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Founded in 1947, Educational Testing Service (ETS) is the largest private, nonprofit educational testing and assessment organization in the world. Every year ETS prints, distributes and scores 13 million paper-based standardized tests, including the SAT, GRE and AP subject exams. A decade ago, the Princeton, N.J.–based company ($1.5 billion in revenue) internally handled the warehousing and shipping of all those tests, as well as their return for scoring purposes.
“When you’re sending out 650,000 parcels each year containing 16 million tests or so, and you expect each of them to come back on time, human error is inevitable,” says Jack Hayon, ETS’s senior vice president. ETS no longer frets about such things, having made the decision in 2004 to outsource order fulfillment to Accenture.
Today the company is saving approximately $50,000 a year on shipping costs, thanks to Accenture.
“We’d reached a point where we wanted to improve our quality,” according to Hayon. On rare occasions, he explains, a box of SAT tests shipped to a high school would arrive late, forcing the school to postpone the examination. Inbound problems such as a finished test that failed to show up on time for scoring was another quality issue.
In 2004, ETS signed an agreement with Accenture—a comprehensive order fulfillment outsourcing strategy—to improve its supply chain management.
A key element of the engagement was for ETS to retain ownership of its 170,000-square-foot warehouse in nearby Ewing, N.J., and lease the space to Accenture. “We’d also maintain ownership of the property and the equipment as well, and lease it all to Accenture,” says Hayon. “The 300 employees who previously worked for us in our warehouse operations were moved over to Accenture and are now employees of that company.”
ETS agreed to make any necessary ongoing investments in order fulfillment systems and processes, but Accenture would manage the operation, including the return of tests for scoring. For SAT tests, that meant the collection, packaging and return of every single test administered at 3,500 sites across the country.
To help perform the task, Accenture first designed and developed an innovative technology solution it calls SeNT—serial number tracking system. ETS, according to the contract, paid for the software. “We’re now able to see via tracking labels on each test which ones might be missing,” says Hayon.
Before outsourcing order fulfillment to Accenture, ETS had as many as 10,000 tests a year that it could not score because of lost or late shipments. Cycle time—tests out and back—also has been pared. “For the AP exam, for instance, we would send out and process 2.5 million tests during the month of May,” says Hayon. “It used to take us four months to process that volume. It now takes two-and-a-half weeks.”
ETS has also achieved significant savings in freight and printing expenses, thanks to Accenture’s negotiated discounts with freight carriers and more exact number of tests to print. “In the old days, to be sure that every test taker had a test to take, we’d print up extra copies,” explains Hayon. “When you’re shipping to 3,500 test sites, that extra bundle of prepackaged, shrink-wrapped tests added up to a lot of printing and related costs. Boxes had to be shipped back—even if they were unused—for quality-control purposes, which also added to the cost. Accenture developed an algorithm to predict a more precise order quantity, which is saving us $50,000 annually.”
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