Facilitating Inventory Reduction
The Department of the Navy was charged with an initiative by the Department of Defense to reduce its warehouse and distribution footprint as well as the costs associated with that reduction. The client sought Kairos Worldwide’s expertise and guidance for deploying the appropriate methodology and pertinent analytical tools; and to function as the overall Project Manager of this significant initiative.
The Department of the Navy was facing budget constraints in the face of a growing and more expansive warfare mission throughout the world. Its operating costs continued to restrain its ability to deliver on that mission. Navy leadership focused on the logistical costs associated with inventory investment and warehouse and storage infrastructure as opportunities for freeing up funds that could be redeployed to the warfare mission. The Navy requested that Kairos Worldwide assume the lead contractor role to facilitate inventory reductions and the corresponding facility footprint adjustments, as they transitioned warehousing and distribution function and personnel to the Defense Logistics Agency.
Kairos Worldwide’s team developed a methodology for analyzing the current warehouse situation, which involved 350 buildings occupying 12,950,000 square feet dispersed across 22 sites and spanning 6 geographical areas, some as far away as Sigonella, Italy, and Yokosuka, Japan. Kairos developed an informational matrix that utilized more than 100 discrete data requirements during the analysis phase, sent this matrix to all of the sites for initial completion, and then followed up with site surveys spread over 18 months. After intense and lengthy analysis, Kairos Worldwide took the following actions:
- Proposed inventory disposition recommendations based upon data gathered during completion of the matrix and site visits
- Recommended, based upon extensive data gathering, that:
- 102 warehouses be scheduled for demolition because of limited habitability and sub-standard quality
- 108 warehouses, with a total square footage of 5.5 million, be transferred from the Navy to Defense Logistics Agency
- 149 warehouses be retained by the Navy based upon economic and strategic goals
- Monitored actions to effect a seamless transfer
These actions crossed multiple disciplines, including personnel and payroll, environmental, legal, acquisition, training, facilities, equipment and inventory. This project crossed 22 sites and required the coordination from agencies throughout DOD.
- Kairos Worldwide successfully met all schedules and milestones.
- The Navy projected savings estimated at $23 million over 5 years.
- The multiple, phased transfers were accomplished without any disruption to service or readiness, despite transferring 108 individual warehouses, associative functions, and more than 400 personnel.
- Based on the success of this effort, the DOD is reviewing the results of the Navy’s initiative and is contemplating the Kairos Worldwide methodology as a template to deploy across other military departments.