Lean in Government | Episode 12 | Vendor Management System

Government has one of the greatest responsibilities of any organization—serving people.

In my newest episode of the Lean in Government Podcast, I share three practical ideas that can make a real difference:

✅ Why working in government is one of the most meaningful careers and why public servants deserve our appreciation.
✅ How Vendor Managed Inventory (VMI) can reduce costs, eliminate waste, and simplify purchasing.
✅ Why a standardized naming convention can transform inventory management, document organization, and daily operations.

These are not just theories—they are lessons learned from real Lean transformation projects that helped improve government operations while delivering better value to taxpayers.

If you work in local, county, state, or federal government—or simply have a passion for continuous improvement—I invite you to listen to this episode. I hope it gives you practical ideas you can apply in your own organization.

🎧 The link to the episode is in the comments.

What is one improvement your organization has made that saved time, reduced waste, or improved service to your community?

#LeanGovernment #LeanLeadership #ContinuousImprovement #PublicSector #OperationalExcellence

Transcript

SPEAKER_00 0:38

Hello and welcome to a new episode Lane in Government. Today I would like to talk to you about three things. Number one, I would like to speak to you about the importance for working for government, regardless local, state, government, or federal, county, doesn't matter. And then I would like to talk to you about building some relationship with your suppliers who can provide vendor management system and how it can benefit you and your organization. And the last thing I want to talk to you about is the importance of naming convention. How important is that for your warehouse environment or for your other files and folders that you use every single day working for government? Let us talk about number one. Importance of working for government. Why is it important to work for government? First of all, I mentioned this before, it takes a special person to work for government. And the reason for that is government usually pays less than the private sector. That's number one. Number two is you don't get any bonuses ever, ever, ever, ever. Like you could you could receive some bonus if you do well in the private sector. So that's why it takes somebody who really cares about their community, who really cares about the country, and is willing to go that route and that path and to work for government. So I want to let you know that I really appreciate every single one of you who work and serve us every single day. This past week, I was in the city of Chicago in the state of Illinois, and I was so pleasantly surprised that I took time to thank the people of Chicago. Why? When I arrived and um when I went out for a walk to the Navy pier and checked out the town, I found out how clean and organized that city is. I also felt safe because there were so many police officers, security officers on patrolling the street, on the street, patrolling the streets. And um it made me feel safe. And I saw many families, uh, husband, wife with kids, and they felt safe too. And um the other thing I really liked is how clean it was. Uh that that that that city, the downtown of Chicago, is so clean that you can't find a piece of paper on the street somewhere. I mean, they really take care of that city with love, and we can tell that we as a visitors. So I took the initiative and I wrote in my LinkedIn a short post just to thank them and to tell them about my experience in the city of Chicago. So today I want to thank you. Doesn't matter where you are, all those of you who are serving our country and every single day and working for a government. Thank you very much. Let's get back to our topic today and talk about now the importance of building some relationship with your suppliers. Your suppliers can help you and benefit you greatly. And one of the things that I found from when I was consolidating warehouses in uh City Grand Rapids and making uh distribution centers, um, I found out that we could save a ton of money if we let our suppliers handle something that they do well and better than us at lower cost. And at the beginning, you might receive some pushback, and I want to talk about that as well. When I suggested on my project document, which we call an A3, and I'll talk about an A3 in future episodes, I proposed this solution, this this um not a solution, this idea uh for managing inventory, small inventory by our local vendors. And people initially thought that this will slowly take away jobs uh from our government entity, and uh there of course was some resistance. But I promised them and told them that this will actually not uh take any jobs away. Actually, if we save money and we can prove it, we could actually share that with our private employees and pay them more. Which I thought they were not paid well enough initially. So I had to find a way how to save money so I can justify paying them more. And I wanted our employees, storekeepers, and their supervisors to focus more on things that matter more. Things like uh parts that keep the city running every single day, wells, meters, uh, and other things. And um to be able to do that, I had to open up capacity for my employees. I had to change the way they think and the way the way they do every single day their work. And I thought it was a great opportunity to take away something from their uh workload and to give them more time to focus on critical things, things that matter, where they can really, really spend more time and efforts, and in return uh make more money. And that's what I did. Um, I did actually uh change their titles and positions from, for example, Storekeeper 1, we moved everybody Storekeeper 2, then we made some supervisory roles and hired new supervisors, we called them MRP supervisors, material resource planning supervisors, and uh we made sure that everybody was paid well. Now, how did we get there? Like I just mentioned earlier, is vendor managed system helped us a lot. And what I mean by that, uh during the inventory at one of the warehouses, I found out how much obsolescence we had, and we had to get rid of some things. For some things we had to pay to get rid of, like some chemicals and oil. You can't just uh get rid of it in the landfill. That is not appropriate or illegal. So we had to hire companies that can safely dispose all those chemicals that can we can no longer use. So that was very costly. Another thing I found out is how many products we had with expiration date that need to be replaced. For example, I didn't know that the hard hats, those plastic hard hats, had expiration dates. And uh working with some um EHS uh with some safety personnel, I found out and learned that they do for a fact have uh expiration date like child seeds, those uh uh child seeds, they have expiration date as well. And then explained to me how to look the date and how many years you can have them before you they start deteriorating and you need to get rid of them, they're no longer safe for you to use. The other thing I found out and stuck in my head all these years was an eye wash fluid. We had a ton of eye wash fluid, which you have to have. When you have thousand-and-plus employees, you gotta provide that. God forbid something happens, they get something in their eyes, they need to wash their eyes very quickly before they see a doctor or a nurse. But that item had expiration date. And then we had other items, I can remember them all, but they had expiration as well. Also, we had items that um we had to buy on a regular basis every month, and I noticed that my team was spending a ton of time providing the creating a purchase requisition, um, getting those items, putting them away, and then later they had to pay those invoices one by one, and they would get those items from several different suppliers. And you can imagine the amount of paperwork that we had. At this one location, over 50 POs were created, purchase requisitions, POs, and then invoices were paid every single month. Over 50. Just in those small items. I'm not even talking about the bread and butter items that keep the city running and operational, like valves, like flanges, like like couplings, like mead water meters, like parking meters, and so on. So I saw a waste in that. And then I talked to the purchasing manager at City Hall about this idea and talked to my boss, CFO. And what we did, we actually uh found a way and found companies that do a vendor management system for small components on small consumable items, uh things uh like eye wash fluids, gloves, batteries different sizes, uh flashlights, and so on. So we found three companies Granger, FastNal, and MSC. They did a very good job, what I have heard when it comes to a vendor management system. They had these different vending machines that they provide to their customers and they dispense those items. So, what I did with my team, we identified all those items, hundreds of items, that we think we could run through those machines and lockers that would be provided by our vendor. And um we gave it to all our vendors a list and expectation for this vendor management system. One of the expectations that I set is I no longer want to own the inventory or pay for anything until my team dispenses inventory inside the locker or inside the vending machine. That was my request. Out of those three companies that I mentioned, only one said, we normally don't do that, but we're gonna obey your expectation and we're gonna uh tweak our current process and provide to you all the inventory that you want, and only charge you once a month for things that you have dispensed. And things that have not been dispensed, uh, we will not charge you for that. The other two companies didn't want to do that. And I think that was a big mistake for them. Uh later on, I found out how much money they lost because they didn't want to go with that. And because we were switching now this process, we also wanted to make sure whoever gets this contract, and we went uh and and gave everybody a chance to bid on this project, uh, only one company uh actually came back and submitted a proposal and was okay with us only paying when we dispense something and paying only one monthly consolidated bill. The other thing I I made is I wanted to have one invoice for the entire city. Instead of paying 50 invoices every month here and there, and we have multiple six, seven, eight storerooms, um, and they all had to process the same thing, buy the same thing, pay the same invoices. I wanted to simplify that. I wanted to make sure that we can pay only one invoice, and we made that happen. The way we made that happen is by giving these RFID like credit cards, cards to employees. Actually, later what we did, we purchased a badge for employees, HR did, and inside the badge there was an RFID chip. So anybody that gets a badge from HR, these new badges, would have those RFID chips. And we were able to program it with their name, what department they work for, and their account code. What account code are they associated with? That gave me the ability to give them access to all the machines throughout the city, and we did implement so many machines everywhere. We had them in every corner of the city. We had them waterpot, wastewater, uh, parking services, street lighting, signs and signals, uh, public works everywhere. So we had those machines throughout the city, and for the most part, they have contained the same items, same critical items like gloves, uh safety glasses, earplugs, batteries, and so on. But then for each apartment, we did add some unique items as well. So, what we did, uh we broke an old practice uh where employees, when they needed something, let's say they needed gloves, they needed earplugs, they needed something, and they would have to travel back to their respective storeroom to get those items. What a waste, right? So they wasted gas, they wasted time, and um they could have been working at that location. So, what we did, we gave access to all those employees, to all the uh vending machines throughout the city, and told them they can use any vending machine. And what we did at the end of the month, we were able to filter, and we had a report that filtered that, filter by their name, how much they use, when they used it, and from which location they picked it. So the right account code was charged for the items that they use. So, water department people, whatever they used, were charged for those items, and their budget was hit. So that's one good thing. The other good thing the people found out is accessibility. They said, this is great. There were days where we had to call a storekeeper uh on overtime, like a holiday weekend in the evening, because we didn't have access to the storeroom. Only storekeepers and their supervisors and managers of the department had access to the storeroom. So we would have to wake somebody up or call somebody on the weekend to come unlock. So typically, storekeeper would come in and automatically, even if they helped them for five minutes, they would get four hours of overtime. We eliminated that 100% with this new process, and that was not necessary anymore. Believe it or not, those storekeepers liked it as well. Uh, most storekeepers hated coming in on the weekend when they're spending some time with their family and they were on the call and they had to come in just to issue a few items. Like those consumable. The other thing that we fixed was we eliminated obsolescence completely, 100% for those items that we now kept inside vending machines and those lockers attached to the vending machines. We 100% eliminated obsolescence. So I measured that as a manager, as an inventory national manager, I measured that on a monthly basis and an annual basis, how much money we were saving. Um, I also had measurements from before how much money we wasted and had to eliminate. So the other thing is that helped us is before everybody was ordering, stocking, and possibly ordering more than they need, and then it would get damaged, we would lose it, or we would have to dispose it when it becomes obsolescence. They've got eliminated 100%. So now storekeepers and MRP SurSP only one invoice for the whole city. So I had an MRP supervisor, one of my MRP supervisors, just processed for the whole city, that one invoice and sent each department how much money they have spent, how much money we took from their account, and which account code. And sometimes supervisors wanted to know who took what and how much. Because there were some people that were abusing. You can imagine about the holiday seasons, we start seeing an increase of batteries, AA batteries, uh, or triple A batteries. We start seeing an increase. So there was some disciplinary action taken as well with some employees, and they were warned and said, hey, uh, you can't use this for your personal use. We this is this is for our work only and cannot be used for personal use. So first year, a few instances like that happened after that. We didn't have that issue anymore because people know we have some checks and balances, which we should. In government, we should not be abusing our system and using taxpayers or ratepayers' dollars and using for our own benefits. So, vendor management system is a great way to go. Find some uh vendors in your town, write a proposal, uh, let it go to bed so you everything is legal and right. So whoever you award for uh nobody else is gonna be able to complain. Now I want to talk about naming convention, importance of naming convention in government. And I'm not just gonna talk about naming convention in the warehouse, but also in the office. But let's start with a warehouse. So, warehouse, what I found out is we have all these warehouses. In some warehouses, we have the same identical items, like water and wastewater treatment plan, uh, had some uh valves and flanges. They're 100% identical to get them from the same supplier. However, uh in their systems, doesn't matter if it was a Cardex file, Excel file, XS database, whatever they used, was called differently. So I couldn't never initially figure out how much really inventory we have of an item in the city when I was asked. So, what we did, we created a naming convention. I brought different parties from all departments to make sure everybody agrees on this naming convention, everybody signs off it because going forward, we're gonna change this whole uh description names and naming convention that we currently have to something that's more structured and better for everyone. So, for example, uh the team, I can't remember, but we agreed on the part number and then description, and description would have for, for example, a name, a valve, comma, space, three-quarter inch, comma, space, whatever. Or it would have paint, comma, space, orange, comma, space, um, how many gallons or something like that it is. So I don't remember exactly, but we did write also SOP for the naming convention, and every single employee within the city had to go back to their systems and rename everything. We also hired some interns and had them help us with this task because if you have uh thousands of part numbers and descriptions need to be changed, it takes time. Not only we changed it in our MRP system, we also changed an on-base that was associated with our MRP system and a work order management system. So everything is the same. And that is a huge, huge plus. So typically in most organizations, I'm sure there are some government entities that already have great and good naming conventions. So good job, and kudos to you. But most other uh government entities that I met during the link conferences that we organized and other events where I met people and had a chance to talk to them, uh, they never had a really structured and robust uh naming convention. So I would highly recommend that you look into that as well. Same thing in the office environment, talking about city attorneys, talking about people at City Hall, uh City Clerk, Parkinson's water, wastewater, public works, you name it, uh we all have files and folders. And if we name things the same way, it is a light easier to search. And you know when you go to Google, for example, and you type in paint, and then you type in something else next orange, uh, things get filtered much better and you get to your results a lot faster. And our systems and softwares were designed the same way as Google search bar, and that helped us immensely. So I would highly recommend that you guys figure out uh how to name your folders inside a computer, maybe OneDrive, uh SharePoint, whatever you use, uh have a naming convention and then create that naming convention, create an SOP, make sure everybody within your organization majority agrees on it. You're never gonna get 100% of agreement, but majority agrees on it and go forward with that and make them mandatory. Then you have to audit that system from time to time to make sure everybody follows that, and you can coach uh people that get off track. So those are the three things I wanted to share with you. In the future episode, I would like to talk to you about an A3 that I mentioned earlier, what that is, and how we utilize this A3 uh for all our projects, for new position justifications, for capex and other things. Um, so we're gonna talk more about that in our next episode. Until then, I wish you the best. Keep learning, keep improving, and until next time, goodbye.