United States Transportation Command (USTRANSCOM)

A Logistics Overhaul Yields a Billion Dollars in Savings

The Department of Defense achieved both better performance and remarkable cost savings when it transformed its multi-billion-dollar supply chain.

Client’s challenge

The United States Transportation Command (USTRANSCOM) coordinates the logistics of moving people and cargo from all around the world in support of military operations. It has the huge and daunting task of synchronizing and coordinating end-to-end distribution for the Department of Defense’s (DoD) massive supply chain, and it strives to make that supply chain as effective and efficient as possible for the two million people it serves globally.

USTRANSCOM continuously strives to improve its performance in terms of both speed and cost, but it’s a challenge. Implementing any improvement requires working with the multiple organizations that have a stake in the supply chain and aligning all their interests with the desired performance outcomes. The scale of the task is immense. When the agency wanted to further reduce its costs while improving its effectiveness, it sought the professional advice.

PwC’s advisory solution

USTRANSCOM engaged PWC to identify opportunities to support its logistics and strategy initiatives. The agency knew that PwC has had success in transforming large-scale supply chain processes and asked us to analyze USTRANSCOM’s supply chain and then advise and support it on its mission to make it more efficient. There was no time to waste; USTRANSCOM wanted actionable ideas within months, not years.

We assembled a balanced team that included highly experienced professionals with commercial supply chain backgrounds or had done commercial consulting before, as well as advisors who had military supply chain experience. Knowledge of commercial leading practices was vital, but adapting that insight into the military’s way of doing things was crucial because we knew that simply trying to impose successful commercial processes in the military arena would never work. Instead, we focused on embracing the relevant commercial processes in ways that would mesh with the military’s unique needs.

After working with USTRANSCOM to identify several strategic opportunities to improve efficiency, PwC formulated almost 30 specific initiatives, two thirds of which focused on cost savings, one third on performance. On the cost side, we took a hard look at optimizing air and surface transportation, the cost of which represents 60 to 80 percent of the entire DoD logistics budget. We identified where transportation could be improved, primarily by analyzing how USTRANSCOM’s logistics processes operated compared to the commercial standards we understood well. We utilized relevant leading practices from the commercial world and adapted them to the military environment, thusly finding huge savings in improving utilization of transportation assets, making sure that every plane or ship in transit was loaded optimally, and thereby cutting back on the total number of shipments needed.

We also identified savings opportunities by analyzing the blend of transportation conducted by military organic assets with commercial transportation assets. By reducing overlap, USTRANSCOM was able to save hundreds of millions of dollars.

When it came to lean process improvements designed to speed up the supply chain, we turned our attention to the countless requisitions that USTRANSCOM must constantly process. We isolated groups of requisitions that were either moving slower than other groups, or groups that were moving slower than requisitions would move in the commercial environment. We used standard process analysis to see why requisitions weren’t moving fast enough and then worked with the stakeholders to identify and implement the necessary process changes.

Impact on client’s business

Since we began collaborating with USTRANSCOM on designing and implementing improvements to its processes and supply chain, we have achieved 10 to 30 percent service-level improvements while simultaneously achieving nearly a billion dollars of savings to date. Our ability to identify and deliver huge savings and significant performance improvements has helped USTRANSCOM achieve its mission and serve the Department of Defense more effectively than ever.