Slides 10 4 identify relevant components of information from

316 th ESC - MRE IssueGroup one Issue: Army policy requires that veterinarians periodically inspect MREs at operating bases to determine their fitness for use.. 316 th ESC - MRE Issue

Organizational-Based Cost-Management in a Deployed-Tactical Environment:

A Case Study

316th Expeditionary Sustainment Command (ESC)

Deployed in Iraq from November 2007 - May 2008

Author: Dr Peter H Antoniou, MIBA Major Mike Williams, USA and Major Matt Mixa, USMC Excerpts from MBA Thesis at the Naval Postgraduate School

Terminal Learning Objective

• Task: Identify Relevant Components of

Information from a Real World Scenario

• Condition: You are training to become an ACE

with access to ICAM course handouts, readings, and spreadsheet tools and awareness of

Operational Environment (OE)/Contemporary

Operational Environment (COE) variables and

actors.

• Standard: with minimum 80% accuracy

• Use information from case study to answer questions

316th ESC Case Study

– Supply Support Activity (SSA)

Assignment

– MREs, Groups (1,2,3)– SSA, Groups (4,5,6)

This case is based on actual operational experience and

accomplishments of a US Army Reserve Unit, the 316 th ESC, under the command of BG Couch during their Iraq

deployment in 2007-2008.

Corrective measures were taken to rectify all issues indentified

in this case study

The research for this case was originally done by MAJ Mike

Williams USA and MAJ Matt Mixa USMC as their thesis at the Naval Postgraduate School.

316 th Case - Purpose

Purpose Statement: Discuss two 316th ESC deployment

“lessons learned” and demonstrate how the ESC

learned about its financial cost and documented the

effects of that learning

Command level questions:

Did the 316th ESC improve efficiency and

effectiveness through the implementation of the

components of a Cost Management Enterprise?

How did they do it? Who did it? Why did they do it? What were the results?

United States Army Reserve - Leadership

A 3- star General leads the United States Army Reserve and holds the following two titles:

1 Chief, Army Reserve (CAR) The CAR reports to the Chief

of Staff of the Army and represents the Army Reserve in policy and planning discussions with the Army, the Department of Defense and Congress

2 Commanding General (CG) of the U.S Army Reserve Command (USARC). The CG of USARC reports to Army

Forces Command and is responsible for the staffing, training and readiness of most Army Reserve units in the continental United States and Puerto Rico

316 th ESC - Mission

Mission: To provide command and control of all

sustainment forces in an operational theater

The ESC plans, coordinates, synchronizes, monitors, and controls

operational-level logistics operations for the Army component commander, joint task force, or joint task for headquarters for the area

The 316th ESC has 13 units with eight subordinate brigades comprised of more than 10,000 soldiers in approximately 110 battalions, companies and detachment-sized units

The 316th ESC is a subordinate command of the 377th

Theater Sustainment Command (TSC) located at Belle Chase, Louisiana (near New Orleans)

316 th ESC Deployment in Iraq

Background

The 316th deployed from Pennsylvania to Baghdad in 2007

Assigned to Multi-National Corps Iraq (MNC-1), it

owned 8 Support Brigades in support of Multi-National

Divisions

It consisted of:

- A single general support transportation battalion

- Six sustainment brigades aligned with each Multi-National Division (MND

It was responsible for coordinating over 20,000

soldiers supporting 165,000 coalition and Iraqi forces

316 th ESC - Issue:

Meals, Ready-To-Eat (MREs)

Responsible for the supply of MREs to forces in Iraq

• MRE’s shelf life is 3 years at 80 Degrees F

• In Iraq, stored “in the sun”; no cover, shade

• Environmental containers not cost effective

• Iraq’s environmental conditions resulted in

MRE’s shelf life = Two months

• Found that over $31 million in MREs were

condemned since 2003

316 th ESC - Issue:

Supply Support Activity (SSA)

Standard operating procedures are often a “bad

fit” initially in a combat zone due to:

- Shortage of transportation assets

- Lack of supply infrastructure

- Segmented or separated SSAs

- Communication incompatibilities

- Close sense of ownership for on-hand supplies

• Upon arrival in Iraq, 316th ESC did not refer SSAs between supply points, resulting in:

- Excessive Customer Wait Time (CWT), and

- Excessive cost incurred by filling SSAs CONUS

316 th ESC - MRE Issue

Group one

Issue:  Army policy requires that veterinarians

periodically inspect MREs at operating bases to

determine their fitness for use.  A study initiated by

the 316 th ESC’s staff found that $31M of MREs were

thrown away in the previous 6 years

Question:  What additional cost categories would

you assume or investigate if you were evaluating the total cost to the Army of the loss? 

316 th ESC - MRE Issue

Group Two

Issue:  A study found that millions of dollars of

MREs are being thrown away in forward operating

bases because they were not used before their

expiration dates.

Question:  What would the MRE Control report

look like that you would recommend that the CG

require of Brigades?

316 th ESC - MRE Issue

Group Three

Issue: The attached summary on MRE usage was

briefed to the CG by one of the Brigades.

              Days Prior Current Soldiers Area on hand       period usage    period usage

A          60                  300                   300    

5,000   

B          30               3,000                3,500  5,000

Question:  What questions would you suggest the

CG ask and why?

316 th ESC - Referral Issue

Group Four

Issue:  Numerous warehouses in the area of

operations stock the same parts

Question:  What are the advantages and

disadvantages of allowing one warehouse with a

stockout to order a part from another warehouse with

a surplus (a referral) versus ordering from CONUS in the US?

316 th ESC - Referral Issue

Group Five

Issue:  Sharing of critical parts between

warehouses appears to be minimal requiring

warehouses with shortages to order from CONUS in the US at increased cost or air shipment

and increases time to service.

Question:  What would the Referral Control report look like that you would recommend that the CG

require of Brigades?

316 th ESC - Referral Issue

Group Six

Issue:  The attached summary was briefed to the

CG by one of the Brigades

Warehouse    Referrals Referrals Referrals made     completed in a incomplete

in week in week

A            60                  60        0   

B             30                    5             25

Question:  What questions would you suggest the

CG ask and why?

316th ESC - Instructor’s Support Material

316 th ESC - Instructor’s Support Material

• Length Time: 2h

– Briefing 15-20 min, break out 40-50 min, presentation 3-5 min per group, wrap up 15-20 min

• Process

– Introduce the case

– Break out the class into 6 groups

– Notice - there are 2 issues at hand:

– Groups 1-3 MREs and 4-6 Referrals

– Each group needs to prepare 2-3 slides for presentation

• Presentation

– Discuss findings with participants

– Introduce results and ‘What Happened’

316 th ESC

Discussion

316 th ESC - MRE Issue

Group one

Issue:  Army policy requires that veterinarians

periodically inspect MREs at operating bases to

determine their fitness for use.  A study initiated by

the 316 th ESC’s staff found that $31M of MREs were

thrown away in the previous 6 years

Question:  What additional cost categories would

you assume or investigate if you were evaluating the total cost to the Army of the loss? 

316 th ESC - MRE Issue

Over $31 million in MREs condemned since 2003

Other costs not included in the $31 million:

316 th ESC - MRE Issue

Group Two

Issue:  A study found that millions of dollars of

MREs are being thrown away in forward operating

bases because they were not used before their

expiration dates.

Question:  What would the MRE Control report

look like that you would recommend that the CG

require of Brigades?

316 th ESC - Cost Measurement

- Excel worksheets and graphs

- Daily / weekly metrics

- Tracked and projected demand

- Did not calculate unit costs based on purely

financial costs

- Substituted other cost drivers, i.e time, inventory size, storage overhead, disposal costs, convoys, aircraft utilization, etc

316 th ESC - MRE Issue

Group Three

Issue: The attached summary on MRE usage was

briefed to the CG by one of the Brigades.

              Days Prior Current Soldiers Area on hand       period usage    period usage

A          60                  300                   300    

5,000   

B          30               3,000                3,500  5,000

Question:  What questions would you suggest the

CG ask and why?

316th ESC - MRE Issue

316 th ESC - Referral Issue

Group Four

Issue:  Numerous warehouses in the area of

operations stock the same parts

Question:  What are the advantages and

disadvantages of allowing one warehouse with a

stock out to order a part from another warehouse

with a surplus (a referral) versus ordering from

CONUS in the US.

316 th ESC - Referral Issue

• Advantages:

– Parts received more quickly

– With a lower shipping cost

316 th ESC - Referral Issue

Group Five

Issue:  Sharing of critical parts between

warehouses appears to be minimal requiring

warehouses with shortages to order from CONUS in the US at increased cost or air shipment

and increases time to service.

Question:  What would the Referral Control report look like that you would recommend that the CG

require of Brigades?

316 th ESC - Process

- Weekly Review and Analysis meetings

- SPO set the Review and Analysis agenda

- CG only wanted to see abnormal variances and

trends

- Managers briefed the cause of variances

- Managers briefed recommendations for action

- Subordinate units participated indirectly

- Subordinate units saw slides ahead of time

316 th ESC - Referral Issue

Group Six

Issue:  The attached summary was briefed to the

CG by one of the Brigades

Warehouse    Referrals Referrals Referrals made     completed in a incomplete

in week in week

A            60                  60        0   

B             30              5            25

Question:  What questions would you suggest the

CG ask and why?

316 th ESC

Summary and Results

316th ESC -

Cost Management Program

STAFF ACE

LE AD

ER SH

OC ESS

MEASUREMENT

316th ESC - The ‘Cost Management’ Learning Process

316 th ESC

-Leadership Driven Management

- Experience in Iraq as a Brigade Commander influenced his desire to seek improvements

- Believed in de-centralized control; let subordinates track what was necessary

- Leadership Methodology:

“Drove us hard-brutal in his standards Also, provided top cover.”

“Did not accept ‘I don’t know’.”

“Almost a sixth sense to detect problem areas.”

316 th ESC

Briefed both subordinate brigades and MNC-I and 1st TSC

– Push back from Brigades initially

– Fear of not being able to provide support when needed

– BG Couch pushed the issue and told the BDEs they were going to do it

Initial problem with Iraqi Theatre going “Amber” and

“Black” on Day Of Supply (DOS)

– DLA was not aware of new standards

– Had to change tracking metric and re-calibrate what

“Green”, “Amber”, etc meant

With data, planned usage for theatre

– Used a moving average

– Head count was cost driver to forecast future usage

316 th ESC - MRE Issue

Redefined what a Day-of-Supply (DOS) meant

– Old way: 3 MREs per day per Soldier

– New way: Looked at actual MREs issued, factored

in DFACs to develop new DOS number

Reduced required DOS from 30 to 25

316 th ESC - MRE Issue - Results

Minimum cost savings of $4.85 million

– Reduced convoys (BG Couch focused on getting soldiers off of the roads)

– Reduced storage costs in Iraq and Kuwait

Continued to meet mission

316 th ESC - Referrals Issue - Results

In 82% of all referrals, the referral process saved

2-3 days in wait time per item.

The SSA in Taji reduced Wait Time from 28 days (Jan ’08) to 9 days (May ’08).

In 10 months, referred 32 million pounds of

parts Cost avoidance to not transport into

theater: Over $65 million

316 th ESC - Conclusion

Leadership driven management used by the 316th

ESC saved lives, saved time, and saved money.

The lessons of the 316th ESC’s operations in Iraq are applicable to both ongoing and future operations.