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DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET. ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

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Page 1: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

DOING MORE

WITH LESS

KEITH LIPPERT,

VADM – US NAVY, RET.

ACCENTURE RETIRED

MANAGING DIRECTOR

HIGH PERFORMANCE

LOGISTICS IN

CHALLENGING TIMES

Page 2: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved.

2

THE BURNING PLATFORM

Global Defense organizations are currently faced with the

unprecedented challenge of dramatically reducing costs while

ensuring uncompromised mission support.

Page 3: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 3

ESTABLISHING A FRAMEWORK

FOR HIGH PERFORMANCE

Defense Executives are faced with many complex and challenging questions:

• How can I dramatically cut costs and while maintaining critical operational

readiness?

• Do my IT systems provide me accurate and actionable information for rapid

decision making?

• Where are my greatest supply chain risks and how can I control them?

• What should my supply chain network look like and how can I get there?

• Is my workforce prepared to meet “do more with less?”

Meeting these challenges requires Defense organizations to establish

a framework for achieving high performance, that includes:

• Foundation for Success – Executive Sponsorship & Governance

• Case for Change – a clear & quantifiable business case with dedicated

change management

• Integrated Performance Levers – alignment of people, process, and technology

Page 4: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 4

“WE’VE BEEN THERE BEFORE…”

Case Study: US Defense Logistics Agency (DLA)

Background

$46 Billion global enterprise – more than 27,000 military

and civilians in 28 countries

One of the largest and most complex supply chains

in the world

Primary DoD Warehouse Function

Reverse logistics processor…reutilization and disposal

• Manage nearly 5 million product line items, across 8 supply

chains, supporting over 2,200 weapon systems

• Supplying 84% of all Military Services’ repair parts and 100%

of fuel and troop support consumables

• Processes nearly111,300 requisitions and more than 11,000

contract actions a day.

• $2.4B in Foreign Military Sales supporting 110 Nations

Page 5: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 5

DLA’S CHALLENGE

By the late 1990’s, DLA was at a crossroad

DLA need to find a way to reduce cost and improve service…

or risk “going out of business”

In 1999, DLA decided it was time to change…

• Observations of DLA from military customers

• Prior Efforts to Transform Failed to Meet Expectations

– “It takes too long to get material from DLA”

– “DLA is too expensive”

– Previous IT modernization programs not delivered

– DLA remained a loose confederation of organizations that acted independently

– People, process and technology were misaligned

Page 6: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 6

DLA’S TRANSFORMATION & GROWTH

1990s 1960-89 2000s

1962 Defense Supply Agency

1977 Defense Logistics Agency

• DOD assigns most Service-unique consumables, warehousing and cataloging to DLA

• Increased direct customer interface

• Employed commercial practices

• Implemented Distribution Standard System

• Implemented Enterprise Business Systems (SAP/ERP)

• Expanded forward presence

• Increased mission w/BRAC

– DLR Procurement

– Industrial Support

– Commodity Privatization

• Strategic Sourcing

• Continued business systems enhancements

MANAGEMENT

EFFICIENCIES

FOR COMMON

ITEMS

MANAGING

SUPPLIES

MANAGING

SUPPLIERS

BETTER LINKING

SUPPLY AND

DEMAND

Integrating functions to enhance EFFECTIVENESS and EFFICIENCY

2010s

• Continued vital role

in SWA

• Logistics efficiencies

• Single national

inventories

• Leverage ERP

capability

• Strategic Network

Optimization

• PBL role

Page 7: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 7

ESTABLISHING A FRAMEWORK

FOR HIGH PERFORMANCE: BUSINESS

SYSTEMS MODERNIZATION (BSM)

Sponsorship

• Starts at the top…senior executives across all effected organizations are

engaged and personally sponsoring program

• Full-Time “Visible” Project Leadership

Governance

• Decision-making authority is engaged, readily available, and has the

necessary span of control, responsibility, authority, and incentive to drive

change

• Decisions around key issues are dealt with in structured manner, resolved

quickly, and are not re-visited

• “Single” Process owners established for all functions

• Partner with Integrator

BSM was not conceived as an “IT modernization” initiative, but rather a

comprehensive transformation initiative to enable DLA to reduce cost while

improving service.

Page 8: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 8

A FRAMEWORK FOR

HIGH PERFORMANCE LOGISTICS:

UNDERSTANDING THE CASE FOR CHANGE

Business Case

• Value proposition is documented with quantifiable, time-phased benefits

• Contracting model that creates incentives for both customer and integrator

to achieve the business case

• Program objectives are aligned to an outcome-based contract

• Business value judgment used in making scope/cost tradeoff decisions

Change Management

• Business case is shared and communicated throughout the enterprise

• Willingness to embrace changes is driven by shared recognition of

program importance, often accompanied by performance

incentives/bonuses for individuals

Page 9: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 9

A FRAMEWORK FOR

HIGH PERFORMANCE LOGISTICS:

ENABLING PERFORMANCE LEVERS

People

• Train, train, train…new skill sets needed

• Measure performance

Process • Improve process with greatest impact on supply chain performance

• Reengineer to align with core technology

• Measure performance

Technology

• Leverage COTS functionality

• Implement the new business processes through software

configuration, not customization

• Start with concept demonstration, capture lessons learned,

scale with added functionality

• One version of the truth

• Measure performance

INT

EG

RA

TIO

N – Demand Planning – reduce forecast error through customer collaboration

– Supply Planning – optimize inventory levels with cost to serve

– Procurement – reduce lead time, reduce spend through strategic sourcing

Page 10: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 10

BUSINESS SYSTEMS MODERNIZATION

RE-BASELINED JUNE 2003

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006

2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3

System Releases

Users and Materiel Added

Full Operating Capability

Medical

BPR Design, Build, Test

FOC

Release

2.2

Phased

Roll-outs

Release

2.1

OSD OP

Tests

Release

2.0 Core

Release 1.2

C&T,

Legacy

Procurement

Release 1.1

Subsistence

&

BDUs

Release 1

Concept Demo

– Hardware &

Troop Support

170K Line Items $300M Sales

390 Users

250K Line Items $3B Sales 1175

Users

5.2M Line Items ~$18B Sales ~7000 Users

Release 2.2.1 Enhanced

Page 11: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 11

HIGH PERFORMANCE DELIVERED

Improved Service

• Achieved 99.7% system availability…single ERP instance

• Reduced Logistics Response Time (21 days to 15 days)

• Reduced order status notification (>24 hours to 4 hours)

• Ground breaking changes in operating model with Implemented

Sales & Operations Planning

Cost Reduction

• Achieved $72M in cost savings over legacy systems

• Reduced cost recovery rate from 22.1% to 14.4%

• Reductions in forecast error…$500M in cost avoidance by reductions

in forecasts

Compliance

• First successfully deployed ERP in DoD…delivered on-time, on-budget

• Provided 100% supply chain interoperability with services

• Positioned DLA for DOD financial compliance

Page 12: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 12

BEYOND BSM…

ENTERPRISE BUSINESS SYSTEMS (EBS)

Extend Capabilities with Improved Demand Planning

• Leverage Existing Technology - modify business rules/configuration settings

to further reduce forecast error

• Extend Collaboration – integration of customer maintenance data with

Demand Planning

Enhance Strategic Sourcing Capabilities

• SAP SRM - modernize contract writing system with new COTS functionality

• Leverage Existing BI/BO Functions - extend analytical functions to support

Strategic Sourcing

Extend Capabilities with Advanced Analytics

• Strategic Network Optimization – utilize advanced analytical tools to optimize

the DOD Distribution Network (identified $731M in transportation savings, $2.5B

in recurring inventory savings & $4.75B in infrastructure savings)

• High Risk Procurement – developed advanced analytic algorithms/models

that effectively predict and reduce the occurrence of awards of contracts

for overpriced items, counterfeit items or to high risk suppliers

(net 5-year savings of $215M)

With the successful completion of BSM in 2007, DLA initiated a EBS, a new transformation

initiative to extend capabilities, meet new mission requirements, and enable $10B in cost

savings over the next 5-years.

Page 13: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 13

BENEFITS FROM IMPROVED DATA

INTEGRITY

• Reduced the number of statistical demand planners from 134 people to 8

• Reorganized into one unit at DLA Headquarters

• Inventory Reduction Efforts

• For DLA managed material on long term contracts, procure monthly consumption vice EOQ, demand over procurement lead time, and safety level

• Supplier engagement is critical

If successful, next steps are to expand to material not on

long term contracts

Page 14: DOING MORE WITH LESS - NSPA - ePortal...DOING MORE WITH LESS KEITH LIPPERT, VADM – US NAVY, RET.ACCENTURE RETIRED MANAGING DIRECTOR HIGH PERFORMANCE LOGISTICS IN CHALLENGING TIMES

Copyright 2017 Accenture. All rights reserved. 14

BENEFITS FROM IMPROVED DATA

INTEGRITY – CONT.

• Management of individual items conducted by item managers within DLA

• Before the ERP implementation:

• Item managers spent countless hours “cleaning the data” as part of the procurement process

• AFTER the ERP implementation:

• With improved data integrity, item managers are freed up resources

• With the War on Terror, DLA’s revenue more than doubled but no additional item managers were required to keep up with the increased workload