Material support integration: establishing NAVSUP as the navy provider of choice for SIM contracting and BOS supply chain management

Over 2,000 people and millions of I dollars in funding are being realigned from Commander, Navy Installations (CNI) to the Naval Supply Systems Command under a sweeping and ambitious initiative called Material Support Integration (MSI). This article explores the short history and process of the MSI effort, and provides a look ahead at the next steps.

Everyone understands the absolute necessity to recapitalize the fleet; it is the driving force behind Sea Power 21 and the myriad cost-saving initiatives associated with it. According to RDML William Kowba, Commander, Fleet and Industrial Supply Centers, "As our nation engages in contingencies abroad, especially the war on terrorism, NAVSUP continues to transform to fully support the CNO's Sea Power 21 vision. There is a sense of urgency to modernize our fleet to deal with the geopolitical realities of the new century. We contribute to this effort, in part, by focusing on the Sea Enterprise pillar of SeaPower 21. This involves further realignment to properly manage resources, achieve greater efficiencies, and drive down costs."

For its part, leadership from NAVSUP, Naval Air Systems Command, Naval Sea Systems Command, and Space and Naval Warfare Systems Command began collaboration to identify redundant processes and to achieve efficiencies in business management under the concept of the 88.

CNI is another such initiative created to establish a single shore installation management organization to focus on shore facility and service effectiveness by aligning processes, structures, and standards, and by employing best business practices. Comprised of 16 regions and 98 Navy installations that span the world, CNI clearly offers enormous potential to return substantial resources to the fleet.

With the stand-up of CNI came opportunity. In comparing CNI and Virtual SYSCOM operations, it was evident that efficiencies could be gained within the supply chain management and contracting functions. To that end, a memorandum of agreement (MOA) was signed by CNI and the Virtual SYSCOM members to examine all supplies and services associated with contracting and supply chain management to determine better ways to align support. The MOA further delineated that NAVSUP would be the provider of choice for Shore Installation Management (SIM) contracting and Base Operations Support (BOS) supply chain management, with execution of these functions done at the COMFISCS level.

This monumentally increases the area of responsibility of every FISC in the enterprise. Moreover, with the exception of those functions under fleet control, this alignment firmly places NAVSUP as the Navy's supply support provider capable of bringing to the entire Navy best business practices and methodologies in supply management functional areas.

Data Call Analysis

In October 2003, COMFISCS was designated as the lead to examine the integration of SIM contracting and BOS supply chain management. Under the leadership of Elliot Fields, COMFISCS Executive Director, and facilitated by CAPT Kathi Jensen, of NAVSUP, and CAPT Carol Hoffman, Commanding Officer, FISC Puget Sound, a Core Integration Team was established to determine a plan for the transfer of functions from CNI to NAVSUP, a plan keenly focused on achieving efficiencies and cost savings. CAPT Arlis Ethridge and then CDR Frank Purdy served as CNI representatives.

To start, each region was geographically aligned under a FISC. Korea and Japan are aligned under FISC Yokosuka; Guam and Navy Region Hawaii--FISC Pearl Harbor; Navy Region Northwest and Navy Region North Central--FISC Puget Sound; Navy Region Southwest--FISC San Diego; Navy Region Midwest, Navy Region Northeast, Navy Region Mid-Atlantic and Naval District Washington--FISC Norfolk; Navy Region South, Navy Region Gulf Coast and Navy Region Southeast--FISC Jacksonville; and Europe, Bahrain--FISC Europe (to be established in FY '05). From that moment on, each FISC had an assigned area of responsibility and was responsible for data collection and site visitation in that AOR.

In December 2003, a data call was issued to the various field activities in each region, focusing on material management (inventory management and control, requisition processing, warehousing, accommodation storage, transportation) and supply services (large contracting, simplified acquisition, personal property, mail service, fuels management). Data on workload, transactions, cycle times, information systems, warehouses, funding sources, customer base, staffing and service levels, and much more was collected. After receiving the data, the FISC teams then validated this information during multiple site visits in order to understand the physical plant and layout, interview onsite personnel and installation commanding officers, and consult with customers. The intent was to develop a total picture of the "as is" organization and operations in each region.

From an examination of the associated processes, workload, and staffing, the teams then utilized a business case analysis methodology to determine a "to be" vision of the new service delivery model for their respective installations and regions, including projected staffing levels and associated non-labor operating costs necessary to achieve customer-required performance (capability) levels at reduced cost.

Additionally, the teams prioritized the CNI activities that would transfer to COMFISCS and annotated initial thoughts on the next targets of opportunity. However, it must be stressed that the data call, site visits, and subsequent analysis occurred under a very compressed time line and required that the teams determine initial "to be" organizations that could be established by the end of fiscal year 2004 and offered short-term cost savings.

"In just over 60 days, the FISCs were able to review and determine alignments that produced over l0 percent initial savings across the CNI enterprise," said Jensen. "Once the FISCs assume operational control over these functions and those under the system commands, all are confident they will be able to continue to determine further efficiencies that will produce additional, significant savings."

Current Status

Transformation is a challenging and evolving journey. At this stage of the MSI effort, the COMFISCS senior leadership team is thoroughly examining the results of the FISC teams' research and recommendations. It is critical that this analysis be done so that the future organization is fully spelled out before the transfer of resources and infrastructure. With manpower being the primary resource to transfer, the teams are now identifying the specific military and civilian billets that will be transferring to COMFISCS, the Most Efficient Organizations (MEOs) currently in place, and the activities undergoing A-76/Commercial Activity studies.

A follow-on "operational" MOA is now in draft for NAVSUP, CNI, and COMFISCS signature. Applying to all installations and regions under CNI and the NAVSUP enterprise, the operational MOA lists the work and functions to be transferred, and delves into the mechanics of the transfer. Turnover of billets and personnel, reimbursement arrangements for services, information systems, facilities, and metrics must all be taken into account. Elements of the MOA are to be documented in NAVSUP's Strategic Plan and supported by NAVSUP's Assistant Chief of Staff for Regional Commander Support (ACOS RCS). Signature of the MOA will formally authorize action to execute the transfer of specified SIM contracting and BOS supply chain management functions from CNI to NAVSUR Once that occurs, subject matter experts in human resources, budgeting and accounting, and supply management will roll up their sleeves to implement the steps necessary to effect the transfers on a phased basis.

The Way Ahead

The benefits of MSI are clear, allowing for the leveraging of NAVSUP's enterprisewide capabilities, the streamlining of delivery models, and the elimination of duplicated effort. There are definite opportunities that have been identified to reduce manpower, warehousing, and other non-labor resources. However, these transfers are not the final end state for COMFISCS. Work will continue to integrate computer systems, rewrite contractual vehicles on an enterprisewide basis, and identify candidates for outsourcing, consolidation, or reengineering.

"We must find additional efficiencies that are inherent in how we have traditionally delivered Naval supply services by challenging the assumptions," said Kowba. "Products and services are being delivered with emphasis on eliminating duplication and layering. The NAVSUP enterprise in tandem with COMFISCS must continue to deliver products and services most cost effectively and export this methodology in support of the warfighter."

Clearly, only the first chapter on MSI has been written, with many more to follow.

CDR John Gonzalez holds a bachelor's degree in business administration from the University of Washington and a master's degree in business administration from the University of Michigan. Previous assignments include Office of the Chief of Naval Operations, Supply Programs and Policy Branch (OPNAV N412); Commander, Naval Air Forces, U.S. Pacific Fleet; Naval Air Station, North Island," USS Austin (LPD 4); Naval Air Systems Command; and USS Duluth (LPD 6). He is a qualified Surface Warfare Supply Corps Officer, Naval Aviation Supply Officer, and Navy Acquisition Professional.

Patrick "Tiny'" Del Grosso served 12 years as a Navy journalist with tours on USS Vega (AF 59), USS Tripoli (LPH 10), and American Forces Radio and Television Detachments in Keflavik, Iceland and Exmouth, Australia. He has worked for 16 years" as a writer/editor, public affairs specialist, and public affairs officer at FISC Puget Sound.

J. Overton holds a bachelor's degree in history from Northwest Arizona University and is now completing graduate work in business strategy. He served four years in the U.S. Coast Guard and is currently a management analyst at FISC Puget Sound.

COPYRIGHT 2004 U.S. Department of the Navy, Supply Systems Command
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