Supply Chain Makeover Could Save US Government $500 Billion

We all know supply chain optimization can save money. But, a new report suggests that the US government could save a massive $500 billion by simply putting best practices to work and decreasing duplication in its supply chain network.

The report, released last week by the Technology CEO Council (TCC), says better aligning government supply chains would also "render the government's procurement process far more transparent, helping to strengthen public trust." As I see it, there's one more significant benefit, too: risk mitigation. Improving supply chain visibility is an essential first step to reducing both short-term and long-term threats.

In addition to decreasing supply chain duplication, TCC's report also reveals several other areas where tax dollars could be saved. For example, TCC suggests improvements with regard to:

Management of IT assets. The federal government spends approximately $76 billion annually to support and manage its vast and widely dispersed information technology (IT) assets. TCC estimates that up to 30 percent of that spending could be saved by further reducing IT overhead, combining data centers, eliminating redundant networks and standardizing applications.

Analytics used to detect fraud. The government could save an estimated $200 billion by applying advanced analytics technology to reduce fraud and errors in federal grants, food stamps, Medicare reimbursements, tax refunds and other programs, TCC says. Analytics can transform these kinds of programs, making them more adaptive, responsive and even predictive based on the changing needs of citizens.

Digital technology. Transitioning antiquated, paper-based processes to digital records management for federal forms could generate as much as $50 billion in cost savings over 10 years.

Asset consolidation. The US Office of Management & Budget (OMB) has identified 14,000 excess, and 55,000 under-utilized, buildings in the federal inventory. Mining the balance sheet aggressively and corporatizing certain federal operations, the federal government could save $150 billion over 10 years by selling surplus facilities and auctioning off others, according to the report.

All told, TCC found that based on real-world expertise, technology and organizational changes that are already working successfully in the private sector, the government could cut back about $1 trillion from the deficit while increasing productivity, improving government operations and boosting the economy.

TAGS: Finance
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