The US Army Materiel Command has implemented a new Integrated Business Planning (IBP) programme, developed by consultancy company Oliver Wight, to yield billions of dollars in reduced inventory spending.
Having achieved best practice for AMC in record time, the programme is now set to roll out across all military services.
The US military demands excellence in logistics. Army Material Command (AMC) is a 65,000-employee operation, responsible for logistics planning for transportation, sustainment, clothing, armament, and battlefield movements. Its role is to supply the parts and materials that keep the army’s combat systems running.
With a culture of ensuring soldiers are safe ‘at all costs,’ inventory optimisation during 12 years of war in the Middle East presented AMC with a significant challenge.
However, after implementing its IBP (Advanced Sales and Operations Planning, S&OP) process, AMC has gone from logistics sub-optimisation to reach a best practice standard within six months.
AMC is on target to cut inventory spending by $4.5bn by the end of this year, without any degradation in readiness.
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.
“The AMC team is justly proud of what it’s achieved and wants to get the good news out there,” concludes Oliver Wight principal, Jim Correll.
As a result of the IBP programme, AMC is well on the way to achieving its goals of reducing inventory and backorders by 22% and 30% respectively.
The next step, according to Oliver Wight, is to implement Integrated Business Planning across all US military services, and for AMC to continue its journey to ‘Class A’, the globally recognised standard of business excellence.