Defense MRO
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Transcript of Defense MRO
DefenseMRO
Where from Here?
April 2014John Johns
Deputy Assistant Secretary of Defense(Maintenance)@nowhiteflagz
Where we are
• Reset of equipment from Iraq and Afghanistan
• Shift in strategic focus and use of forces
• Continued instability throughout the world
• Continued pressure on the budget
2
$-
$100
$200
$300
$400
$500
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$700
$800
FY48
FY51
FY54
FY57
FY60
FY63
FY66
FY69
FY72
FY75
FY78
FY81
FY84
FY87
FY90
FY93
FY96
FY99
FY02
FY05
FY08
FY11
FY14
DoD Budget Authority(in FY14 Dollars)
FY 2014 $496B Base$85B OCO
Total: $581B
Historic Trends in Defense Spending
Iraq/Afghanistan
Korea
Nuclear Triad
OCO
-51%
Vietnam
“Hollow” Army
-25%
80s Buildup
“Peace Dividend”
-35%
2001Workforce
61K
2011/13Workforce82K / 75K
-25%
3
• ARMY• 3rd / 4th quarter inductions
cancelled – all depots affected • TOCs, Firefinder,
PATRIOT, Blackhawk, aviation components, M1s, M88s, Howitzers, small arms
• Arsenal manufacturing
• MARINE CORPS• Ground – resourced at 30%
of Base requirement• M1s, MRAPs, AAVs,
LAVs, Tactical Trucks• Air
• > 100 Marine aircraft
• NAVY• 3rd / 4th quarter inductions
cancelled - all FRCs affected • > 200 Navy Aircraft• > 1200 engines/modules
• 70% of ship’s mxin private yards
• 25 availabilities• 2 Refueling/complex overhauls
• AIR FORCE• All ALCs affected
• 150 aircraft• 85 engines• Sustaining engineering deferred• Software engineering deferred
• CLS reduce at multiple sites
CR/Sequestration/OCO Shortfall Effects
4
CAPABILITY
Quickly confront and defeat aggression from any adversary,anywhere, anytime
PROTECT & PRIORITIZE
Key investments in technology and new capabilities
DIPLOMACY Strengthen
key alliances & partnerships
Build innovative partnerships
MILITARY
Smaller
Leaner
Technologically Advanced
REBALANCE GLOBAL POSTURE
Asia-Pacific
Middle East
Where We are Going
5
Guiding Principles and Opportunities
• Maintain/Strengthen National “Core” capabilities• Establish new capability in most efficient and effective
manner possible• Protect surge capability/capacity
• Flexibility• Agility
• Strengthen “expeditionary” and “integrated” capabilities• Aggressively increase effectiveness and efficiency
in existing operations• Cycle-times• Quality• Cost
6
Actions Transition “enduring” requirements from OCO to Base
Link metrics and ensure connectivity between warfightingcapability, readiness, and logistics requirements and budgets
Synchronize statutes, policy, strategic planning, and governance
Leverage strengths of both public and private sectors through partnerships
Synchronize, and soundly structure, contracts, partnership agreements, and implementation agreements
Develop and transition technologies that advance MRO capability, effectiveness and efficiency and embed ultra-high reliability in weapon system design 7
Warfighter Support
8
Provide authorities for Retrograde and Disposition / Demilitarization of equipment to meet operational timeline 17K pieces of rolling stock 4K containers of equipment & supplies 18K containers of contractor materiel
Support post-2014 Afghanistan Resolute Support Mission footprint
Further develop and enable operational concept for managing contractors in contingency operations
Mature Inter-Agency logistics support concepts and operations
Mature Non-Standard Urgent Needs support
Increase focus on sustainment in SFA
Affordability and Lifecycle Management
Published BBP PBL Comprehensive Guidance
Completed F-35 O&S Cost Reduction Study
Improve content of Life Cycle Sustainment Plans to include:
O&S Affordability
O&S Should Cost initiatives
Use of PBL arrangements
Publish O&S Cost Management Handbook
Publish PBL Best Practices Guidebook
Integrate PBL best practices with DAU course curricula
Establish Senior Logistics Public-Private Partnership Council to facilitate cost reduction strategies across industry and DoD
9
Supply Chain Efficiency Implementing Comprehensive Inventory Plan On-hand excess inventory reduced by $8B
Excess inventory orders reduced from $1.1B to $564M
Backorders and planned procurements reduced by $218M
Developed Distribution Network re-engineering Phase I… $402M in transportation savings
Validate SNO Phase I savings of $402M in POM15 anddevelop Phase II inventory optimization business model
Institutionalize enterprise supply chain metrics and performance reviews
Leverage International / Joint Logistics Forums in support of global supply chain operations
Published the DoD Counterfeit Prevention Policy10
Inventory Management
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FY09 FY10 FY11 MarchFY12 FY12 March
FY13 FY13 FY14 FY15 FY16
Excess On‐Hand $8.8 $8.5 $9.5 $10.3 $7.5 $6.9
Percentage 9.4% 8.4% 9.2% 9.9% 7.8% 7.2%
Target 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 9.0% 8.0%
0%
3%
6%
9%
12%
$0
$3
$6
$9
$12
$15
Billion
s of D
ollars
FY09 FY10 FY11 MarchFY12 FY12 March
FY13 FY13 FY14 FY15 FY16
Total On-Order Excess Dollars $1,302 $892 $609 $631 $666 $754
Total On-Order Dollars $13,647 $12,032 $10,885 $9,397 $11,003 $9,929
% of On-Order 9.5% 7.4% 5.6% 6.7% 6.1% 7.6%
Target % 7.0% 7.0% 6.6% 6.6% 6.3% 6.0% 5.0% 4.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Mill
ions
of D
olla
rs
On-Hand ExcessOn‐Order Excess
7.6%
On‐Hand Excess 6.4%
“Don’t buy what we won’t need”
“Don’t keep what we don’t use”
On-Order Excess
Reduced on‐hand inventory by $8B … first decrease since 1998 In‐Storage Visibility increased participation from 243 to 508 sites
and saved $218M in lateral redistribution & procurement offsets Consolidating wholesale inventory and distributing retail support inventory Increasing accountability for inventory held by contractors Restructured Supply Chain policy and review practices Institutionalize balanced readiness‐ and cost‐driven metrics
Path Ahead
12
Support operations in Iraq and Afghanistan
Continue to adjust for new steady-state funding
Identify and protect critical capabilities Government depots, shipyards, and arsenals
Contract maintenance
Issue Arsenal and Depot Source of Repair Instructions
Institutionalize supply chain metrics-driven performance reviews
Improve Life Cycle Sustainment Plans
Publish PBL Guidebook and O&S Cost Management Handbook
Establish Logistics Public-Private Partnership Council
Create opportunities to generate efficiencies and partnerships
2013 SecDef Mx Award Winners• Field Maintenance:
• Phoenix Trophy - D Company, 3rd Battalion, 82nd Aviation Regiment, Task Force Talon,82nd Airborne Division, USA
• Marine Heavy Helicopter Squadron 361, USMC
• Submarine Performance Monitoring Program, Naval Sea Systems Command, USN
• USS EMORY LAND (AS 39), USN
• USS JOHN C. STENNIS (CVN 74), USN
• 27th Special Operations Maintenance Group, USAF
• Depot Maintenance – Robert T. Mason Trophy
• UH-60 Black Hawk Recapitalization Program, USA@nowhiteflagz