Optimizing Marine Corps Management of
Temporary Storage Projects
Aminad Consulting helped the Marine Corps streamline enterprise storage and drive savings through rationalization of excess stock, process improvement and close collaboration with the owners of temporary storage projects. Aminad worked quickly, rapidly progressing from storage strategy to implementation to help the Marine Corps deal with pressing fiscal challenges and space constraints. With Aminad’s help, the Marine Corps captured $5M in annual storage cost savings without affecting mission performance and freed up nearly three full warehouses for indoor storage of high-value military equipment.
In 2018, Marine Corps enterprise storage capabilities were reaching a breaking point after a series of compounding setbacks. Marine Corps Logistics Command (LOGCOM), which manages enterprise storage, did not have enough warehouse space to store all assets indoors, and large pieces of high-value military equipment (ME) were stored outdoors, causing them to degrade from heat, humidity and precipitation. A hurricane in Albany, Georgia, LOGCOM’s primary storage location, damaged 47,000 pieces of outdoor-stored ME. Enterprise storage capabilities had been funded by Other Contingency Operations (OCO) appropriations, and LOGCOM was facing the elimination of $30M OCO funding, as shown in Figure 1. LOGCOM used temporary, hurricane-related funds to maintain enterprise storage, but this funding strategy only delayed inevitable cuts to the Marine Corps enterprise storage budget. Enterprise storage consistently also failed Department of Defense audit readiness requirements and contributed to overall Marine Corps audit problems.
Figure 1.—Enterprise storage faced a $30M budget cut from the elimination of OCO funding
In the face of these setbacks, LOGCOM activated the subordinate Marine Forces Storage Command (MFSC) to provide a regimental leadership over enterprise storage and charged MFSC’s first Commander with cleaning up enterprise storage. The new Commander faced a daunting set of challenges. How could he find the space to move ME assets indoors without Marine Corps investment in warehouse construction? How could he manage down to a lower budget without affecting mission execution or degrading service levels to the Fleet Marine Forces (FMF)? How could he modernize warehouse operations, modernize technology and improve data visibility to support audit readiness? Where was there room to move quickly, before MFSC’s budget was slashed? LOGCOM turned to Aminad Consulting for help.
Aminad quickly focused LOGCOM and MFSC on Operating Materials and Supplies (OM&S). Although MFSC’s primary mission was enterprise storage of ME, the secondary OM&S category had been neglected, continued to grow year over year, and constrained MFSC’s ability to execute its primary ME mission. OM&S inventories include two types of material:
- Temporary Storage Projects (TSP). Marine Corps Systems Command (SYSCOM) and PEO Land Systems (PEO LS) programs own TSP material and use LOGCOM facilities for storage. TSPs are critical to the SYSCOM / PEO LS mission, and program managers may use TSPs for initial provisioning (e.g., when items are awaiting NSN assignment), to store modification kits that will be used to upgrade weapon systems, or when items become difficult to obtain through standard DoD sources of supply (e.g., a life-of-type buy when a supplier goes out of business). TSP storage is intended to last no longer than two years, and if a project persists for longer than two years, LOGCOM standard operating procedures indicate that TSP requirements should be revalidated every two years.
- Stock List 3 (SL-3). LOGCOM owns and stores SL-3 material to support the shipment of principal end-items (PEIs) to the FMF. SL-3 items are collateral material (e.g., fuel cans, axes) that are associated with PEIs and ship alongside PEIs when they are sent to the Fleet. MFSC removes SL-3 material from inbound parent PEIs before PEIs are repaired or upgraded, procures new SL-3 material, as needed, and reattaches SL-3 gear to outbound PEIs before shipment to the FMF.
Aminad focused LOGCOM and MFSC on TSP as the first target of opportunity by quantifying the impact of TSP on the MFSC organization. TSP material occupied 20 bays of warehouse space, or approximately three 200,000-square-foot warehouses. MFSC was not budgeted to store TSP material, and neither SYSCOM nor PEO LS made any financial contribution to TSP storage costs, which totaled ~$9M per year. TSP inventory accuracy was extremely poor, with ~40% of TSP items lacking a project code that would allow MFSC to link the material back to a SYSCOM / PEO LS program and validate the continued TSP requirement. Aminad developed a TSP improvement strategy for MFSC that focused on (1) inventory reductions, (2) cost management, and (3) process changes.
Inventory Reductions. MFSC had a tremendous opportunity to reduce the TSP footprint. MFSC had 263 projects in storage, representing $1B of material. Within these 263 projects, SYSCOM and PEO LS had directed MFSC to close 41 projects (~15% of projects) and dispose of all associated material, but these projects remained within MFSC warehouses. An additional 84 projects (~30% of projects) had no documented action or revalidation within two years. Even within active projects, 50% of items had not been issued within two years. Aminad identified TSP and NSN-level targets for MFSC divestment.
Figure 2. DLA storage was nearly three times more expensive than MFSC storage
Process Changes. TSP management lacked standard operating procedures, and where LOGCOM and MFSC had defined TSP processes, these processes were not consistently followed. As an example, 76 projects (~30% of projects) lacked a valid Letter of Request (LoR) specifying project requirements and milestones. Of the 187 projects with a valid LoR, only 60 projects (~30%) were either less than two years old or had received a validation of requirements within two years. Aminad proposed a series of business roles to support ongoing TSP management.
Aminad’s Unique Value to the Marine CorpsFocus on highest-value opportunities yields rapid results to meet near-term budget targets Facilitation of collaboration across commands yields greater impact for the Marine Corps enterprise Comprehensive implementation support enables successful execution of inventory strategy
After designing a TSP strategy for LOGCOM and MFSC, Aminad helped implement the proposed changes to the TSP program. We facilitated close collaboration among LOGCOM, MFSC, SYSCOM and PEO LS to reclassify 6 million “orphan” NSNs—OM&S items that lacked a project code—and either assigned them to an active TSP project or identified them as SL-3 material. With a more accurate picture of TSP inventory, Aminad helped LOGCOM, MFSC, SYSCOM and PEO LS work together on inventory divestment. To date, MFSC has disposed of over $500M of inventory, representing 14 warehouse bays and 560,000 ft2 of space, and received $17M of one-time cash credits through DLA’s material returns program. With new warehouse space available, Aminad helped MFSC move all items out of DLA storage and recognize a $5M annual storage cost savings. Lastly, Aminad helped LOGCOM draft a TSP Policy Order, signed by LOGCOM’s Commanding General, that formalized critical processes, delineated clear boundaries of responsibility, and increased SYSCOM and PEO LS accountability for TSP project storage to ensure that MFSC sustains TSP improvements over time.
The TSP effort helped MFSC’s Commander begin to dig out of an unsustainable financial, storage-space, and audit-readiness hole. With new levels of data visibility into OM&S, he also has clear line of sight into what to pursue next – a clean-up and optimization of $600M in SL-3 inventory. With the tremendous success of the TSP program as a model, the MFSC Commander can continue to right-size inventory, bring additional ME assets indoors, and free up resources for investments in technology and warehouse modernization.