AUSA ILW Breakfast – Irreversible Momentum

1. AUSA ILW Breakfast – Irreversible Momentum LTG Charles S. Mahan Jr. United States ArmyDeputy Chief of Staff , G-4

2. “Logistics transformation will give our Objective Force the rapid deployability and sustainability we demand, without compromising warfighting lethality or survivability. But success will be the result of the collaborative efforts of the acquisition and the logistics communities – incorporating the logistician’s view into the design of our systems before we even begin to build the platforms.” GEN Eric Shinseki AUSA Eisenhower Luncheon 22 October 2002

3. HQDA REORGANIZATION ASA(AL&T) AAE Responsible Official for Sustainment MILDEP for Acquisition “Responsible Official for Sustainment” Responsibilities • Manage readiness • Ensure sustainment is adequately considered and reflected during acquisition process • Ensure Integrated Logistics Support requirements are incorporated early in the design process

4. LIFE CYCLE CONSIDERATIONS ACQUISITION FIELDING CONCEPT DESIGN SUSTAIN DEMILITARIZATION Design Life Spt Concept (CLS) Tech Insertion Modular Design Periodic Upgrades Embedded Training On Board Diagnostics On Board Prognostics Special Tools Test Equipment Lift/Deployability Adequate Spares Reliability as Key Performance Parameter Total Package Fielding Simulators Sustainment Systems Technical Support Post Production Software Support Supply Depot Operations Tech Data Package Second Destination Trans Recapitalization Configuration Mgmt Support Infrastructure Munitions Modification Work Orders Repair and Rebuild War Reserves Demilitarization Foreign Military Sales Security Assistance Significant sustainment costs when not considered….. TUAV TOW MISSILE LOSAT M1A2 SEP M2A3 BRADLEY CCA’S MUNITIONS DEMIL FMTV BOWS & TARPS

5. Not limited to designing more efficient systems… Includes decisions regarding the support concept. ALTERING PRIORITIES (Total Life Cycle Costs) SUSTAINABILITY COST SCHEDULE PERFORMANCE We will consider corporate best value! We should field fewer systems in order to field complete, sustainable sets. Army Policy: COST = SCHEDULE = PERFORMANCE = SUSTAINABILITY

6. CURRENT CHALLENGES • Estimating weapon system sustainment costs • Unable to link cost to performance • Hidden costs • PMs responsible for life cycle management • Limited sustainment expertise • Evolving oversight mechanisms • 8 – 10% O&S cost increase over last five years • Requirements process that emphasizes weapon system performance • Limited involvement in life cycle sustainment • Industry / Contractor incentives Enterprise Resource Planning Activity-Based Costing • Revise Advanced PM Course • Expand PM Executive Refresher Course • Influence new PM Capstone Course • Add Executive Acquisition Logistics Course Cost = Schedule = Performance = Sustainment Major Culture Change Need your ideas and input!

7. Enterprise Resource Planning Readiness Deployment Force Structure ERP MRO Materials Human Resources Purchasing Maintenance

8. Solution: ENTERPRISE RESOURCE PLANNING (ERP) GCSS-Army LOGISTICS MANAGEMENT:THE CASE FOR CHANGE Current Log Systems • Stove-piped (not integrated) • Few web-based • Government-unique • Few real-time TacticalLogistics Future Log System • Integrated • Web-based • Real time • Commercial-Off-The-Shelf based Wholesale Operations Global CombatSupport System- Army Joint Operations

9. ERP BENEFITS • Allows serial number tracking of end items • Permits configuration management • Allows Activity-Based Costing • Allows shared data across Services / Defense Agencies ERP supports the Logistics Modernization Program • Improves readiness and weapon system support • Adopts best business practices – market driven • Performs business process reengineering while leveraging IT • Integrates with Global Combat Support System – Army/Single Stock Fund LMP GOAL: Modernize business practices and supporting information technology to meet current and future military readiness requirements

10. “We’re already revolutionizing our logistics processes with the Single Stock Fund. We will centralize Army supply management, streamline the supply chain, and eliminate duplication in tracking and accounting – this is long overdue.” GEN Eric Shinseki AUSA Eisenhower Luncheon 22 October 2002

11. WHAT IS SINGLE STOCK FUND? An Army re-engineering initiative aimed at: … Improving Warfighter Support: worldwide access to stock … Consolidating separate wholesale & retail elements into a single fund … Integrating and simplifying supply & financial processes • Eliminate multiple ledgers • Eliminate multiple billings • Eliminate multiple points of sale … Integrating logistics & financial automated information systems Focused On A Smart Business Practice For The Army Warfighter Support

12. SSF BENEFITS • Increased benefits projections • Factory-to-foxhole visibility—enables supply chain management • Capitalization of tactical supply support activity O&M inventories into the Army Working Capital Fund: • Increased depth of inventory to support deployed forces • Increased depth of inventory for redistribution • Provides near real-time data on Army Secondary Item consumption, returns • Eliminates separate financial inventory ownership Immediate visibility of $1.1B of tactical ASLs Benefits • Enhanced Warfighter support • Global access to critical stocks • Robust Reachback Supply Operations • AWCF-SMA funds ASLs • Improved Decision-making • Visibility of Assets - Requirements - Finances • Smarter buy, redistribute, and repair decisions • Integrated - Seamless Process • Logistics & financial visibility • Active & Reserve Component ASLs • Requirements determination • Streamlined • Eliminated multiple financial transactions • Eliminated duplicate automated systems Sets Stage for Further Optimization: Stock positioning, Integrated Requirements, Computation, Repair decisions, etc.

13. DEMAND POLICY DEMAND ENABLERS POLICY ENABLERS • Reduce logistics footprint • Improve deployability • Generate more logistics capability using fewer resources DEMAND POLICY ENABLERS …drive a culture of continuous improvement WHAT ELSE HAVE WE DONE? Reducing demand will help reduce the logistics footprint… Logistics Transformation Task Force AFFORDABILITY Industrycan help us reduce demand by designing sustainability in new systems … But we can also change policies and invest in enablers to enhance the ability to manage demand…..

14. EMBRACING REACH OPS TO REDUCE THE FOOTPRINT Production base directly supports Army sustainment Warfighters Sustaining Base • Knowing what warfighters need • Share a Common Logistics Operating Picture • Maintaining visibility of assets and requirements • Leverage Automatic Identification Technologies • Maintain intransit visibility • Maximize use of deployment automation tools • Maximizing the capacity of the distribution system • Configured loads eliminate excess materiel handling • Minimize intermodal materiel-handling (Container Roll-Out Platforms)

15. THE ULTIMATE GOAL OF LOGISTICS TRANSFORMATION - READINESS STRATEGIC READINESS SYSTEM (SRS) • Fundamentally changes culture from “reporting” to “managing” • Identifies what is important helps measure it • Enables leaders to anticipate readiness issues • Reporting becomes a dynamic activity, not a monthly event EVERY ORGANIZATION WILL REPORT AND BE MEASURED! WHAT IS SRS DESIGNED TO DO? • Accurately reflect AC and RC capabilities • Report the status of SORTS equipment (Big 16 + 4) AND enabling systems (eg M1A2’s & PLGR’s) • Report the status of our wholesale logistics systems • Report status of backlog / unserviceables at depots INDUSTRY, PEO / PM, AND G-4 PARTNERSHIP

16. CONCLUSION • Logistics Transformation is underway • We’ve made policy decisions and committed resources to create irreversible momentum • Our greatest challenge will be changing culture WHAT YOU CAN DO TO HELP US Give us your innovative ideas on how we can maximize our Return On Investment (ROI) that achieve our 3 goals: enhanced responsiveness, optimizing the logistics footprint and reducing costs.

17. SUSTAINING THE TRANSFORMING ARMY