Senior leaders from the Defense Logistics Agency, including DLA Maritime officials, met with industry representatives to discuss financial concerns and strengthening partnerships during a “Captains of Industry” meeting Feb. 12 at the McNamara Headquarters Complex.
For DLA, the captains of industry meetings with leaders across the agency’s supply chains have helped establish strong relationships with suppliers and vendors, leading to additional cost savings for the agency, DLA Director Navy Vice Adm. Mark Harnitchek said.
“We’re getting great results,” he said. “We buy about half a million things every year, so we’re really nothing without you guys. … I’m really looking forward to hitting a critical mass of activity, and I think we’re starting to hit that here on the maritime side.”
Although support to warfighters is still the agency’s No. 1 priority, DLA has an added responsibility to also cut its budget and operating costs, Harnitchek said.
“Our customers are the center of everything we do,” he said. “ That’s what we’re all about, is delighting our customers. For my folks, if we’re not doing something that directly or indirectly delights customers, we’re probably not doing the right thing. That is job [first] here. On the back end, with all the budget pressure here, we’ve got to take a lot of costs down. … I think a lot of the budget uncertainty here is not gone, but it’s less uncertain now than it was this time last year with sequestration and the government shutdown.”
With an aggressive goal to significantly improve performance while dramatically reducing costs, DLA will need supply leaders to help the agency buy the right items at the right price, Harnitchek said.
“I’ve said this before; it’s not an attack on profit. A lot of people think the government doesn’t like industry now, but we love industry because we’re nothing without you. But we need your help to take costs down. By long-term contracts, by performance-based contracts, by really asking you the question, ‘How do we take costs down?’ And you tell us. Generally, it’s something we can do and we’re going to go do it. We want to be buying the right stuff.”
Another part of the agency’s fiscal 2014 guidance to save money is by rightsizing inventory, Harnitchek said.
“We’re putting a lot of pressure on ourselves to take costs out of our operating side,” he said. “The big one there is just unburdening ourselves of a lot of inventory we don’t need. We were at a $14 billion inventory level a couple of years ago. At the end of this year, we’ll be about $10 [billion] or less. That implies less infrastructure we need to carry around [and] a whole lot less inventory that we need to worry about. We’re cleaning out the attic, and we’ve adjusted how we buy so we don’t fill up again. [There’s been] a lot of effort on decreasing the level of inventory we have and then optimizing that network so the inventory is in the right place.”
Harnitchek said a strong partnership between the agency and its suppliers is critical to successfully achieving goals for both the agency and DoD, he said.
“We need your help to do this,” he said. “That’s why it’s important that we have this relationship [and] that you have this relationship with … all the folks in our enterprise here that I charge to make this happen. So thanks for coming. Thanks for showing up these last few years. Thanks for helping us hit some homers here on those action items; and I really am looking forward to taking this to the next level.”
Other topics discussed during the event included pricing concerns, reducing the time to award for DLA contracts, and DLA Maritime’s industry engagement strategy, as well as a status update of action items from the previous land and maritime roundtable, held in November.
Defense Logistics Agency Director Navy Vice Adm. Mark Harnitchek (center) looks on during a “Captains of Industry” maritime meeting Feb. 12 at the McNamara Headquarters Complex. Such meetings are part of a series of efforts to better partner with industry leaders from DLA’s supply chains. Photo by Teodora Mocanu