Educational Testing Service: Supply Chain Outsourcing

Founded in 1947, Princeton, New Jersey-based Educational Testing Service (ETS) was established to develop, administer and score tests for its sole client, the College Board.

While the College Board is still its biggest customer, nonprofit ETS in recent decades has extended its influence beyond the Scholastic Assessment Test (SAT), Advanced Placement (AP) and Graduate Record Examinations (GRE) by serving the testing needs of corporations, government organizations and educational consortia.

With the overall objective of becoming a high-performance business, ETS wanted to intensify the pace of its push into new markets. The company set an aggressive 5- to 10-year revenue growth plan that involved expanding the scope and breadth of its existing market relationships and also developing a more global client base. ETS chose Accenture to help it achieve these goals.

ETS faced a major hurdle as it embarked on this ambitious strategy. The company prints and sends out millions of tests to thousands of locations. All of those tests are then graded, the test books securely stored and the scores reported to institutions—and the scores must also be readily accessible to be distributed to schools at the request of test takers. In all, ETS annually administers more than 50 million tests, shipping 260 million items and 53 million score reports.

Like any company operating at such a scale, ETS's continuing success rests on its ability to maintain a reliable and efficient supply chain. The company realized that it needed to significantly improve that supply chain if it hoped to penetrate new markets. Efficient and effective supply chain operations would provide ETS with the agility to more easily leverage new opportunities to grow and increase revenues and advance its mission—as well as reap significant savings.

Chief Executive Officer Kurt Landgraf realized that ETS needed a trusted third party to help it create the new supply chain model and manage it with optimal efficiency while the company focused on its core competencies of test development and psychometrics research and development.

The company chose Accenture based on our strong track record in business process outsourcing (BPO)—skills that help nonprofits develop models of operations that yield new process efficiencies—and also for our strategic consulting and other professional services capabilities. It was also important that Accenture had alliance relationships with leading companies providing logistics and supply chain services.

Accenture Industry-specific BPO Services provided an outsourcing supply chain solution designed specifically to meet ETS’s business needs. The solution is helping ETS consolidate and simplify its supply chain processes, logistics and infrastructure to improve overall operational efficiency. Accenture leveraged both custom and off-the-shelf software for functions like forecasting, inventory planning, production planning and scheduling, warehouse and transportation, and shipment tracking.

Under the terms of the arrangement, Accenture Industry-specific BPO Services assumed responsibility for supply chain activities spanning publishing, printing, forecasting, inventory and production planning, distribution and logistics—including tracking and shipping of tests and test-related materials globally. This means that once ETS develops a test, it is Accenture's responsibility to format and print the tests and manage materials, planning, inventory, fulfillment and warehousing operations.

ETS manages test administration, while Accenture is responsible for collecting, processing and accounting for tests, and for capturing test data. In overseeing the complete supply chain, Accenture annually manages an average of more than 50 print manufacturing suppliers for the production of more than 159 million individually printed products, fulfills more than 300,000 orders and processes some 11 million outbound mailings.

Choosing Accenture to help it transform and manage its supply chain operations has enabled ETS to significantly improve the control, accuracy and integrity of its operations. These improvements are helping ETS win new business in target markets. Since the start of the outsourcing arrangement, ETS has experienced an improved client win rate, boosting global sales to more than $100 million. Today, ETS is also benefiting from guaranteed service levels for the first time in its history, thus gaining a consistent level of reliability and a predictable cost structure for the operation of its supply chain.

The new closed-loop tracking system enables full visibility of tests throughout ETS's global supply chain. The company has also succeeded in lowering print costs by 16 percent (consequently achieving $3.8 million in savings) and transportation costs by 24 percent (resulting in $4 million in savings). In addition, ETS has experienced improvements in workforce effectiveness, including a 25 percent increase in warehouse productivity. Furthermore, ETS is achieving more than 99.5 percent accuracy in key service level agreement operational areas.

The transformation of supply chain operations and the outsourcing arrangement has been so successful for ETS that the company chose to extend the agreement for an additional three years (through 2012). “Our partnership with Accenture has been a key factor in our exceptionally efficient supply-chain processes,” notes Scott Weaver, Senior Vice President of Production and Delivery, ETS. “Accenture has worked in tandem with ETS to ensure operational quality, which directly benefits our customers. We wanted this shared commitment to excellence to continue.”