Fort Belvoir, Virginia –
The Defense Logistics Agency is working to increase the services’ buying power by 10% by refining demand projections in collaboration with military and industry planners, the DLA director said during its second Service Readiness Demand Planning Summit May 1.
DLA spent about $45 billion on supplies in fiscal 2018 with about $30 billion going toward commodities other than energy and fuel, Army Lt. Gen. Darrell Williams said. Improving the demand planning for those items by just 10% is a conservative goal, he added, and one he hoped to achieve during the summit and the daily communication that takes place between DLA and its partners.
“That 10% is a lot of buying power and parts on the shelf. That’s a lot of readiness, which is the No. 1 priority for the secretary of defense and every one of the service chiefs,” he said. “I think we can give back the Department of Defense collectively – not in terms of a check, but in buying power and getting the right things – somewhere between $2.5 billion and $3 billion over the next few years.”
Though DLA and the services do a good job sharing information that helps determine demand projections, it’s not enough to rely on projections spit out from DLA and service demand planning systems without group rationalization and refinement, the director continued.
Improving demand projections is an objective in DLA’s Strategic Plan. The expectation is for DLA to work with service and industry partners to improve demand projections, reduce demand planning errors to increase service readiness and increase buying power across DoD.
In last year’s summit, participants projected demand patterns for fiscal 2019 and 2020 from operational and industrial perspectives. DLA and military planners discovered about 20% more demand for supplies than projected by electronic systems. While that helped reduce back orders and non-support to weapons systems, there was also a significant amount of over- and under-forecasting, Williams said. Demand planning efforts for August 2018 through January 2019, for example, led to over-forecasting of about 37,000 items and under-forecasting of about 17,000 items.
“For every dollar we spend where we miss the forecast, that’s hundreds of millions of dollars we’re not spending on something we really need,” he added.
More precise planning can come by creating a collective picture of the future, Williams continued. If DLA and service planners know 75 Army brigade combat teams will be rotating in the next year, for example, planners can easily predict spikes in demand for particular weapons systems and even the number of systems that will need support. Similarly, knowing which naval platforms are scheduled for repair at which shipyards and when also helps shape predictions.
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, said Tim Morefield, chief of DLA Logistics Operations’ Planning Division.
“We took all of that information, along with other data that we were reading in from the National Defense Authorization Act related specifically to weapons systems where there was expectation for increased funding and activity, and we translated that into what we thought would happen with future demand,” Morefield added.
The results were a 24.6% increase in demand captured for the Army, Air Force, Navy and Marine Corps.
Participants spent more than half of the summit in breakout sessions for each service outlining details such as future increases in depot-level production per weapons system, as well as areas where service representatives expect demands to fall.
Roxanne Banks, deputy director of DLA Acquisition, stressed the importance of forecasting data from a contracting perspective.
“All this planning is critical to the acquisition strategy piece and that’s where folks like contracting officers come in to take that info and translate it into a business plan,” she said. “That’s why I’m thrilled to be here to hear some of this because what we hear about demands and requirements can be used to craft an optimal business plan,” she said.
DLA will host a subsequent planning session with industry partners in July.