The GSA Federal Acquisition Service’s (FAS) supply program has undergone a dramatic change in recent years and GSA’s fourth-party logistics, or 4PL solutions, is one of the breakout programs. This model is proving successful because of exactly what it isn’t – one-size-fits-all.
Ten years ago, in 2007, GSA was charged with transforming the legacy ServMart stores into a single garrison retail supply chain solution that could support the entire United States Marine Corps (USMC) around the globe. In response, GSA developed a groundbreaking single enterprise approach. It’s a customer-centric, vendor-managed 4PL solution that, among other things, enabled government and military personnel to focus their time, energy and resources on their mission rather than managing the store’s inventory and stock of cleaning and office supplies.
GSA’s 4PL retail solutions range from virtual sales to a full storefront and are customizable to the needs of any partner. This flexibility is exactly why the USMC ServMart and GSA’s vendors have found 4PL works so well for them.
In just a few short years, GSA’s 4PL solutions program has transformed the Garrison Retail Supply Chain for the USMC. According to the USMC, at the beginning of this initiative, it was spending more than $66 million annually to operate USMC ServMarts. Today, that operational cost is less than $5 million each year.
In the pre-4PL “old days,” the USMC operated independent garrison retail supply operations at key installations around the world, selling government-owned industrial products and office supplies warehoused at GSA depots. They operated in the classic “inventory” model – complete with all the accompanying purchasing and warehousing headaches. Because GSA owned the products, the agency was responsible for all carrying costs. Bottom line: if the goods sat on the shelf and didn’t sell, the taxpayers paid the price. The “old way” also meant that government (and military) personnel were having to expend valuable resources on day-to-day routine activities of running their stores. GSA’s 4PL model has replaced that with a single enterprise solution.
With 4PL, professional customer service and support keeps the stores running efficiently. GSA manages vendors that provide products both online and in brick and mortar stores. Vendor partners assume responsibility for delivery and displaying products in the store. In addition, the vendor owns the products until the point of sale, lowering overhead costs. Customer purchases from GSA are still requisitions, but product choices are much broader than they had been and online purchase for shipment to the store is available, too. The referral process provides USMC’s local and remote customers, and other government agencies, with access to hundreds of thousands of line items offered by GSA vendors. It has also reduced the number of USMC procurement actions, saving the USMC the cost of conducting procurements via contracts and the Government Purchase Card.
“We also come in with our own point of sale system,” said Paul Mack, Director of GSA’s Office of Retail Operations. “This allows the Marines to not spend any more money on legacy IT systems. They use ours and get all the data from us, metrics, whatever spend data they want on a monthly basis. We provide that program management and oversight to them from the enterprise level.” With GSA as the single contact for flow of products, financial data and other pertinent information, the USMC can focus on its core mission – which isn’t retail sales.
But Mack says 4PL isn’t limited to just the USMC. “We’re working with all the Services now and are continually trying to grow our customer and product base. We’re implementing a single enterprise solution right now with the Commander, Fleet Readiness Centers – they’re the naval aviation enterprise depot level repair facilities. And we have Army and Air Force customers all over the globe, too.”
So what’s the “secret sauce” in 4PL? Mack believes turning over the day-to-day operations of the stores (and the warehouse and inventory jobs) to GSA and our vendor partners allows the USMC and the other services to focus on their core missions. “There’s a lot of flexibility in the products we provide to them. There’s best value pricing. And we manage the vendors and ensure compliance with the Ability One mandates, the Trade Agreements Act, the Buy America Act. Not to mention that we get you the products you want, when you want them, where you want them.”
Under the 4PL model, GSA can boast results that include verified cost savings, cost avoidance, cost standardization and an improved customer experience. “And vendors continually add different types of products, too,” says Mack. “They want to make it ‘one-stop-shopping’ for all kinds of products. It’s a growth platform for them, as well. And for us.” By the end of last year, all the retail stores supporting the USMC bases in the Pacific had transitioned to the 4PL model. There are now 10 ServMarts in operation, with two more planned to open at Marine Corps Air Station Yuma, Arizona and Marine Corps Air Station Miramar, California by 2018.