USPS Supplying Practices Process Step 2: Evaluate Sources

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Define Supplier Diversity Objectives

The Postal Service's Supplier Relations Principle aims to establish and maintain a strong, competitive supplier base that reflects the diversity of the supplier community and provides suppliers with access to purchasing opportunities. The Postal Service understands that a diverse supplier base is important from both a performance and public policy standpoint. Supplier diversity translates into conducting business with small, minority-, and woman-owned businesses (SMWOBs), as well as other suppliers. The Postal Service strives to be a world-class leader in supplier diversity.

Supplier diversity enables the Postal Service to take full advantage of the entrepreneurial spirit, capabilities, competitive pricing, new processes, products, services, and innovations offered by diverse suppliers. Diverse suppliers are essential to the Postal Service's continuing objective of being a market-driven organization. Postal Service suppliers are also Postal Service customers, so the value of cultivating a diverse supplier base is good business practice. The Postal Service has established programs and teams to ensure its full commitment to supplier diversity.

Definitions

1. Small business. A business, including an affiliate (see # 2 below), that is independently owned and operated, is not dominant in producing or performing the supplies or services being purchased, and has no more than 500 employees, unless a different size standard has been established by the Small Business Administration (see 13 CFR 121, particularly for different size standards for airline, railroad, and construction companies). For subcontracts of $50,000 or less, a subcontractor having no more than 500 employees qualifies as a small business without regard to other factors.

2. Affiliates. Businesses connected by the fact that one controls or has the power to control the other, or a third party controls or has the power to control both. Factors such as common ownership, common management, and contractual relationships must be considered. Franchise agreements are not considered evidence of affiliation if the franchisee has a right to profit in proportion to its ownership and bears the risk of loss or failure.

3. Dominant. Being a controlling or major influence in a market in which a number of businesses are primarily engaged. Factors such as business volume; number of employees; financial resources; competitiveness; ownership or control of materials, processes, patents, and license agreements; facilities; sales territory; and nature of the business must be considered.

4. Minority business. A minority business is a concern that is at least 51 percent owned by, and whose management and daily business operations are controlled by, one or more members of a socially and economically disadvantaged minority group, namely U.S. citizens who are Black Americans, Hispanic Americans, Native Americans, or Asian Americans. (Native Americans are American Indians, Eskimos, Aleuts, and Native Hawaiians. Asian Americans are U.S. citizens whose origins are Japanese, Chinese, Filipino, Vietnamese, Korean, Samoan, Laotian, Kampuchea (Cambodian), Taiwanese, in the U.S. Trust Territories of the Pacific Islands or in the Indian subcontinent.)

5. Woman-owned business. A concern at least 51 percent of which is owned by a woman (or women) who is a U.S. citizen, controls the firm by exercising the power to make policy decisions, and operates the business by being actively involved in day-to-day management.

6. Number of employees. Average employment (including domestic and foreign affiliates), based on the number of people employed (whether full-time, part-time, or temporary), during each pay period of the preceding 12 months, or, if the business has been in existence less than 12 months, during each pay period of its existence.

Supplier Diversity Objectives

Supplier diversity is the proactive business process that seeks to provide suppliers with access to purchasing and business opportunities. Supplier diversity is defined by:

• Enterprise and Supply Management (SM) policies and objectives

• The purchasing process

• Continuous improvement and monitoring

Supplier diversity objectives include:

• Continuous improvement of supplier diversity and in relationships with SMWOBs

• Continued broad market research analysis of the supplier community to identify and select the best suppliers

• Process improvements that promote opportunities for all suppliers to provide value-added products and services

• Awareness and information - making all Postal Service personnel responsible for supplier diversity

The supplier diversity objectives are aligned with Postal Service and SM objectives, which is a top-down approach. Laws, regulations, clauses, and provisions also contribute to shaping supplier diversity objectives. The Postmaster General and Vice President, Supply Management (VP, SM) convey the importance of supplier diversity. The Postal Service's website, www.usps.com, includes a supplier diversity section, which contains information on supplier diversity, goals, processes, frequently asked questions (FAQs), and a stated commitment to supplier diversity by the Postmaster General and VP, SM.

Supplier diversity objectives are universal to all Postal Service purchases; however, certain objectives may be more pertinent to specific types of purchases. The purchase's progression through the Process Steps defines the diversity objectives for each purchase. For example, the Postal Service diversity objective of continuing to perform broad market analysis to identify other possible suppliers is more pertinent to the purchase if a noncompetitive sourcing method is to be used. The business case for a noncompetitive purchase must address the extent and result of the market research.

The Postal Service continually monitors supplier diversity objectives and results, and by doing so, further refines the determination and definition of those objectives, which is in line with the supplier diversity objective of continuous improvement. This refinement is conducted through meetings, reviews, data gathering, and other methods of examination.

Supporting Supplier Diversity

The following sections of the supplier diversity corporate plan contribute to defining the supplier diversity objectives. Each area directly or indirectly influences at least one of the activities that define supplier diversity objectives, the activities of the purchasing process, continuous improvement and monitoring, and defining supplier diversity for the enterprise and suppliers. The areas are:

• Management involvement

• Communication/outreach

• Sourcing

• Subcontracting

• Innovative initiatives

• Training and development

• Tracking progress

• Performance indicators

• Recognition

Management Involvement

The VP, SM and SM management, meet quarterly to review supply strategies to ensure that the Postal Service is taking full advantage of the capabilities, competitive pricing, new processes and products, and innovations offered by SMWOBs.

The Supplier Diversity Team in Supply Management carries out continual assessments of supplier diversity business process applications, and provides related updates and briefings on best practices. The Supplier Diversity Team also serves as an information source to the SMWOB community.

Communication/Outreach

The Postal Service works closely with trade and industry associations, government agencies, and business development and purchasing organizations to exchange information on methods, initiatives, and processes to identify sources of supply. This enables contracting professionals, as well as credit cardholders and other Postal Service personnel to more effectively identify potential suppliers to meet Postal Service needs.

The Postal Service will:

• Conduct supplier forums to share information on Postal Service corporate business goals and objectives

• Conduct and participate in surveys and benchmarking studies for continuous improvement of supplier diversity processes

• Maintain intranet and Internet sites with supplier diversity policy, procedures, points of contact, and other resource information for various Purchase/SCM Teams, Clients, and suppliers

• Attend and participate in business opportunities and trade fairs promoting SMWOBs

• Continue to foster the development of mutually beneficial business relationships between internal clients and the supplier community

• Publicize purchasing and business opportunities in print or electronic media as appropriate to enhance competition

• Provide internal and external stakeholders with timely updates on the positive contributions of supplier diversity processes

• Continue to make available a formal registration process for potential suppliers

Sourcing Considerations

Purchase/SCM Teams should ensure that individual purchase plans and plans for prequalification demonstrate active sourcing efforts for diverse suppliers. Prequalification is further addressed in the Prequalify Suppliers topic of the Perform Solicitation-Related Activities task of Process Step 2: Evaluate Sources. Specific methodologies should be included for including SMWOBs in the purchasing process. Also, it must be ensured that each Purchase/SCM Team's market research includes specific efforts to identify SMWOBs capable of prequalification criteria and that these firms are encouraged to compete.

Market research is performed by continuously assessing the marketplace for drivers of market segments, industry trends, impact of new technology, competitive dynamics, supplier characteristics, and number of suppliers (national or regional) in a market. Market research is further addressed in the Conduct Market Research and Benchmarking Analysis topic of the Decide on Make vs. Buy task of Process Step 1: Identify Needs.

Subcontracting

The Postal Service encourages subcontracting with SMWOBs. Subcontracting with SMWOBs is further discussed in the Subcontracting with Small, Minority, and Women Owned Businesses topic of the Evaluate Proposals task off Process Step 2: Evaluate Proposals.

Training and Development

All employees in SM functions should annually participate in training related to supplier diversity.

The Postal Service, in collaboration with suppliers, will:

• Conduct roundtable discussions to share information on Postal Service corporate business goals and objectives

• Work together to develop better proposals

• Conduct sessions aimed at innovation and improvement

• Work to leverage benchmarking and best practices in the supply chain

Tracking Progress

The Postal Service strives for continuous improvement by performing quarterly monitoring of all effort-based indicators and year-end results. The Postal Service will periodically reposition supply strategies to adopt leading practices identified in the purchasing process.

All suppliers are classified to identify prime and subcontracting (second-tier) spend within each socioeconomic category. The Postal Service will continue to collect and report results through the tracking of:

• Total number of transactions (contract award and modifications)

• Total dollar amount of transactions

• Number of transactions with SMWOBs

• Prime Supplier SMWOBs spend

• Subcontracting (second-tier) spend with SMWOBs

• Total credit card expenditures

• Number and value of credit card expenditures with SMWOBs

Performance Indicators

The Postal Service strives for continuous improvement by establishing effort-based indicators in such areas as:

• Sourcing Plans - ensuring that SMWOBs are considered in the sourcing process, including consideration for prequalification and subcontracting opportunities

• Attending and participating in business opportunity and trade fairs promoting SMWOBs

• Holding advisory and debriefing sessions with SMWOBs

• Participating in and sponsoring forums that provide suppliers an opportunity to obtain additional guidance on processes within a commodity area

• Tracking types and numbers of source files and related resources used to identify qualified suppliers

• Tracking the number of opportunities offered within an industry category

• Developing, implementing, and maintaining purchasing and sourcing strategies that include SMWOBs

• Understanding the current diversity of each category supplier base and taking specific steps to ensure the continued effectiveness of that base

• Benchmarking results with other public and private sector organizations

Recognition

Recognition of supplier diversity efforts of both Postal Service personnel and suppliers will further promote the defined supplier diversity objectives. The Postal Service will celebrate successes by:

• Publishing both quantitative and qualitative results by each buying category on a quarterly basis

• Publishing supplier successes on a periodic basis

• Recognizing and publicizing outstanding SCM performance and best-practice successes by both clients and suppliers

• Recognizing extraordinary individual performance

• Recognizing substantive team or category performance, using current Postal Servicerecognition processes each year

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