Title Developing a Business Framework Lisbon 21 October 2005 Major General Klaus-Peter Treche Deputy...

Title

Developing a

Business FrameworkLisbon 21 October 2005

Major General Klaus-Peter Treche Deputy Commander

Joint Support Command

SKUKdoSKUKdoAgenda

“Transformation” – more than a catchword (everything is changing ...)

Framework for more cooperation with industry (a decisive pillar for the reorientation of the armed forces)

Road to success (realised business cases and projects in the pipeline)

SKUKdoSKUKdoThe transformation is determined by new forms of conflicts

• Terrorism Terrorism

• Separatism Separatism

• Proliferation/drug trafficking Proliferation/drug trafficking

“The Bundeswehr focuses on

conflict prevention and crisis

management operations as

well as on operations in

support of allies, including

out-of-area operations.”

Source:

Defence Policy Guidelines 2003

“The Bundeswehr focuses on

conflict prevention and crisis

management operations as

well as on operations in

support of allies, including

out-of-area operations.”

Source:

Defence Policy Guidelines 2003

SKUKdoSKUKdo

Total: 6,339Total: 6,339

As of October 2005

KFORKFOR 2,781

EUFOR 976EUFOR 976

OEF 246OEF 246

UNOMIG 11UNOMIG 11

ISAF/KUNDUZ ISAF/KUNDUZ 2,3122,312

UNMEE 2UNMEE 2

The Bundeswehr during Operations

UNMIS 7UNMIS 7 AMM 4AMM 4

SKUKdoSKUKdoChanging Mission means Change of Capabilities - Force Strength -

1989 2010

495,000495,000

250,000250,000

218,000218,000

270,000270,000

195,000195,000

55,00055,000

Extended serv persExtended serv pers ConscriptsConscripts

National and

Alliance defence

National and

Alliance defence

Expeditionary warfare

(changing multinationality)

Expeditionary warfare

(changing multinationality)

SKUKdoSKUKdoChanging Mission means Change of Capabilities - Structural Reform -

Army Air Force Navy

Focus on core tasksFocus on core tasks

Joint Support Service

Bw Joint Medical Service

Army Air Force Navy

Tasks performed at multiple levelsTasks performed at multiple levels

Medical Service

Logistics

Old approach New approach

Command and Control Support

SKUKdoSKUKdoChanging Mission means Change of Capabilities - Equipment -

Personal equipmentPersonal equipment

and other capabilitiesand other capabilities

Air transportability Air transportability

Modular approach Modular approach

Mine protectionMine protection

Advanced communicationsAdvanced communications

Cross-country capabilityCross-country capability

SKUKdoSKUKdoChanging Mission also means Reorientationof the Defence Budget

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

As of 2 Feb. 2005As of 2 Feb. 2005

TrendTrend

Operating expensesOperating expenses

PersonnelPersonnel

Maintenance &

other operations

Maintenance &

other operations

Defence expenditureDefence expenditure

SKUKdoSKUKdoAgenda




SKUKdoSKUKdoCooperationwith

Industry

Targets

Focal points

Raising capital

Obta

inin

g

exte

rnal kn

ow

-

how

Incr

easi

ng

effi

ciency

and

eff

ect

iveness

in

opera

tions

CPM

2001

Pilot p

rojects

Agency

SKUKdoSKUKdo

Internal

optimisation

Internal

optimisation

PPPPPP

Outsourcing-Outsourcing-

??

??

??

Degree to which Bw is relievedfrom non-core tasksDegree to which Bw is relievedfrom non-core tasks

6%3%

34%

29%

7%

7%

5%

5%

4%

Real estate

Lo

gis

tics

Procurement

IT

Oth

er

Fleet

Training

ClothingFood service

Food service

€ 10.5 billion for

civilian services *

€ 10.5 billion for

civilian services *

* Defence budget 2001:

~ € 24 billion

* Defence budget 2001:

~ € 24 billion

Relief from Non-core Tasks - Three Options for Better Cost Effectiveness

SKUKdoSKUKdoAgenda




SKUKdoSKUKdo

Initial Situation in 2001

Vehicle pool: 100,000 (mil, partly mil, commercial)

Unacceptable obsolescence(cars 12, trucks 17 years)

Unacceptable failure times and operating costs

Investment backlog of approx. € 2 billion

Personnel strength approx. 5,000 civilian employees

Source: g.e.b.b.Source: g.e.b.b.

Internal

optimisation

Internal

optimisation

PPPPPP

Outsourcing-Outsourcing-

??

??

??

Degree to which Bw is relieved from non-core tasksDegree to which Bw is relieved from non-core tasks

Business Case: White Fleet Management

SKUKdoSKUKdo

Targets/Effects

More economic rendering of services achieved with

Fleet reduction by 50%Reduction of average age

Increase in the level of vehicle utilisation through modern management methods

Provision of vehicles on a lease basis

Personnel reduction by approx. 65%

Initial Situation in 2001

Savings

in 10 years € 1.18 billion


Vehicle pool: 100,000 (partly mil, commercial)

Unacceptable obsolescence(cars 12, trucks 17 years)

Unacceptable failure times and operating costs

Investment backlog of approx. € 2 billion

Personnel strength approx. 5,000 civilian employees

Business Case: White Fleet Management

SKUKdoSKUKdo

Individualdemand

Basic demand

Previous peace-timeTOE

Additionaland peak

demand

Type of mobility

Long-term rental

Short-term rental via regional

mobility centres

Drivers’ services

and other

Annual driving services in an activity

New Bundeswehr Mobility Concept

SKUKdoSKUKdo

Berlin

Wilhelmshaven

Aachen

Cologne

Bonn

KoblenzHammelburg

Ulm

Kiel

Hamburg

Rostock

LeipzigDresden

Fürstenfeldbruck

Amberg

Osterholz-Scharmbeck

Flensburg

Neubrandenburg

BurgHanover

Fassberg

Munster

Augustdorf

Fritzlar

Idar-Oberstein

Mainz

SigmaringenKaufbeuren

Bad Reichenhall

Ingolstadt

Mobility Centres - Full Area Coverageunder Regional Responsibility

SKUKdoSKUKdoBusiness Case: White Fleet Management Efficiency Levers for the BwFPS Model

Total payments per car km

in €Cent/km

Bw passenger carsBwFPS

New passenger cars1st half 2003

Mileageper car p.a.

37.4

31.1

14,214 km

23,922 km

~-20%~-20%

Repair

AvailabilityAvailability

Consumption

UtilisationUtilisation

Number of veh.

Ø Fleet age

Leasing

Investments = 0


SKUKdoSKUKdo

1,016 761 700 1,018 710

1,016

735

Optimised Bw model

Planned exp.

BwFPS

Source: Economic Efficiency Analysis 10/2001, FMOD Army Staff II 2

810

1,018

756

873

Actualexp.

BwFPS2002 2003

206

75

145

117

694

Optimised Bw model

Planned exp.

BwFPS

Actualexp.

BwFPS

Business Case: White Fleet ManagementSavings Realised in 2 Business Years

Gains in efficiency

BwFPS PLAN/ACT. € 192m

BwFPS ACTUAL / .

Bw model € 545m

SKUKdoSKUKdoBusiness Case: Clothing ManagementImproved Services with Simultaneous Savings

Expenditure balanceAug. 02 – Jul. 04in € million

414447

374

LH offer LH offer

ACTUAL LHBw costsACTUAL LHBw costs


0

0,05

0,1

0,15

0,2

0,25

0,3

0,35

0,4

0,45

0,5

Apr 0

3

Jun

03

Aug 0

3

Okt

03

Dez 0

3

Feb 0

4

Apr 0

4

Jun

04

Aug 0

4

Okt

04

Dez 0

4

after 2 weeks

Shortage in %Shortage in %

Jan

05

Jan

05

73

after 2 weeks

after 3 days

SKUKdoSKUKdoDeveloping a Business FrameworkRoad to Success ...Projects in the Pipeline

2005 2006 2007 and later 2005 2006 2007 and later

•Relieve the Bw from non-core tasks

•Create scope for investment through

•cost reduction in operation

•private capital & external know-how

•Relieve the Bw from non-core tasks

•Create scope for investment through

•cost reduction in operation

•private capital & external know-how

Catering at home (outsourcing)Catering at home (outsourcing)

Technical training (PPP) Technical training (PPP)

Logistic management Logistic management

Catering during operations (outsourcing)

Catering during operations (outsourcing)

Construction project companies (PPP) Construction project companies (PPP)

Travel management (PPP) Travel management (PPP)

(outsourcing /

internal optimising)

(outsourcing /

internal optimising)

Schlußfolie

The “right”

business cases

pave the “road to success”

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