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Creative streamlining helps agencies cut costs

Dec. 9, 2013 - 06:00AM   |  
By ADAM STONE   |   Comments

Across government, budgetary belt-tightening has increased the pressure on logisticians. These planners and organizers still must get the right material to the right place at the right time. Now they’re doing it to under a cloud of fiscal uncertainty.

“It is forcing our people to get a lot more creative with the solutions they provide,” said John Thackrah, executive director of the Military Sealift Command.

A number of recent efforts show how creative logistics has become.

At the National Institutes of Health, centralization has become the name of the game.

“Sometimes we will have 27 institutes all coming in for their Petri dishes and each turning in their purchase orders. That is a lot of manual work for us,” said Gary Marquez, chief of the Supply Management Branch at the NIH Supply Center.

NIH’s solution has been to engage in blanket purchase order agreements. These allow NIH to keep a minimum quantity of common items in stocks, while also offering the predictability that is near and dear to the logistician’s heart.

“We have no price fluctuation. We have a steady stream of product. The customers will always have what they need in sufficient quality,” Marquez said.

The plan is to eventually go to a Wal-Mart style, just-in-time inventory system, reducing purchase orders by 90 percent. Marquez foresees this happening within six months.

Bring it back

Consolidation has likewise played a role in bringing down the costs on the herculean task of bringing back military equipment from the Afghan theater, said Army Lt. Col. Ralph Lounsbrough of the Transportation Command Logistics Sustainment Division, Strategy, Policy and Logistics Directorate.

Lounsbrough has been helping to manage some 25 to 30 flights a month.

“They used to fly straight back to wherever they were going in [the continental U.S.] Stuff would get loaded in Afghanistan and fly to Fort Campbell [Ky.],” he said.

That kind of disaggregation proved inefficient, putting lots of planes in the air to multiple destinations.

In April, the directorate began taking a different approach. It has established hubs at Dover Air Force Base, Del., and Joint Base Lewis-McChord, Wash. Incoming flights touch down at a hub and goods are trucked out from there, shaving off roughly $30,000 per planeload in fuel and personnel savings.

“It’s more efficient, and it allows us to get the airplane back in the system much faster,” Lounsbrough said.

Looking ahead, Lounsbrough would like to put idle fly time to use. The Air Force must log a certain number of hours in the air to maintain a strategic level of readiness. With the war on, this was easy. As the opertional tempo winds down, Lounsbrough wants to use anticipated flight hours to move cargo.

“It costs what it costs to fly an airplane for an hour, and so now we are asking: What is out there that we can put on those airplanes?” he said.

System adjustments

Sometimes it is possible to streamline logistics by making relatively small tweaks to the system.

Take for instance the Federal Aviation Administration Logistics Center, which used to ship antennas out to a commercial vendor for testing and repair.

“The vendor’s initial step was to test the asset. If there was no fault found, the vendor would return the asset to the FAA and charge a testing fee,” said Transportation Department spokesman Bill Adams. FAA has lately switched the order of things, testing components before shipping them out. By running checks in house, FAA saves more than $100,000 a year in shipping and other costs.

DOT also has done some paring down of inventory in the name of better logistics. In the course of relocating warehouse operations, planners took a careful count and were able to purge unnecessary stock, whittling away enough to enable relocation into a 35 percent smaller space, Adams said. This has brought down utility and rental costs by some $175,000 a year.

Ship to shore

Sometimes better logistics can be a matter of reducing head count.

Thackrah’s office in the past has had an officer stationed on every combat support ship in use. More recently, it has pulled all of those people off the ships and put them to work on land. This move cut 88 billets and created 16 new ones for a net savings of $4.5 million a year, Thackrah said.

“Instead of this person managing one ship, we would raise the rank of this individual and give them a region to cover. So there are now officers in five Navy regions over the world who manage the provision of those 31 combat logistics ships from ashore, rather than being stationed aboard each ship,” he said.

There’s no silver bullet when it comes to logistics. To make improvements, planners need to talk about people, structures, timetables, inventory management and industry partnerships. These few examples help to show that in agencies across government, these conversations are in play. ■

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