A cost analysis of forward positioning material in the Fifth Fleet Area of Responsibility

Abstract

The Navy has forward staged mission-critical material in Bahrain, Yokosuka, and Sigonella to meet immediate customer demand and lower equipment downtime. The aim of this research project is to determine the cost effectiveness of forward-positioning material in the Fifth Fleet Area of Responsibility and the impact to lead time before and after the standup of the Defense Logistics Agency commercially owned commercially operated (COCO) warehouse in Bahrain. The results indicate that the current forward-staging efforts are saving the Navy money and lowering customer wait time. The Navy’s share of the holding cost at the COCO warehouse is relatively small when compared to how much money is saved by shipping material via surface transportation instead of by expedited air. This is partially due to the heavy weight of some of the items listed on the planned stocking list. The lead time analysis shows substantial savings in lead time days and even greater improvement in lead time categories. We conclude that the 29 percent reduction in overall lead time is a direct result of the forward staging efforts in the Fifth Fleet at the COCO warehouse. We anticipate additional cost savings and even lower lead times as the warehouse becomes fully stocked.