1. Funding the Future Force Supply, Ordnance & Logistics Operations
United States
Navy
Sea Enterprise:
Funding the Future Force by
RDML Al Thompson
Director
Supply, Ordnance & Logistics Operations
19 May 2004

2. GEORGE WASHINGTON (CVN)
The United States Navy Today
The United States Navy Today
17 MAY
RONALD REAGAN (CVN)
OPS
GEORGE WASHINGTON (CVN)
VST JEBEL ALI
TARAWA (LHA)
OPS
ESSEX (LHD)
OPS
KITTY HAWK (CV)
OPS
WASP (LHD)
OPS
USNORTHCOM
USSOUTHCOM
COMUSNAVSO
USEUCOM
USCENTCOM
USPACOM
USPACOM/
USNORTHCOM
2ND FLT
6TH FLT
5TH FLT
7TH FLT
3RD FLT
40 SHIPS
3 SHIPS
13 SHIPS
18 SHIPS
28 SHIPS
35 SHIPS
295 SHIPS
ACTIVE DUTY END STRENGTH: 376,713
RESERVE END STRENGTH: 84,378
UNDERWAY: 137 (46%) 3 CV, 3 LHA/LHD
DEPLOYED: 97 (33%) 2 CSG, 2 ESG TOTAL PERSONNEL: 33,302

3. Leadership & Management
Covenant Leadership
Productivity
Efficiency
Cost Reductions
Consumption
Best Business Practices
Lean
Six Sigma
Mission Accomplishment
“Product”
“Output” $$
People
Return on Investment
Assessment
“Metrics”
Right Output?
Right Cost?

4. Navy vs. Corporate Model for Risk Taking
IRCA
Corporate
Headquarters
Product/Business Units
Risk/reward trade-off
Profit Obj
-Risk
LOBs selected
Business plans outlined
Qualified/quantified:
Risk
ROI
Risk established
Cost determined
Risk accepted
Funding allocated
Headquarters
Product/Business Units
Business lines driving strategy
Risk drives cost
Slow to market
Unbalanced
Slow death syndrome
Lack of accountability
Strategy driving business lines
Risk drives decisions
Time to market key consideration
Diversify/balance to minimize risk
Cut losses quickly…eliminate failures
Accountable for achievement
“Success is the ability to go from failure to failure without losing your enthusiasm.” Winston Churchill (as quoted by John Peterman)

5. Risk Management and Leadership
Tyranny of cascading risk aversion
Are risk decisions made at the “right” level?
How do we incentivize risk taking at all levels?
How does accountability/responsibility impact risk calculus?
Is risk being “bought out” at every level of the organization?
Zero risk is neither achievable nor affordable
What is the right level of risk?
Can we continue to buy down risk today at the expense of the future?
Leaders can’t avoid risk…need to decide what risks to accept
Leadership’s Role:
Understanding the risk
Quantifying the risk
Decision-making
Managing the risk
We need to rethink what we are doing…
re-imagine our organizations & challenge all assumptions!

6. Sea Enterprise…Balancing Our Priorities
What is Sea Enterprise?
Balancing our Priorities
Sea Enterprise…Balancing Our Priorities
Sea Enterprise Offsite
September 2002
Right Force
“Transforming our force must occur
within existing resources.”
Efficiency
Effectiveness
Right Readiness
“Our focus must be on readiness and productivity…
readiness at any cost is not the answer.”
Right Cost
“Allowing cost growth at the rate of inflation
is not an option.”

7. Spending vs Force Structure
Why Sea Enterprise?
#3. Right thing for the Navy!
Why Sea Enterprise?
Spending vs Force Structure

8. Sea Enterprise…What’s Changing?
What’s Changing with Sea Enterprise?
Sea Enterprise…What’s Changing?
Enterprise-wide:
Approach to transformation
View of targeted cost reductions and efficiencies
Energized decision-making considering risk
Senior leaders focused on execution
Savings directed to recapitalization
We are positive, optimistic…and we believe

9. FY05 Sea Enterprise Results… Achieved $3.7B in Cost Savings/Avoidance
$1.1B Fleet Readiness
$0.7B Shore Readiness
$0.8B Navy Spares Inventory Augmentation (FRP)
$0.4B Navy Working Capital Fund Cash Infusion
$0.4B Level of Effort
$0.3B Defense Logistics Agency Inventory Augmentation
$3.7B Total Cost Savings/Avoidance
3-4 Ships…or 1-2 Ships + 40 F/A-18 Strike Fighters

10. QUESTIONS?