses on making purchases at the last minute. This method identifies the needs and mission of each unit and defines the requirements for procurement. As an example, the Navy uses this method to distribute items based on the projected operational environment and required operational capabilities reports.
Tactical sourcing deals with procurement at the point of need rather than long-term strategic goals. It is a popular strategy for small businesses and organizations that do not have the resources to map out a complex network of suppliers. In addition, this method requires less time and effort than traditional strategies.
In many cases, items that are not defined in a TOA must be purchased through other means. This may be due to the unique requirements of the unit, which are unknown because they’re not covered by the TOA. We list examples of tactical procurement strategies below.
Government Purchase Card Program
One option is to purchase items using the Government Purchase Card (GPC), which issues credit cards for purchasing small-ticket items. This program was created to provide greater equipment procurement flexibility by streamlining the payment process and minimizing paperwork under the micro-purchase threshold. Purchase thresholds are dependent, but range from $10,000 to $30,000.
National Stock Number System
The National Stock Number system is a 13-digit code used to track the supply of standardized materials. It is used for items such as weapons and equipment. Purchasing these items through stock listings is usually the easiest way to acquire them. In addition to facilitating logistics, NSNs make it possible to manage the lifecycle of these supplies. Using GSA global supply, agencies can access NSNs through the requisition process. This is a simple way to buy products directly from the government. In addition to competitive procurement, GSA complies with Federal Acquisition Regulations (FAR) and other relevant regulations, so all requisitions are compliant.
Leveraging Existing Contracts
Instead of going the GPC route or initiating new contracts, you can look at existing contracts to secure materials. By going this route you can reduce the amount of paperwork and audit requirements as long as the vendor has already been approved by the Defense Logistics Agency (DLA).
Tailor-Made Logistics Support
The SOE TLS program is a framework for providing tailored logistics support for special operational equipment (SOE). It was developed by the Construction and Equipment Directorate of the Department of Defense (DOD) Troop Support. It’s designed to deliver high-quality products at competitive prices to customers worldwide.
This program brings together commercial support and Government transportation capabilities to provide solutions that meet the needs of both the military and civilian customers. It offers support in five core areas: Aerospace, C5ISR, Expeditionary, Fire & Emergency Services, Medical, and Tactical.
ADS, Inc. is one of the largest companies in the Defense Department's Tailored Logistics Support program. Founded over 20 years ago, we now manage 3,000 supplier partnerships and over 50,000 military gear products. We have expertise in multiple procurement channels with a proven record of delivering.
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