![](media/image1.png){width="2.0in" height="2.0in"}

Logistics Supply/Warehousing Services

"Most Efficient Organization Summary"

National Institutes of Health

Solicitation \# 263-04-P(BC)-0013

Supply/Warehousing Services

23 December 2004

![](media/image2.png){width="1.875in" height="1.875in"}

**Table of Contents**

[1 EXECUTIVE SUMMARY 3](#__RefHeading___Toc91566687)

[1.1 Objective 3](#objective)

[1.2 Approach 3](#approach)

[1.3 Organization 3](#organization)

[2 Introduction 4](#introduction)

[2.1 Purpose 4](#purpose)

[2.2 Functions Under Review 4](#functions-under-review)

[2.3 Methodology/Approach 4](#methodologyapproach)

[3 Recommendations 5](#recommendations)

[3.1 Methodology and Assumptions Used to Develop MEO
5](#methodology-and-assumptions-used-to-develop-meo)

[3.2 Organizational Effectiveness, Efficiency, and Accountability
5](#organizational-effectiveness-efficiency-and-accountability)

[3.3 Levels of responsibility in the MEO
6](#levels-of-responsibility-in-the-meo)

[3.4 Technology 7](#technology)

[4 MOST EFFICIENT ORGANIZATION 7](#most-efficient-organization)

[4.1 Management Approach 7](#management-approach)

[4.1.1 Management Organization 8](#management-organization)

[4.1.2 Staffing 9](#staffing)

#   {#section .unnumbered}

# EXECUTIVE SUMMARY

The National Institutes of Health (NIH) Most Efficient Organization
(MEO) was developed as the government's organizational entity for
performing the scope of work and tasks required for Logistics
Supply/Warehousing Services at the National Institutes of Health. The
logistics staff manages a broad range of supplies and materials from
basic office supplies to biomedical research, animal food and bedding,
laboratory, chemicals general supplies and medical supplies that are
critical to patient care and medical research protocols. Development of
the MEO was accomplished through review of the Performance Work
Statement (PWS) requirements, analysis of workload data, and evaluation
of the requirements by staff currently performing each function. The MEO
is structured as a classical vertical organization along functional
disciplines augmented with support staff providing direct services at
four remote Institute/Center (IC) sites.

## Objective

The objective of the MEO development effort was to identify process
improvements, cost reductions, and organizational structures associated
with performance of activities required by the PWS to produce a
competitive agency tender submittal. Development of the MEO was based on
the PWS, interviews with management and technical staff, workload
analysis, and an evaluation of current operating procedures.

## Approach

The MEO was developed with a comprehensive analysis of the current
workload and comparison of the workload to the requirements of the PWS.
The approach to technical performance amplifies the MEO motto **"We
Deliver So They Can Cure!"** by focusing on the following four
fundamental themes:

-   Professional, quality service to the research community.

-   Responsiveness to changes in research dynamics.

-   Continued confidence and trust within the research community.

-   Ability to provide solutions to researcher demands.

The MEO development further sought to minimize the amount of indirect
positions and roles necessary to operate the organization to further
enhance their competitive capability.

## Organization

The MEO is predicated on the belief that activities provided by
logistics support staff are an essential ingredient of the NIH mission.
Underlying the technical approach of the MEO is the realization that
customer service and knowledgeable accurate responses to the NIH
community is of paramount importance. The staff that will form the core
of the MEO currently performs these services and is keenly aware of
their role and impact to the NIH.

The final overall MEO organization employs a vertical management and
functional reporting structure staffed by 30.4 Full Time Equivalents
(FTE) federal employees, supplemented with contract services employing
an additional 26 equivalent employees, to produce an efficient
organization capable of effectively completing the PWS workload.

# Introduction

## Purpose

The purpose of this document is to describe the government's Most
Efficient Organization that will conduct the functions specified in the
PWS.

## Functions Under Review

The PWS defines six performance areas applicable to the main Gaither
Distribution Center (GDC) and four remote sites at the National Library
of Medicine (NLM), the National Institute on Aging (NIA), the National
Institute of Dental and Craniofacial Research (NIDCR), and at the Center
for Scientific Review (CSR) The six performance areas are not required
at each site. Table 1, "Services Required at Each Location," identifies
the specific services required at each of the five specified locations.

  ------------------------- --------- --------- --------- --------- -----------
                            **GDC**   **NIA**   **NLM**   **CSR**   **NIDCR**

  **Requisitioning**        X                   X                   

  **Receiving and           X         X         X         X         X
  Delivery**                                                        

  **Storage**               X                   X                   X

  **Picking and Shipping**  X         X         X         X         X

  **Inventory Control**     X                   X                   

  **Special Functions**     X                                       
  ------------------------- --------- --------- --------- --------- -----------

**Table 1**: Services Required at Each Location

## Methodology/Approach

The MEO team carefully reviewed the performance work statement.
Following the review, the team evaluated the individual tasks required
by the PWS and assigned workload and position levels. Decisions were
made with respect to organizational structure, management approach, and
workflow commonality within the areas described by the PWS. The MEO team
conducted a "bottom up" evaluation of the PWS requirements. These
considerations were coupled with the workload information to formulate
the MEO team. This was an iterative process with several tangents taken
and variations considered until a final management approach was
designated and formal costing finalized. The MEO team reviewed all
appropriate documents and information for this management plan and
ultimately adhered to and is compliant with the final PWS.

# Recommendations

## Methodology and Assumptions Used to Develop MEO

Analysis of the PWS by NIH Subject Matter Experts and the MEO
development team produced three findings that underlie the current
proposal:

-   The current organizational structure is reasonably efficient and
    operating fairly effectively while having numerous vacant positions
    fairly unfilled,

-   Remote site operations are integral to IC operations, and

-   Use of subcontractor for GDC labor is a cost effective approach.

The above three findings were instrumental and structuring the MEO
organization and defining PWS task allocation. The MEO will be an
organization focused on customer service that accepts, performs, and
completes the workload professionally and efficiently, with an emphasis
on customer satisfaction.

## Organizational Effectiveness, Efficiency, and Accountability

To implement the MEO, the primary focus will be to effectively improve
distribution of workload, accountability, and overall performance,
ultimately yielding timely and accurate completion of work requests. The
management approach will provide all services specified and required in
the PWS, at a level of quality and timeliness that meets or exceeds the
specified requirements.

The MEO will incorporate a systemic monitoring of tasks, assignments,
workload, progress and quality of work that may be sampled at any time.
By incorporating a primary focus of improvement, accountability and a
proactive organizational response for the NIH, the MEO attains quality
required in the Quality Assurance Surveillance Program and addressed
through the Quality Control Plan.

For quality control purposes, the MEO staff and supervisors will, on an
ongoing basis, document acceptance, performance, and completion of
services and tasks. All employees of the MEO will be familiar with the
PWS, the MEO proposal, and most importantly, the MEO commitment to
provide quality service and response to support the NIH mission.

The MEO proposes comprehensive supply/warehousing services that will be
technically integrated and centrally managed. To execute these
comprehensive services, the MEO will focus on four fundamental themes.

-   Professional and quality service to the research community.

-   Responsiveness to changes in research dynamics.

-   Continued confidence and trust within the research community.

-   Ability to provide solutions to researcher demands.

Logistics Supply/Warehousing Services are vital to keep researchers
supplied with the materials they need to advance the state of medical
science in addition to keeping administrators and support personnel
working effectively to maintain a productive work environment. The
management approach fully addresses and comprehends the philosophy and
operational concerns of an organization as unique and talented as the
NIH. There are numerous key organizational requirements and
considerations that will be addressed, including the ability to:

-   Implement a highly responsive and service oriented organization that
    efficiently and effectively delivers services.

-   Quickly adapt to changing workloads and environmental dynamics.

-   Efficiently and swiftly move workforce to the workload.

-   Balance cost and service.

-   Meet the unique and diverse demands of the NIH.

-   Function within the scope of government environment.

-   Provide for employee satisfaction and development.

## Levels of responsibility in the MEO

There are three levels of responsibility within the MEO; employees, team
leaders and senior MEO management/supervisors. Functional organizations
place responsibility for both task performance and employee supervision
at management levels, mostly at the line supervisors.

Employees perform the detailed tasks and are responsible for their
quality and timely execution. Tasks are assigned through supervisors and
team leaders. Task leaders are experienced staff with first hand
knowledge of the activities they support.

Senior MEO management provides the overall supervision and guidance of
the organization. Reporting to the MEO manager are a supervisor
overseeing all Warehouse and Distribution Management (WDM) functions and
another supervisor managing the Inventory Management (IM) activities.
These two supervisors are further supported by marketing, quality
control, and administrative staff.

Under the leadership and guidance of the WDM supervisor and a central
storeroom lead, a purchase order will provide continuing "subcontract"
labor for most of the central warehouse services. This order has been in
place for several years and has proven extremely effective in performing
the basic warehousing services. Subcontract administration as defined in
the A-76 circular for the management of subcontract personnel will be
provided by continuing government activity. The WDM branch also is
responsible for the operation of the Self Service Stores.

The logistics staff at the National Library of Medicine, the National
Institute on Aging, the National Institute of Dental and Craniofacial
Research, and the Center for Scientific Review will continue to be
responsible for providing services directly to these respective IC.
These staff members will be within the MEO and will functionally report
to the MEO Manager; however, their administrative supervision will be
procured by the MEO and provided by the continuing government activities
of their respective organizations.

## Technology

The Warehouse Distribution Management branch utilizes the Robocom's
Inventory Management System (RIMS) to assign work. RIMS is the back bone
of the Warehouse Distribution Management branch and is integrated with
the Administrative Data Base (ADB) system. RIMS is an automated system
utilizing bar code technology and radio frequency hand held equipment.
Managers will electronically assign tasks such as cycle counts,
receiving, put away, storage, picking, issuing, shipping and
re-warehousing pertaining to the 12,000 storage locations, 63 storage
classes, and 25 storage types.

The MEO uses the data from the automated systems (RIMS and ADB) to
perform verification and analysis of data before final decisions are
made. The MEO is scheduled to transition to the planned New Business
Research Support System (NBRSS). The NBRSS is will replace both the ADB
and RIMS systems and will become the mandatory system for all of NIH.

# MOST EFFICIENT ORGANIZATION

## Management Approach

The MEO will provide the managerial, supervisory, administrative, and
direct workforce personnel to accomplish the scope of the performance
work statement. The MEO management approach fully addresses and
comprehends the philosophy and operational concerns of an organization
as unique and talented as the NIH.

To manage the size, scope and different site locations required by the
PWS, the MEO will specifically tailor the organizational structure to
address the six performance areas in a technically integrated fashion
while maintaining the specific service requirements that are expected at
the four IC remote sites and at the Self Service Stores. The MEO will
be:

-   Properly staffed to handle all requirements.

-   Focused on task control of warehousing and distribution.

-   Able to maintain remote sites with a functional reporting structure.

-   Managed by a relatively flat organization using a team approach in
    which individuals supervising employees and those responsible for
    task completion collaborate to complete tasks in a quality and
    timely manner.

Management and staff of the MEO, who are currently members of the
Logistics team performing the breadth of the services at all seven
locations, are cognizant of the nuances of coordinating and
synchronizing the services across the NIH. With this incredible
experience base at the disposal of the MEO, the management approach
selected will consolidate operation of the GDC and Self Service Stores
to allow the IC remote sites to continue to operate as a stand-alone
activity. The staff necessary to perform services at the NIA, NIDCR,
NLM, and CSR will be within the MEO and will functionally report to the
MEO Manager, but will also continue to report to the supervisors of
their specific IC. Those supervisors will be providing administrative
oversight of the employees. The business proposal has properly included
the cost of the IC supervisors in the MEO offering. The supervisors are
continuing government activity and the portion of their time allocated
to oversight of the MEO employees is procured by the MEO. This approach
allows the current operations at the four locations to continue without
disruption.

### Management Organization

The organizational structure is a functional management approach with a
supervisor overseeing all Warehouse and Distribution Management (WDM)
functions and another supervisor managing the Inventory Management (IM)
activities. These two supervisors along with marketing, quality control,
remote site personnel, and administrative staff will report directly to
the MEO Manager. The new organization is shown in Figure 1, "Most
Efficient Organization." This organizational strategy will use the best,
current business practices to align the MEO with the policies,
procedures and priorities of the NIH and various Institutes and Centers
to ensure that the support services provided will be compatible with the
mission and goals of the NIH and the Institutes and Centers.

The Warehouse and Distribution Management Branch provides services at
the GDC as well as management of two Self Service Stores on the NIH
campus. The Self Service Stores are located in Bethesda, Maryland on the
main NIH campus in Building 10 and Building 31.

Under the leadership and guidance of the WDM supervisor and a central
storeroom lead, the MEO will continue using the services of a support
purchase order providing labor at GDC. The personnel providing labor
under the purchase order will consist of material handlers, hazardous
materials handlers, and motor vehicle operators. The WDM operations will
be primarily located in a 150,000 square foot leased facility at the
Gaither Distribution Center. This facility, which will be operated by
the MEO, contains a climate and environmentally controlled Animal Feed
and Bedding storage area, an Association for Assessment and
Accreditation of Laboratory Animal Care certified storage section, a
general products storage area, refrigerated storage, a secure area for
controlling pilferage, and environmentally safe storage areas for
chemicals, gas cylinders, flammables, toxic and hazardous chemicals and
refrigerated chemicals. The WDM branch will staff the Self Service
Stores with a store lead and eight store workers.

![](media/image3.wmf)

**Figure 1:** Most Efficient Organization.

### Staffing

Table 2, "MEO Workforce," summarizes the aggregate staffing of the MEO
and the distribution of staff at the various locations. In addition to
30.4 Full Time Equivalent (FTE) federal employees, the MEO will have 26
full-time, labor-equivalent contract employees.

The MEO has sought to minimize the amount of indirect positions and
roles necessary to operate the organization. An equivalent of five FTE
will be performing activities or roles that are inherent to a successful
quality operation, but will not perform tasks within the PWS. These
roles will be supervision, quality control, and general administration.
Subcontract administration as defined in the A-76 circular for the
management of 26 subcontract personnel will be provided by continuing
government activity. Table 3, "Distribution of Indirect Roles,"
describes how the MEO Manager, the WDM supervisor, the IM supervisor,
the Quality Control and Marketing Coordinator, and administrative staff
will distribute and share the indirect roles. The WDM and IM supervisors
will also perform direct tasks as defined in the PWS 35% of the time and
the Quality Control and Marketing Coordinators are assigned 70% to
direct marketing tasks defined in the PWS.

**Table 2**: MEO Workforce

+----------------+---------+------+------+------+----+-----+----+----+
| **Title**      | **Pos   | **M  | **W  | **   | *  | **N | *  | *  |
|                | ition** | EO** | DM** | IM** | *N | IDC | *C | *N |
|                |         |      |      |      | LM | R** | SR | IA |
|                | **      | **M  | **   | **   | ** |     | ** | ** |
|                | Grade** | anag | Bran | Bran |    |     |    |    |
|                |         | er** | ch** | ch** |    |     |    |    |
|                |         |      |      |      |    |     |    |    |
|                |         | **   |      |      |    |     |    |    |
|                |         | Offi |      |      |    |     |    |    |
|                |         | ce** |      |      |    |     |    |    |
+================+=========+======+======+======+====+=====+====+====+
| Supply         | GS-     | 1    |      |      |    |     |    |    |
| Management     | 2003-14 |      |      |      |    |     |    |    |
| Officer (MEO   |         |      |      |      |    |     |    |    |
| Manager)       |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Distribution   | GS-     |      | 1    |      |    |     |    |    |
| Facilities     | 2030-13 |      |      |      |    |     |    |    |
| Manager        |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Supervisory    | GS-     |      |      | 1    |    |     |    |    |
| Inventory      | 2010-13 |      |      |      |    |     |    |    |
| Management     |         |      |      |      |    |     |    |    |
| Specialist     |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Logistics      | GS-     |      |      | 5    |    |     |    |    |
| Management     | 0346-12 |      |      |      |    |     |    |    |
| Specialist     |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Distribution   | GS-     |      | 1    |      |    |     |    |    |
| Facilities     | 2030-11 |      |      |      |    |     |    |    |
| Management     |         |      |      |      |    |     |    |    |
| Specialist     |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Inventory      | GS-     |      |      | 1    |    |     |    |    |
| Management     | 2010-11 |      |      |      |    |     |    |    |
| Specialist     |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Quality        | GS-     | 2    |      |      |    |     |    |    |
| Control and    | 2001-11 |      |      |      |    |     |    |    |
| Marketing      |         |      |      |      |    |     |    |    |
| Coordinator    |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Inventory      | G       |      |      | 2    |    |     |    |    |
| Management     | S-2010- |      |      |      |    |     |    |    |
| Specialist     |         |      |      |      |    |     |    |    |
|                | 0       |      |      |      |    |     |    |    |
|                | 7/09/11 |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Supervisory    | GS-     |      | 1    |      |    |     |    |    |
| Supply         | 2005-08 |      |      |      |    |     |    |    |
| Technician     |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Secretary      | GS      | 1    |      |      |    |     |    |    |
| (Office        | -318-06 |      |      |      |    |     |    |    |
| Automation)    |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Supply         | GS-     |      | 8    |      |    |     |    |    |
| Technician     | 2005-06 |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Supply         | GS-     |      |      |      | 2  | 1   |    |    |
| Technician     | 2005-05 |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Secretary      | GS      | 1    |      |      |    |     |    |    |
| (Office        | -318-05 |      |      |      |    |     |    |    |
| Automation)    |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| Supply Clerk   | GS-     |      |      |      |    |     | 0  | 2  |
|                | 2005-04 |      |      |      |    |     | .4 |    |
+----------------+---------+------+------+------+----+-----+----+----+
|                |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| **TOTAL FTE**  |         | 5    | 11   | 9    | 2  | 1   | 0  | 2  |
|                |         |      |      |      |    |     | .4 |    |
+----------------+---------+------+------+------+----+-----+----+----+
| **MEO STAFFING |         | 30.4 |      |      |    |     |    |    |
| TOTAL**        |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| **MEO          |         | 26   |      |      |    |     |    |    |
| SUBCONTRACT    |         |      |      |      |    |     |    |    |
| LABOR**        |         |      |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+
| **TOTAL MEO**  |         | 56.4 |      |      |    |     |    |    |
+----------------+---------+------+------+------+----+-----+----+----+

**Table 3:** Distribution of indirect roles

+---------------+----------+---------+----------+------------+--------+
|               | **MEO    | **      | **G      | **S        | **     |
|               | Super    | Quality | eneral** | ubcontract | Direct |
|               | vision** | Co      |          | Mgt**      | L      |
|               |          | ntrol** | *        |            | abor** |
|               |          |         | *Admin** |            |        |
+---------------+----------+---------+----------+------------+--------+
| MEO Manager   | 70%      |         |          | 30%        |        |
+---------------+----------+---------+----------+------------+--------+
| WDM           | 25%      |         |          | 40%        | 35%    |
| Supervisor    |          |         |          |            |        |
+---------------+----------+---------+----------+------------+--------+
| IM Supervisor | 45%      |         |          | 20%        | 35%    |
+---------------+----------+---------+----------+------------+--------+
| QC/Marketing  |          | 30%     |          |            | 70%    |
| (2)           |          |         |          |            |        |
+---------------+----------+---------+----------+------------+--------+
| Admin Staff   |          |         | 80%      | 20%        |        |
+---------------+----------+---------+----------+------------+--------+