News | Nov. 6, 2018

Demand planning, cost transparency key topics at 11th Cost Summit

By Beth Reece

Discussions on demand planning and cost transparency topped the agenda during the Defense Logistics Agency’s 11th Cost Summit at the McNamara Headquarters Complex Nov. 5.

The meeting is held twice annually to update military customers on financial issues affecting DLA and the services.

“This is all about our customers and transparency. We set aside these events to talk about whatever topics and issues you want to put on the table as we set the way ahead,” said DLA Logistics Operations Deputy Director Mike Scott, who co-chaired the event with DLA Finance Director Gretchen Anderson.

The group received an update on metrics resulting from the Service Readiness Demand Planning Summit DLA hosted with the services and U.S. Transportation Command in July. Demand planners combined service-shared data with the latest National Defense Authorization Act to come up with a projected increase of 24.6 percent in demand over the next two fiscal years.

As a result, the agency is developing a strategy to meet a 13.7 percent increase in orders in fiscal 2019 and a 10.09 percent increase in fiscal 2020. Since the President has announced plans to reduce the Department of Defense’s fiscal 2020 budget, Anderson requested that service representatives share their demand projections with the agency as soon as possible.

“You all will get indications on how reductions are going to affect your operations before we do. As quickly as you can, please send us better information so we can adjust,” she said.

DLA is ready now to accept the service’s input and will send a final request for input again in January. The next Demand Planning Summit will be held in April or May.

DLA has also created an Integrated Product Team to review “born-on” pricing, which refers to the concept of exempting requisitions on backordered materiel from annual price changes. The IPT will work in two phases. The first involves documenting how each service adjusts its budget to implement annual price changes, as well as identifying how much money was de-obligated as a result of backorders and not identified in time to support other requirements in fiscal 2016 through fiscal 2018.

The second phase will identify how each service would implement born-on pricing if implemented and outline necessary information technology changes and associated costs. The group will have its first meeting mid-November and expects to develop possible courses of action and recommendations for DLA leadership by mid-December.

Other topics included savings and cost avoidances from DLA Distribution, as well as the Annual Physical Inventory Control Program for non-energy working capital fund materiel. The next Cost Summit will be held in spring 2019.