Transcom Seeks New Efficiencies, Cost Savings

By Donna Miles
American Forces Press Service

SCOTT AIR FORCE BASE, Ill., Nov. 26, 2012 – When mailing a letter, you can pay a premium for next-day service, or simply use a single stamp for standard delivery.

U.S. Transportation Command wants to give military decision makers the same kinds of choices – particularly as the United States draws down operations in Afghanistan and the Defense Department faces the tightest budget squeeze in more than a decade.

Through 11 years of sustained conflict, the Transcom staff has prided itself on the ability to quickly deploy forces and equipment into the combat theater and to sustain them through redeployment, said Bruce Busler, director of the command’s Joint Distribution Process Analysis Center.

“We are very good at being effective. Transcom has never let one of our customers down,” he said. “We are brute-force effective, when necessary, and we will always deliver. That is one of our mantras here.”

The problem, he said, is that the resources needed to maintain that level of service may not be available in the future – at least not across the board. “The department has made it very clear that we need to be more efficient in how we do our operations,” said Busler.

A team of analysts and engineers in Transcom’s Joint Distribution Process Analysis Center is committed to identifying ways to improve the command’s efficiency as well as effectiveness without sacrificing the quality of service it provides, he said.

That begins with managing overhead – currently about 9 percent, but on a trajectory to reach as high as 14 percent by fiscal 2016 as demand for services drops unless new approaches are adopted, he said. Air Force Gen. William M. Fraser III, the Transcom commander, has challenged his command to bring that figure closer to 10 percent.

With these marching orders, the Joint Distribution Process Analysis Center team is conducting a top-to-bottom review. Their goal is to identify concrete data to support financial decisions and improve the bottom line as part of the command’s overall strategic plan released in October, Busler said.

The team is focused heavily on areas where Transcom spends the most money – primarily in its operational areas, in the fuel, information technology and personnel accounts – and looking for cost-saving measures. Although a lot of work is going into these areas, Busler said, reducing the actual cost of transportation is where the biggest opportunities and payoffs will be found.

“If you can’t see and manage where your money goes, the ability to actually control that outcome is probably going to be pretty poor,” he said. “So we are trying to instill a disciplined process and provide this ability in the right context and based on [the command’s] priorities to make decisions on how we allocate command resources.”

The teams’ analyses are shedding light on the entire transportation and distribution enterprise.

They are providing insights, for example, on big, long-term issues such as how cargo planes, ships and aerial refuelers will support future transportation and logistics demands. A mobility capabilities assessment for 2018, in progress now and due to the Pentagon in January, will help to shape recommendations for the department’s strategic review, Busler said.

The team also is appraising existing seaport, airport, railway and highway infrastructure as well as global access to determine if it can support future Transcom needs.

Meanwhile, the staff has an immediate operational role as the military transitions from the nonstop, high-tempo operations of the past decade – and the big budgets that supported them -- to a more austere, post-conflict era.

They’re reviewing the command’s day-to-day operations, crunching the associated numbers, and challenging conventional ways of doing business to come up with new alternatives, Busler said. In the process, they’re studying the best practices commercial airlines and shipping companies use to turn a profit.

For example, the Transcom team, working with its air component, Air Mobility Command, came up with a fuel matrix for buying fuel where it’s less expensive – even if it might means carrying extra fuel to the next destination. Recognizing the expense and logistical demands of refueling cargo planes in landlocked Afghanistan, for example, they identified circumstances when it might make sense to gas up in Kuwait at about half the cost.

The fuel-buy matrix is now being used to guide these decisions, and already is saving the department $10 million to $15 million a month, Busler reported.

Working with AMC, Transcom also is analyzing the way cargo is packaged and configured for shipment to reduce the cost-per-pound of delivery.

Busler recalled a visit to a major East Coast aerial port, where operators were working at a frenetic pace to build pallets and load them onto cargo planes headed to Southwest Asia. “We found that the aerial port was very concerned about velocity, as they should be,” he said. “They were building pallets that were fairly light, but they were very quickly moving them through the system.”

Questioning the operators, Busler realized that their efforts to provide the fastest possible deliveries to warfighters were backfiring. Loading light pallets moved them quickly, but also meant less was being loaded onto each aircraft. And because forward operating bases typically have limited “slot times” to accept inbound aircraft, sending in aircraft not loaded to capacity actually slowed the ultimate delivery time.

“We actually found out that if we could fly airplanes denser, that the cost-per-pound went down and the velocity at the far end of the pipeline was not hurt at all. In some cases, we actually improved it,” Busler said. “So by looking at this as an enterprise outcome, we improved our ability to deliver to the warfighter while actually reducing the cost of that service to the taxpayer.”

Busler called this model “a perfect example of what Transcom should be doing to drive enterprise solutions.” The challenge coming out of a decade of high-volume transportation operations, he said, is shifting Transcom’s business focus to readiness while still maintaining cost-effective solutions for its customers.

In seeking out those solutions, analysts are assessing issues such as when it makes sense to fly equipment when sending it by surface ship costs about one-tenth that amount. They’re also gauging how using multimodal transit – possibly through an alternate location – can save money without interfering with the mission.

“What we are offering up is a way to provide people the insight they need to see the problem in a different way and confront their conventional thinking and make a different decision,” Busler said.

Transcom’s customers ultimately make the call about the transportation and distribution services they purchase, he recognized. To help them, the Joint Distribution Process Analysis Center is now providing decision makers options – and letting them know the associated costs. Until now, the commands had less precise measures for identifying how their decisions boiled down to dollars and cents.

The new “cost-based decision support” approach allows decision makers to evaluate “Option A” to ship cargo, knowing that it would take a specified number of days and cost a certain amount. But that same decision maker also would understand that the alternative “Option B” might take a specified number of days longer, but may cost less.

The hope, Busler said, is to give decision makers the relevant information to make those choices.

“We are not forcing anybody into the cheapest approach,” he emphasized. “What we want is for our leadership and customers to be able to at least evaluate the options and put a monetary value on them – the cost of a movement or cost per pound for a delivery.”

Busler compared the process to keeping a household budget in check. When money gets tight, it’s time to prioritize what expenses to bear and which ones to eliminate.

“The reality is that we are going to have to operate with fewer resources,” he said. “At the same time, we are very cognizant of our mission and, together with our partners, we deliver for the nation and the Department of Defense when they call us to do that. And that’s a commitment we won’t break. We want to make sure we are able to always deliver.”