Demand planning, G-Invoicing and cost transparency were key topics of the Defense Logistics Agency’s 12th Cost Summit at the McNamara Headquarters Complex May 20.
The meeting is held twice annually to update military customers on financial issues affecting DLA and the services. DLA Vice Director Mike Scott encouraged participants to openly share their service’s concerns and highlighted the need for transparency amid reform efforts underway across the Department of Defense.
“One of the things that’s come up is the need to be transparent, especially when sharing cost information. If you’re a service member attending, please do share up and down your chain of command any and everything we’re discussing here,” he said.
Mark Easton, deputy chief financial officer for the Office of the Secretary of Defense, echoed the need for transparency, saying many people have a narrow view of how the Working Capital Fund operates and how supply rates are set.
In response to questions from the last Cost Summit held in November, DLA Distribution’s Charlie Albright gave an update on how the $27 million used to plus up manning for the fiscal 2019 physical inventory counts was applied to the services. The cost was applied to storage rates through the Program Budget Review process, he said.
DLA Finance officials shared outcomes of the Service Readiness Demand Planning Summit held May 1. The agency’s goal is to increase the services’ buying power by 10% and improve DLA’s material availability and service supply availability by 2% for fiscal 2020.
Improving demand projections is also a key objective in DLA’s Strategic Plan. The expectation is for DLA to work with service and industry partners to improve demand projections and reduce demand planning errors. Forecasts for 2019 and 2020 took into account service-specific input on such things as flight hours, steaming days , brigade combat team and training increases, depot maintenance, divestiture efforts and troop end-strength projections.
Michael Lane, DLA’s program manager for G-Invoicing, gave an overview of the new software platform, developed by the U.S. Treasury for intragovernmental sales transactions. The platform will be in affect this fiscal year and allows buyers and sellers to exchange information, negotiate agreements using general terms and conditions, broker funding against those agreements, exchange billing information and validate invoices. The platform is expected to help the federal government handle collections and disbursements more effectively without rejections, as well as improve audit findings.
Air Force Col. Brian Copes, military deputy for the Office of the Deputy Assistant Secretary of Defense for Logistics, shared an update on DoD logistics and sustainment.
“Our focus continues to be on providing a resilient and agile best-in-class logistics force delivering cost-effective readiness to improve our warfighter lethality. I think that’s what everyone in this room is going after, working to find cheaper ways of providing readiness so we can add some lethality for our warfighters,” he said.
ODASD Logistics is the lead for DoD’s 19 logistics reform initiatives, many of which focus on cost reduction. They include updating maintenance work packages, leveraging productivity and efficiency at service depots, and optimizing non-tactical warehousing operations in the continental United States.
DoD logistics is “big business,” Copes added. The department’s current annual budget includes $163 billion in total logistics costs, and current inventory is valued at $97 billion.
The next Cost Summit will be held in fall 2019.