Thank you very much for that question.
As the ADM responsible for materiel, I oversee all the aspects of the inventory, including location and value, etc. One of the things we're trying to do with this plan, and I'm going to call it a cultural change as well....
I've been in the department 38 years, 36 years in uniform, and have been involved with this for most of my career. When I was a junior officer, when we were a larger military, we had more people who were heavily involved with inventory and stock-taking and those sorts of things. In the mid-nineties, we got out of that game. We've been spending our time not just trying to fix today's problem, but looking at whether we can we localize it all. Can we count it all? Can we put a value on it all? To some extent we can, but it's a very large undertaking. Our fear is if we just stop and try to do that, the problems will reappear. Every time we do data entry of a new stock code, of a new system that we get, we risk recreating the same problems that we've had.
When we really started down this path of improvement, we had a previous plan. I would say it's proven to be optimistic. We've talked about these three big systems, all of which are enterprise systems, but there were many more than that. Every fleet that we got came with its own inventory system, which was a mirror of what the original equipment manufacturer would provide to us. We brought them together into one system and we dealt with all of the legacy issues and problems with that. We only landed that in 2015. Since 2015, we've had one system that does the financial, procurement, and inventory aspects of it. We now have, frankly, what some of my colleagues have called a “richness of data”. We have, in fact, almost more data than we can handle.
For us, it's really about changing the culture at the same time, to make sure that we're not back here in three or four years if we've cracked it, we've looked at it, we've valued it all, but it's gotten away from us again.
In some of the automated technology we're looking at, and even within the systems we have, we're bringing in some algorithms, some procedures, some things that we can do to find the issues. The deputy gave an example of it not being the dollar amount or the number, but rather the units that were entered improperly. We've had situations when a lot of bullets were acquired, and the unit cost of the bullet was put against the whole lot when somebody entered it.
We have tens of thousands of people who interact with this system. Getting them all sufficiently aware and trained to make sure that we understand it.... I'm heartened to see all of my colleagues at level one—the commanders of the army, navy, air force, special forces—are also all personally engaged in this to understand that we have to get back the culture of understanding what we have and where it is and what state it's in, not just for the purposes of public accounts but also for operational reasons. If we don't understand our inventory, it affects us operationally, and it actually triggers overbuys and excess buys. Something we're trying to do—and we've made some pretty important progress, to the tune of tens of millions of dollars annually in savings—is to actually deal with those as well.
We recognize that we have more to do here, but what we're trying to do is transform the organization around inventory management as we do it.