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Maritime Logistics Community News : Autumn 2010
25 NAVY SUPPLY NEWSLETTER AUTUMN 2010 Other commercial organisations that employ AIT universally across their supply chains have seen productivity gains of between 40-50% and inventory accuracy to 95% and there is every reason to expect the same for Defence. Significant productivity benefits are also expected from applying volumetrics data to inventory management. Volumetrics (item and packaging, dimensional and weight data) are essential inputs into a Warehouse Management System (WMS) which will support the new warehousing and distribution network. It will also enable improved logistic supply chain planning and execution, particularly with respect to the Vital Planning and Analysis (VIPA) logistics software planning tool which will improve our deployment planning. A scoping study in almost complete with implementation due for completion by the end of this financial year. Automated Data Collection (formerly referred to as Defence Transaction Processor) will install AIT resources (such as barcode readers) for conducting batch AIT assisted stock management. Batch also allows use in temporary or deployed warehouses in order to maximise AIT benefits of data accuracy and reduced stock management time at all warehouse nodes. A scoping study will be conducted in the first half of this year and implementation will occur in FY10/11. These AIT initiatives will enable Defence to optimise our inventory holdings and better manage the inventory we have, enhancing visibility of stock and the accuracy of Defence's inventory records as a whole, leading to significant productivity gains of between 40 to 50 per cent. We expect to achieve an 80% reduction in manual processing and a 20% increase in resource availability for unit level supply chain activities. A 10-15% improvement in data accuracy and 15% reduction in stocktake errors will also lead to improved demand satisfaction and speed of delivery which in turn reduces the distribution cost of high priority demands. Other Logistics Reform Initiatives Logistics reform initiatives have been captured in a Defence Logistics Reform Campaign Plan. A large portion covers those elements of the Strategic Reform Program that have already covered in this and the previous article. However, there are also a range of other initiatives being looked at by Defence. New Navy capabilities announced in the White Paper such as Landing Helicopter Dock (LHD) ships will require a range of naval operational logistics support infrastructure to be built at a cost in the order of $70m. This will involve an extension to Berth 10 in Townsville, including the provision of suitable marshalling areas as well as upgrades to East Arm Point, Darwin, including a watercraft loading ramp. Also in Townsville Defence requires provision of suitable commercially owned and operated storage tanks for F44 Naval Aviation Fuel to support the LHDs while in Darwin, a long term solution for naval bulk fuel offload will be developed that meets Defence's strategic and operational requirements. These infrastructure needs for Navy are being developed in close consultation with the Queensland and Northern Territory Governments through the State/Territory Consultative Forums that Defence maintains with all State and Territory Governments. Around 95% of the petroleum products consumed in Australia are produced by the local refineries which are mainly reliant on imported crude oils. Strategic and Logistics fuel planning is important for Defence in order to ensure security of supply for its energy needs into the future. Defence has established and staffed a strategic fuels directorate to coordinate, manage and provide oversight of strategic fuel management and policy across Defence. Better fuel demand management practices and opportunities with global suppliers will be pursued as well as continued examination of the use of alternative fuels and energy sources. The implications of not adequately resourcing integrated logistics support and personnel sustainment aspects of a weapon system manifest as considerably greater levels of strategic supply risk over life. Managing these strategic supply chain risks, while delivering improved weapon system availability is an increasingly important focus for Defence. Improved planning and analysis will significantly improve support to logistics planners allowing them to determine the feasibility of the sustainment and distribution aspects of a logistics plan and assist in the definition and evaluation of the logistics force structure. The aim of Defence's Inventory Assurance Strategy is to provide a body of evidence that supports Defence's assertion that its Inventory balance is "true and fair". The Defence inventory is large and has a high cost of ownership. This has contributed to a lack of confidence in the accuracy of inventory valuation and quantities that has previously resulted in qualification of Defence's financial statements. Furthermore, the Defence inventory comprises large numbers of items that have not moved for considerable periods of time but continue to be managed in warehouse facilities alongside fast moving items. In order to coordinate a Defence wide inventory assurance program to support Defence's Financial Statements, a single Business Process Owner has been appointed for logistics management across Defence, supported by an enhanced governance framework. Remediation of high priority logistics information shortfalls will deliver a standardised set of business processes and integrated Logistics Information Systems for the management of engineering and maintenance in Defence. Remediation of asset and inventory data will enable a smooth transition to the new information systems and improve inventory accuracy. An Improved Stock Management (ISM) Project is also helping to research and develop warehousing processes and solutions that could improve inventory accuracy and reduce the time and effort it takes to manage and account for Defence inventory. The initial focus of the Project is inventory segments that are characterised as inactive stock. The end state of the ISM Project will see the implementation of stock management solutions that improve stock accuracy and reduce management costs. These solutions are likely to include Automated Identification Technology (AIT) that will leverage the ADF's investment in AIT. Conclusion The collective program of logistics reform, together with the work we already have underway, is an ambitious and challenging program. It not only requires total support from within Defence, but more generally, support across industry and other Government Departments to ensure successful implementation and timely delivery. Deep reform is essential to maximise productivity gains and provide improved logistics support.