Logistics Agency eliminates transportation costs for some goods.

• Position: SHIPPING EXPENSES

* The Defense Logistics Agency has begun implementing a new initiative that will save vendors time and drive down costs associated with transporting products to the agency.

For the past three years, the agency has been searching for a way to save money on first-destination transportation--the shipment of goods from the vendor to a DLA depot.

Vendors are required to provide their own transportation, including payment, and are later reimbursed by the DLA. Depending on location, this can potentially make their products seem more costly to the agency, said Milton Lewis, executive director of contracting and acquisition management.

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"Most of the transportation costs are combined with the cost of material. Because of this, our decisions of what to buy are often based on those added transportation costs," Lewis said in an interview.

The results of a two-year business analysis led the agency to develop the vendor shipment module (VSM). This web-based transportation system will use current addressing and routing logic to identify the most cost-effective carriers, arrange for load pick-up and will move the supplies to the selected location, the DLA website said.

Under the new program, the agency will pick up the tab for shipping costs by using their internal VSM system. This will level the playing field between competitors selling the same products, because the cost of transporting goods will no longer factor into how the agency decides which company to buy from, Lewis said.

"Now, we would only be looking at the ability and price of the...