The Postal Service has had mixed success with supply chain
management initiatives it began in 2002 aimed at improving
its financial outlook and updating operations, the General
Accounting Office has said.
It said similar management efforts have enabled private
sector corporations to leverage buying power and more
efficiently procure goods and services, but that the Postal
Service has fallen short of fully realizing benefits.
The Postal Service reported $78 million of savings and
revenue in fiscal 2003 through its bulk fuel program, reverse
auctions for transportation contracts, national contracts
for boxes, custodial supplies, labels, retail packaging and
tires, but fell millions short of fully realizing savings,
according to GAO, even as it said the figure was derived
from questionable data.
It said highway contractors have turned away from the bulk
fuel program designed to leverage buying power for diesel
fuel used to ship mail to distribution centers. That was
projected to save $18 million but yielded just $1.1 million
in fiscal 2003 savings — funds will not be recouped, partly
because there is no automated system to adjust fluctuating
Although the Postal Service said it saved $5.9 million
through reverse auctions enabling it to select contractors
through online bidding, $2.1 million of that was based on
incorrect or unverifiable baseline data, said GAO, also
citing the lack of a “system for harnessing annual spending
It said another problem had to do with small business
contracting — neither contracting officers nor contractors
used correct size standards, making it impossible to judge
the effect of the supply chain management initiatives on
small business contracting.