Client Solution Architects

Project Description:
The Advanced Planning System (APS) Transformation Business Case Analysis (BCA) was developed in response to the Navy’s interest in the identification and quantification of potential costs that would be incurred and benefits that could be gained from using the Supply Maintenance Aviation Reengineering Team (SMART) Manugistics' Advanced Planning and Scheduling (APS) tool to enhance productivity and improve processes for transformation. Improvements in processes result in increased productivity and have been shown in labor and/or inventory cost avoidance or efficiencies. The APS Transformation BCA includes three potential scenarios, along with several variants that were analyzed to determine the Net Present Value (NPV) of benefits, Return on Investment (ROI), Payback Period and Break-Even (B/E) Point.

Selected from a list of twenty-one candidates, the three scenarios analyzed in the APS Transformation BCA were:

Scenario I: APS to R-Supply Integration
(Single National Inventory Proof of Concept)
Scenario II: Navy Depot (NADEP) Collaboration
Scenario III: Strategic Positioning Computation for Positioning of Material

Scenario I provided a robust model for prototyping the single national inventory concept. This model would provide an integrated retail level repair/replenishment plan as well as a wholesale buy/repair plan for the F-14 weapons system. Scenario II identified the opportunity for collaboration between the NADEP, Naval Inventory Control Point (NAVICP), and commercial vendors. The collaboration effort would require the sharing of data on four data streams amongst five different trading partners in order to leverage common business practices and drive benefits. Finally, Scenario III included two distinct business processes. The first process was referred to as strategic re-positioning and included an integrated retail/wholesale allowancing computation. The second process was referred to as strategic positioning and consisted of the system generating an optimal positioning recommendation for procured wholesale assets.

Challenges:

Desire by the Navy to model multiple variants to each of the three scenarios
As Collaboration (Scenario II) costs and benefits were dependent not only on the number of data streams, but also the number of trading partners with whom to collaborate and share information, it was necessary to define and explain the selection of baseline case data streams and limitation of trading partners included in the analysis
Estimation of labor and inventory benefit accrual for the scenarios was complicated based on measurement of in-scope labor and inventory

Solutions:
Using Cost Data from relevant contracts and augmenting this with assumptions designed to be consistent with the Navy Merged ERP Project, implementation and sustainment costs were derived for each scenario. Derived from one-time inventory savings for all three scenarios, labor savings (contractor personnel effort reductions) and efficiencies (Navy civilian and military personnel effort reductions) for Scenario II - Collaboration, benefit streams were defined and estimated to generate net benefits and additional measures of financial performance (ROI, B/E, and payback period). The "base case" for each scenario was amended based on a series of variant assumptions to determine impacts on ROI and other performance measures.

The approach taken for this study was to develop a scenario-based analysis that would allow NAVICP to model different implementation scenarios and options quickly and comprehensively so as to reveal the associated benefits of those scenarios. Scenario-based analysis for NAVICP was defined as the ability to model different expanded capability options in order to determine the best ROI and generate the highest net benefits. All current process, implementation, and sustainment cost data were incorporated into a tailored BCA/Budget Model. Industry and Navy benchmarks were identified and incorporated into the BCA/Budget Model. By providing an analytical framework and methodology capable of handling multiple variable changes with real-time statistical and visual updates, the BCA/Budget Model allowed for performing ROI and other financial analyses in a timely manner. The model that supported the APS Transformation BCA document allowed definition of the input variables and output format, as well as the relationships among variables to derive meaningful cost-benefit analysis, including ROI, payback period, B/E and NPV analysis.

Results/Benefits to Client:
For each scenario:

Total estimated cost over the defined interval
Total estimated non-recurring costs over the defined interval
Total recurring costs, over the defined interval, were estimated. This cost was based on hardware server and maintenance fees
Estimated benefits were calculated, as well as, identification of the type(s) of benefit streams (i.e. inventory, legacy system retirement, or labor cost avoidance)
Payback period, identified by the year and quarter payback was achieved, for low-end and high-end benefits ranges
Break Even Point, identified by the year and quarter payback was achieved, for low-end and high-end benefits ranges
Total value net benefits for low-end and high-end were provided with associated low-end and high-end ROI

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Project Description Challenges Solutions Results/Benefits to Client	Project Description: The Advanced Planning System (APS) Transformation Business Case Analysis (BCA) was developed in response to the Navy’s interest in the identification and quantification of potential costs that would be incurred and benefits that could be gained from using the Supply Maintenance Aviation Reengineering Team (SMART) Manugistics' Advanced Planning and Scheduling (APS) tool to enhance productivity and improve processes for transformation. Improvements in processes result in increased productivity and have been shown in labor and/or inventory cost avoidance or efficiencies. The APS Transformation BCA includes three potential scenarios, along with several variants that were analyzed to determine the Net Present Value (NPV) of benefits, Return on Investment (ROI), Payback Period and Break-Even (B/E) Point. Selected from a list of twenty-one candidates, the three scenarios analyzed in the APS Transformation BCA were: Scenario I: APS to R-Supply Integration (Single National Inventory Proof of Concept) Scenario II: Navy Depot (NADEP) Collaboration Scenario III: Strategic Positioning Computation for Positioning of Material Scenario I provided a robust model for prototyping the single national inventory concept. This model would provide an integrated retail level repair/replenishment plan as well as a wholesale buy/repair plan for the F-14 weapons system. Scenario II identified the opportunity for collaboration between the NADEP, Naval Inventory Control Point (NAVICP), and commercial vendors. The collaboration effort would require the sharing of data on four data streams amongst five different trading partners in order to leverage common business practices and drive benefits. Finally, Scenario III included two distinct business processes. The first process was referred to as strategic re-positioning and included an integrated retail/wholesale allowancing computation. The second process was referred to as strategic positioning and consisted of the system generating an optimal positioning recommendation for procured wholesale assets. Challenges: Desire by the Navy to model multiple variants to each of the three scenarios As Collaboration (Scenario II) costs and benefits were dependent not only on the number of data streams, but also the number of trading partners with whom to collaborate and share information, it was necessary to define and explain the selection of baseline case data streams and limitation of trading partners included in the analysis Estimation of labor and inventory benefit accrual for the scenarios was complicated based on measurement of in-scope labor and inventory Solutions: Using Cost Data from relevant contracts and augmenting this with assumptions designed to be consistent with the Navy Merged ERP Project, implementation and sustainment costs were derived for each scenario. Derived from one-time inventory savings for all three scenarios, labor savings (contractor personnel effort reductions) and efficiencies (Navy civilian and military personnel effort reductions) for Scenario II - Collaboration, benefit streams were defined and estimated to generate net benefits and additional measures of financial performance (ROI, B/E, and payback period). The "base case" for each scenario was amended based on a series of variant assumptions to determine impacts on ROI and other performance measures. The approach taken for this study was to develop a scenario-based analysis that would allow NAVICP to model different implementation scenarios and options quickly and comprehensively so as to reveal the associated benefits of those scenarios. Scenario-based analysis for NAVICP was defined as the ability to model different expanded capability options in order to determine the best ROI and generate the highest net benefits. All current process, implementation, and sustainment cost data were incorporated into a tailored BCA/Budget Model. Industry and Navy benchmarks were identified and incorporated into the BCA/Budget Model. By providing an analytical framework and methodology capable of handling multiple variable changes with real-time statistical and visual updates, the BCA/Budget Model allowed for performing ROI and other financial analyses in a timely manner. The model that supported the APS Transformation BCA document allowed definition of the input variables and output format, as well as the relationships among variables to derive meaningful cost-benefit analysis, including ROI, payback period, B/E and NPV analysis. Results/Benefits to Client: For each scenario: Total estimated cost over the defined interval Total estimated non-recurring costs over the defined interval Total recurring costs, over the defined interval, were estimated. This cost was based on hardware server and maintenance fees Estimated benefits were calculated, as well as, identification of the type(s) of benefit streams (i.e. inventory, legacy system retirement, or labor cost avoidance) Payback period, identified by the year and quarter payback was achieved, for low-end and high-end benefits ranges Break Even Point, identified by the year and quarter payback was achieved, for low-end and high-end benefits ranges Total value net benefits for low-end and high-end were provided with associated low-end and high-end ROI