Thursday 25th Apr 2019 - Logistics & Supply Chain

IBP saves US army $4.5 billion

The US army is on target to cut inventory by $4.5 billion by the end of this year as a result of implementing an Integrated Business Planning programme, according to Oliver Wight.

The project was put in place at US Army Materiel Command, a 65,000-employee operation, responsible for logistics planning for transport, sustainment, clothing, armament, and battlefield movements.

The culture of organisation is to ensure soldiers are safe at all costs so inventory optimisation during 12 years of war in the Middle East presented AMC with a significant challenge.

But, with operations in Afghanistan coming to an end, combined with the financial squeeze from government budget reductions, the organisation had to reduce inventory and cut costs.

Oliver Wight, which organised the programme, said that after implementing its IBP (advanced sales and operations planning) process, AMC had gone from logistics sub-optimisation to best practice within six months.

It is on target to cut inventory by $4.5 billion by the end of this year, without any degradation in readiness.

The AMC team is justly proud of what its achieved and wants to get the good news out there, said Oliver Wight principal Jim Correll.

IBP also gives the command a 24-month future view of demand, and by leveraging its capabilities, AMC can see the potential for billions of dollars of opportunity cost savings well into the future.

Oliver Wight said that previously, AMC had limited forward view of inventory requirements and the IBP project revealed a potential overspend of billions of dollars, plus a ten-year inventory backlog. The IBP process was designed in five days and was fully functioning within eight weeks one of the fastest implementations ever. As a result, AMC is well on the way to achieving its goals of reducing inventory by 22 per cent and back orders by 30 per cent, saving billions of dollars for the US taxpayer.

The next step is to implement Integrated Business Planning across all US military services, and for AMC to continue its journey to Class A, the globally recognise standard of business excellence.

Get Weekly Logistics & Supply Chain News
Get Weekly Logistics & Supply Chain News
Thank you for your subscription