Going Out of Business Plan Spending vs Force Structure This is a picture of an enterprise that if left unattended shows a going out of business plan. And this is where Navy was heading in the mid 90s.. Even though the number of ships were declining, our costs were going up. This is the “tired Iron” death spiral – aging ships, aircraft and facilities are more costly to maintain, and these increased operating and support costs have traditionally come from our recapitalization accounts. In other words, we were were cashing in our future by paying for the here and now.

Sea Enterprise Transforming Navy Logistics SEA ENTERPRISE Knowledge Enabled Logistics Sea Power 21 Joint Vision 2020 Enterprise Resource Planning Virtual Systems Command Performance Based Logistics Shipyard Transformation Strategic Sourcing Integrated Readiness Capabilities Assessment AirSpeed SEA ENTERPRISE Improve the Navy “business operations” effectiveness and efficiency to free resources for the 21st century Navy. Legacy System Rationalization NMCI eBusiness Claimant Consolidation Productive Ratios NAVSUP Transformation NAVFAC Transformation This shows you the results we are getting from Sea Enterprise. Examples of those initiatives – and granted some were already works in progress – are shown on the right and left hand sides. For POM 06, the claimants were given Intelligent Targets – that is OPANV told them how much money they had to operate with rather than have the claimants come in and say how much they needed. In order for the claimants to live within their targets, they came in with over 400 initiatives showing positive Return on Investment, improved business processes and streamlining to provide improved capabilities When, and if, executed, these initiatives should result in approximately $40B in harvestable savings across the FYDP that can be put towards navy recapitalization. Earlier than 18 months ago we realized that we needed to get operations and support spending under control. Thanks to Sea Enterprise, we believe we know have a strategic view of O $ M dollars; we understand where the money is and we are starting to harvest the saving. Tactics & Tools for Execution Senior leadership engagement in execution Challenge every cost, requirement, and assumption Aggressive divestment of non-core functions Accelerate transformation Minimize acquisition and life cycle costs Streamline organizations… expand inter-organizational collaboration Consolidate redundant efforts Divest under-performing or unnecessary products, services and capacity Align processes Minimize manpower costs Outcome/performance based metrics Leverage Technology Encourage innovation, challenge barriers