relationships better, Supply Management integrated its materials management and purchasing processes into a single, cost-efficient process.

     The Supply Management organization consists of five commodity-based portfolios (Facilities, Mail Equipment, Services, Supplies, and Transportation) that purchase the equipment, facilities, supplies, and services required by the Postal Service. The portfolios centralize and develop commodity expertise and leverage the Postal Service's buying volume to decrease costs. Each portfolio has a number of buyers, market analysts, price analysts, and item managers who work in category management centers (CMCs) that specialize in particular commodity categories. Each CMC has dedicated teams specializing in the purchasing and supplying of specific goods and services that fit into the particular portfolio.

     CMC teams and purchase teams apply SCM business practices to both strategic sourcing and individual purchases and orders. The teams continually examine demand, market conditions, and the supplier community to determine how best to meet the needs of client organizations and which business practices will be of the greatest benefit to the Postal Service's bottom line.

     Four purchasing service centers are responsible for purchasing supplies and services for the day-to-day operational needs of field offices. An Operations group concentrates on inventory control, materials distribution, and asset recovery and disposal.

     The SCM Strategies group provides SCM expertise and guidance to the portfolios and CMCs to help identify, develop, and implement SCM-focused strategies and cost-reducing initiatives. The Supply Management Infrastructure organization is responsible for policies and procedures, training and development, process review, and data integrity.

     During 2003, Supply Management provided effective support for the Postal Service's strategic programs and exceeded

targets for SCM cost reductions and revenue generation benefits by more than $269 million. Following is a discussion of some of the most effective programs.

     The Mail Transport Equipment Service Center (MTESC) program (see chapter 1 section E.5) provides an integrated network for the processing and repair of the Postal Service's MTE. Five suppliers operate 22 MTESC contract sites. During 2003, contracts were restructured to provide suppliers greater flexibility in responding to Postal Service operational needs. These contracts resulted in savings of $10.6 million. The MTESC network reaps savings in the form of fewer workhours, reductions in purchases, and efficient inventory management.

     The Maintenance, Repair and Operating (MRO) supplies category is comprised of an integrated basket of products and services necessary to sustain postal system wide operations and facilities management. This category is comprised of the following subcategories: MRO supplies, MRO services, custodial supplies, and custodial rental services. Annual estimated spend projection for the entire MRO category is $291 million. Prior to SCM efforts, requiring organizations typically bought MRO products and services from more than 1,000 suppliers through local buying activities (credit cards), purchase orders, basic pricing agreements, geographical system-wide contracts, national ordering agreements and national contracts. Supply Management used SCM techniques and business disciplines to employ a structured management program for MRO category items. Total 2003 SCM captured savings for MRO are $14.4 million.

     The Postal Service's e-purchasing system, eBuy, provides more than 53,000 Postal Service employees with electronic requisitioning, approval, and invoice certification capability. Employees with Internet access are able to access electronic catalogs, track purchases, and electronically certify paper invoices. During 2003, eBuy processed $2.3 billion of the Postal Service's purchasing requirements. Of that amount, $210 million resulted in electronic catalog