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Chapter 6

Business Practices: Saving Money and Improve Services Through Process Engineering

The Texas Department of Transportation TxDOT is a large, decentralized organization with 25 district operations, 27 divisions within its headquarters, and more than 14,000 employees. Given TxDOT’s limited resources, the agency should strive to streamline and improve its business practices so that it can devote as much of its funding as possible toward meeting Texas’ transportation needs. To accomplish this, the agency should look to private industry and other state governments for new, more efficient ways to run their business processes.

Improve Asset Management and Dispose Of Surplus Properties

Aggressive asset management can reduce ongoing facilities operating costs by six to eight percent and reduce the monetary costs of assets by 11 to 15 percent. To achieve these savings, TxDOT should create a strategic asset management system. Further, all land recommended for sale or lease by the General Land Office should be sold by the end of fiscal 2006; 20 percent of the total appraised value should be sold by fiscal 2003.

Improve Purchasing and Warehousing

TxDOT purchases, warehouses, and distributes large volumes of goods each year. Several opportunities exist for TxDOT to improve its purchasing and warehouse operations. Implementing just-in-time inventory programs and reducing the number of locations that distribute goods reduces the need to store goods and the need for warehouse space. Using a supply chain management group to apply best practices across the state and to perform “Yellow Pages Tests” would allow TxDOT to implement the most effective practices at the lowest costs.

Implement Reverse Auctions to Reduce Purchasing Costs

On-line reverse auctions have become a popular feature of e-procurement systems. Unlike normal auctions that have one seller and multiple buyers who bid higher and higher on the price of the product being sold, reverse auctions have one buyer and multiple sellers who bid lower and lower on the price they are willing to sell their products. The reverse auction ends when no seller is willing to offer a lower price within the designated time period. State law should be amended to allow the General Services Commission and other state agencies, including TxDOT, to conduct reverse auctions.

Reduce Human Resource Staffing

TxDOT employs a higher ratio of human resources staff compared to its peers in the private sector, other comparable Texas state agencies, and other state DOTs. The agency should reduce the ratio of total employees involved in Human Resources functions to TxDOT staff from the current level of 1:51 to 1:100.