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Sky’s the limit for FAA savings?

The Federal Aviation Authority in the US is looking into sourcing goods and services and how this can be done more efficiently with a scheme called SAVES – which stands (almost) for Strategic Sourcing of Various Equipment and Supplies. Hey, it’s close enough.

It looks on the surface like it could also be called “could we be getting better deals?” (which would also make a neat acronym if you took some letters away and added some as the FAA appears to have done).  The scheme is focused on commodity products and services only, and as everyone knows, the only way to sell those and compete realistically is on price alone.

Is this sustainable?

Intelligent Sourcing is reminded of a conversation with an advisor a few months ago. He’d been to see a client and examined the deals they had in play and he was honest enough to say, you know what? I can’t improve on these, they are good deals.

Instead of being pleased with the job they’d done negotiating on their own behalf, the client said the answer wasn’t much use because the job’s metric was on how much money they could save. So “you did a really great job last year so the fat has been cut away” really didn’t help.

This is the danger if you use cost only as a metric for sourcing. We imagine the FAA has identified areas for efficiencies and wish them luck; however, how long a scheme like this can be in place before suppliers have to damage their business in order to compete is up for debate.

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