A $35.8 million cleaning and renovation contract was awarded for the Trenton, NJ, P&DC. This renovation project was started after a sterilization project was completed which eliminated anthrax at the site. The renovation project is scheduled for completion in 2005.

The Mail Equipment Portfolio awarded a contract for $127.4 million for installation of the Automated Tray Handling System on the Automated Flats Sorting Machine 100 platform. By employing SCM strategies, $7.7 million was saved on this purchase.

f. Supply Management Operations

Supply Management Operations manages the supply of materials required for daily postal operations, through four material service centers and two material distribution centers. The Operations catalog includes more than 25,000 stocked items, 5,000 items ordered directly from suppliers, and 700,000 items available through electronically accessible commercial catalogs.

Supply Management Operations contributed to the integration of the supply chain between Maintenance and Material Management for the Postal Service by establishing a reporting relationship between Supply Management's National Materials Customer Service at the Material Distribution Center in Topeka, KS, and the Maintenance Technical Support Center in Norman, OK. These functions can now share complaint and operational questions so they can coordinate accurate responses. Questions are also shared with select suppliers to involve them directly with the customers. Suppliers now receive quick, accurate feedback in order to improve their product quality and support to the Postal Service.

Supply Management Operations has also taken the lead on a number of cross-functional programs and projects that overlap portfolios, coordinating between customers, SCM teams, and suppliers. An example was the collaboration with six suppliers to improve support for selected supplies during contingency operations. Suppliers identified alternatives and cost estimates, from which the Postal Service was able to develop standard operating procedures for providing rapid support in emergencies. As a result, standing inventory was reduced by $10 million in new stock while suppliers identified and provided more than $3 million in emergency protection supplies. Supply Management Operations manages an inventory valued at $101 million; an additional $414 million in supplies is managed by Operations but issued directly by suppliers.

International Merchant Purchase Authorization Card (IMPAC) holders for 2004 numbered more than 42,000. Small, routine purchases are charged using these cards. The Postal Service received revenue of $2.2 million in volume rebates from the credit card provider, an increase of 14.3 percent from 2003.

Supply Management Operations pursued process improvements and other cost avoidance initiatives to reduce the amount spent on spare parts for mail processing systems. The efforts resulted in $8.5 million in savings in 2004 on the Postal Automated Redirection System, Automated Tray Handling System for the Advanced Flats Sorting Machine 100, and Feeder Enhancement De-Stacking Retrofit.

Wholesale inventory turnover (the number of times inventory is replaced over the course of the year) improved by 18 percent during 2004. Inventory is calculated as the total number of inventory issues for the year divided by the aggregate average inventory level for the year. More than 4,000 new items with a value of $8.7 million were added to support new major programs.

g. Supplier Diversity

Maintaining supplier diversity is an essential component of the Postal Service purchasing strategy. The primary goal of supplier diversity efforts is to develop suppliers with the capacity and the capabilities to meet postal needs now and for the long term.

Five principle activities are targeted toward creating competitive access to postal business:

• Offering online training for any employee involved in the procurement selection process.

• Offering online access to databases containing pre-identified small, minority-owned, and women-owned businesses to compete for contracts.

• Extending outreach to various segments of the customer population, including small, minority-owned and women-owned business organizations.

• Identifying methods to streamline the purchasing process to ensure that it is more accessible to small, minority-owned, and women-owned businesses.

• Recognizing and rewarding champions within the purchasing and supply management organization that advocate on behalf of small, minority-owned, and women-owned enterprises.