Putting Parts in the Hands of the Maintainer...147.7M Barrels Fuel Sold (FY 03) $12.5B Annual...

Defense Logistics AgencyDefense Logistics Agency

delivering 21delivering 21stst century logisticscentury logistics

1

Defense Logistics Agency Overview To“2004 Department of Defense Maintenance

Symposium and Exhibition”

Putting Parts in the Hands of the Putting Parts in the Hands of the Maintainer Maintainer

October 26, 2004

Ms. Christine GalloExecutive Director

Business Modernization and Integration

DLA HQ

2

The DLA EnterpriseThe DLA Enterprise

637 Reserve Military

Located in 48 States & 28 Countries

People 21,490 Civilians

524 Active Duty Military

Scope of Business45,000 Requisitions/Day8,200 Contracts/Day#54 Fortune 500 – Above Northrop

Grumman#2 in Top 50 Distribution Warehouses25 Distribution Depots5.2 million items24.7M Annual Receipts and Issues 1411 Weapon Systems Supported147.7M Barrels Fuel Sold (FY 03)$12.5B Annual Reutilizations/Disposals

$21.5B$25B$28.9B$ 2.7B$ 3.3B$10.2B$ 5.2B$ 2.2B $ 1.4B$719M 580K124 nations

FY 02 Sales/ServicesFY 03 Sales/ServicesFY 04 ProjectionLand/Maritime/Missiles Aviation Troop SupportEnergyDistributionOther

Foreign Military SalesShipmentsSupporting

Updated Oct. 1, 2004

3

Supply AvailabilitySupply AvailabilityHardware TotalHardware Total

PercentPercent Net Demands (M)Net Demands (M)

DOD Supply Availability Goal: 85%

80

82

84

86

88

90

92

Oct-01

Nov

Dec

JanFebM

arAprM

ayJunJulAugSep-O

ct-02N

ovD

ecJanFebM

arAprM

ayJunJulAugSepO

ct-03N

ovD

ecJanFebM

arAprM

ayJunJul

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Operation Iraqi Freedom

4

Backorders Backorders HardwareHardware

250275300325350375400425450

Oct-01

Nov

Dec

JanFebM

arAprM

ayJunJulAugSepO

ct-02N

ovD

ecJanFebM

arAprM

ayJunJulAugSepO

ct-03N

ovD

ecJanFeb M

arAprM

ayJunJulAugSep

Thousands

Lowest In DLA

History

Operation Iraqi Freedom

5

Cost Recovery Rates Cost Recovery Rates Over TimeOver Time

(Operating Costs as a Percentage of Total Sales)CRR %

12.015.018.021.024.027.030.033.036.0

PB/POM 06 CRR 29.0 34.4 25.9 26.4 28.4 28.7 25.6 24.4 19.8 22.1 24.7 21.5 20.7 15.5 15.0 14.5 13.6 13.1 13.0 12.9 12.7

FY 91

FY 92

FY 93

FY 94

FY 95

FY 96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

Per

cent

Savings Returned to Warfighter(FY 06-11 based on PBR 2006 Proposal)

FY 05 … 15%Lowest Cost Recovery

Rate in DLA History

DoD Policy Decisions

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What We’re Doing to Make What We’re Doing to Make Support BetterSupport Better

� More stable financing (no hold tables)� Reduced volatility in workload

� Better collaboration with customers and suppliers� Improved forecasting and delivery

� More long-term contracts with suppliers� Increased reliance on more highly automated

strategic distribution centers� Shorter administrative lead times through

process improvements� Shifting from manual to automated buying

procedures

7

Readiness Review Sample ChartsReadiness Review Sample Charts

Tobyhanna PA

60%

65%

70%

75%

80%

85%

90%

95%

100%

Jun-03

Jul-03

Aug-03

Sep-03

Oct-03

Nov-03

Dec-03

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04

Aug-04

Sep-04

0

1000

2000

3000

4000

5000

6000

7000

DLA De m a nds B /O G oal 19% Re duction (Fe b04)Tota l Ba ckorde rs DLA S upply Ava ila bilitySupply Ava ila bility Goa l

DLA Support to a Maintenance DepotDLA Support to a Maintenance DepotA Military Service’s Level A Systems WSDC Level A Weapon System SA BO Readiness WSSM

Weapon System 1 G G R YWeapon System 2 G G G GWeapon System 3 G G R YWeapon System 4 G G R YWeapon System 5 G G R GWeapon System 6 G R G GWeapon System 7 G R NA YWeapon System 8 G G R YWeapon System 9 G R G YWeapon System 10 G G NA GWeapon System 11 G G R GWeapon System 12 G G G G

Aviation Weapon System Performance Metrics

GRRGWS 4

GRGGWS 3

GRGGWS 2

GGGGWS 1

WSSM Assessme

nt

Readiness

BOSAAirframe System

DLA Performance

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

JUN

JUL

AU

G

SEP

OC

T

NO

V

DEC

JAN

FEB

MA

R

APR

MA

Y

JUN

JUL

AU

G

SEP

0

5,000

10,000

15,000

20,000

DMD LINES DLA SA OPL READINESS GOALSA GOAL OPL READINESS TOTAL BACKORDERSB/O REDUCTION GOAL

DLA Performance in Support of a WS

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SSA Metrics MatrixN ov 03

B ase

SSAN SN

G rowthA LT

% C hangeP LT

% C hange Q ualityB ack

ordersP rice

C ontro l D elivery D elivery A D V on K

C O M PAN Y A 100.0% -65.3% -14.1% 0 -90.7% 2.6% 99.3% n/a 82.0%

C O M PAN Y B 95.7% -82.0% 18.9% 0 -32.1% 20.2% 95.5% 85.7% 32.4%

C O M PAN Y C 100.0% -38.1% -1.6% 0 -74.7% -7.4% 90.1% n/a 73.7%

C O M PAN Y D 100.0% -90.4% -71.4% 4 -76.3% 1.0% 94.0% 94.7% 93.2%

C O M PAN Y E 110.5% -95.6% -85.2% 6 -79.1% -5.3% 91.9% 90.6% 59.6%

C O M PAN Y F 100.0% -79.0% -24.0% 0 179.2% -3.7% 75.3% 100.0% 7.1%

C O M PAN Y G 115.4% -79.7% -30.1% 0 -60.8% -0.1% 80.8% 100.0% 65.1%

C O M PAN Y H 126.5% -54.5% -12.0% 6 -74.9% -7.5% 92.6% 94.0% 79.3%

C O M PAN Y I 101.0% -78.3% -31.5% 6 -90.1% -10.9% 88.4% 80.9% 75.7%

C O M PAN Y J 171.0% -82.8% -13.6% 12 -83.8% -2.4% 93.4% 90.2% 66.3%

C O M PAN Y K 103.4% -78.7% -20.4% 3 -73.6% -1.8% 93.3% n/a 15.1%

C O M PAN Y L 103.8% -91.2% -53.4% 0 -50.4% 7.4% 97.8% n/a 51.1%

C O M PAN Y M 68.5% -64.9% 19.2% 0 -49.3% -7.0% 75.0% 42.9% 10.0%

C O M PAN Y N 111.7% -67.7% -10.4% 3 -73.2% -19.5% 78.9% 79.5% 64.1%

C O M PAN Y O 125.6% -72.7% -10.8% 0 -40.8% -2.6% 94.6% 93.6% 84.3%

C O M PAN Y P 117.9% -57.6% 32.2% 1 -64.9% 16.7% 92.6% n/a 89.4%

C O M PAN Y Q 129.6% -94.5% -88.3% 7 -93.8% -5.6% 67.0% 52.0% 93.3%

C O M PAN Y R 88.0% -76.0% -7.0% 0 -27.0% -20.0% 97.0% 99.2% 100.0%

C O M PAN Y S <1% -47.9% 5.4% 0 7.8% -8.4% 74.2% n/a 72.0%

C O M PAN Y T 100.0% -44.7% -34.9% 1 <1% 3.2% 93.9% 96.7% 97.0%

C O M PAN Y U 1.3% -46.2% -17.5% 3 4.2% -5.8% 70.8% n/a 45.0%

! Strategic Materiel Sourcing

! Strategic Supplier Alliances

! Supply Chain Integration

Supplier Relationship

Managem

ent

Systems Architecture (SAP/Manugistics)

Cus

tom

er R

elat

ions

hip

Man

agem

ent ! Customer

Insight! Customer

Service! Emergent

Problem Resolution

! Returns Management

" Order Fulfillment

" Planning" Financial

Management

" Procurement

" Tech & Quality

Business Systems Modernization

Distribution Planning Management SystemLoad Planning

Network Warehouse Management IT Systems Integrated w/Partners

Manage Vendor & Carrier Performance

Data Architecture (Integrated Data Environment))

How DLA Pursues Transformation

INDUSTRY

SERVICES

Technical Architecture (Common Protocols and Standards)Technical Infrastructure (Enterprise Telecommunications and Network Data Center)9

10

E2E Supply Chain E2E Supply Chain IntegrationIntegration

Objective: Transform DLA’s business support methods and processes into a disciplined integrated framework that delivers improved and total integrated logistics solutions to the warfighter.

PlanningDLADLA Tech/QA OrderFulfillmentProcurement

DSCRAviation

DSCCLand

DSCCMaritime

DSCPConstruction

DSCPC&T

DSCPMedical

DSCPSubsistence

DESCEnergy

SUPPLY

CHAIN

DDC

DRMS

SERVICES

ENTERPRISE

Synchronizing Process Management and Supply Chain Management

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Bottom LineBottom Line

� Critical Combat Enabler�Light and Agile� Focused on Improved warfighter support and

reduced costs� 32.8% reduction in backorders and improved

readiness (since Oct 01)� 51% decrease in cost recovery rates

� �New Normal�� DLA Leaning Forward to Support Warfighter� Experiencing Peaks and Valleys in Customer

Demand� Transforming the Agency�And the way we

measure successMoving Closer to Moving Closer to

CustomerCustomer



Mr. Douglas FrenchForecasting

Planning Process OwnerDLA HQ


October 26, 200412

13

Business Systems Business Systems Modernization Is…Modernization Is…

� Major Reengineering Effort--Massive Change For Our Workforce, Creation Of An Enterprise

� Incorporating Best Practices Via Commercial-Off-The-Shelf (COTS) Based Tools

� BSM Replaces 30 Year Old Legacy Systems � SAMMS And DISMS

Legend:SAMMS: Standard Automated Materiel Management SystemDISMS: Defense Integrated Subsistence Management System

14

Bottom Line Up FrontBottom Line Up Front

� DLA has developed a new method for customers to submit forecastsof their requirements to DLA

� Maintenance Depots are prime candidates for the new process

� DLA currently working with Services to define initial sites for program roll out

� The process will begin roll out in Feb 2005 for launch customers with business rules defined in DLA / Customer Agreements

� Where implemented, the process will replace the legacy SPR process

� The goal of the new process is to improve customer support by improving Demand Plan Accuracy

� A key feature of the new process is DLA & Customer Collaborationthrough the use of a web based tool

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NetWORKS CollaborateNetWORKS Collaborate

COTS WEB Based Manugistics Collaborate

Enhanced Forecasting Functionality

16

How Does It Work?How Does It Work?

� Customer uses new Demand Data Exchange (DDE) transaction (DIC: CDD) to submit requirements to DLA. Quantities

will be in monthly buckets and will represent total requirement for the customer (Process only applicable to NIINs managed by BSM)

� DLA Collaboration Toolset will compare customer forecast (aka supply plan) to DLA�s statistical forecast

� Forecast quantities that breech parameters (high or low) will generate an alert to the customer and DLA Demand Planner

� Customer/DLA use web based tools to collaborate on exceptions, develop final demand plan, and view pending t k t t

17

R2.1.2 DDE/Customer R2.1.2 DDE/Customer Collaboration Collaboration

Manu generates exceptions

to Customer & DP for

“collaboration”

Manu Generates

DPA for Evaluation

Customer

Set DDE/Collab. Expectations

in PBA

Systemically Load Total Rqmt into Manu. Net.

Collab.

Manu. Computes

Delta between

Gross and Stat. Fcst

Manu. Compares +/- Delta to

Preset Parameters (Parameters

TBD)

Manu. Systemically

Compares Total Rqmt to

DP’s Stat. Fcst

Customer’s Total Reqmt

sent via DDE

Manu. Aggregates

Reqmts for all customers and

sends to Supply

Planning

Supply Planners develop Time-

Phased Inv. Plan

Procurement –Contract

Administration

DLA

� Assumption: This BSM process is hl

Manu systemically loads Delta

as additive to Demand Plan

for Deltas within

Parameters

Customer & DP resolve

issues and reach

consensus on

requirement& load into

Manu.

Manugistics Builds

Enriched Demand

Plan

18

Benefits of Collaboration

• Visibility of DLA forecast and customer supply plan via the sameweb-based Manugistics Networks Collaborate V7.1 tool

• Improved Customer/DLA relationship through systematic collaboration

• Systemic connectivity to customers’ monthly demand data (as known as their supply plans)

• Improved demand plan accuracy

• Ability to capture fluctuations in requirements within and outside of total lead time

• Potential inventory reduction

• Focus on being proactive vs. reactive

• Improved responsiveness

• Stock out report identifies potential support problems for



Captain John Qua, SC, USNParts Sustainment

Chief, Acquisition DivisionDLA HQ


October 26, 200419

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Parts Parts SustainmentSustainment

�Focusing on the Most Important Items and Suppliers (Strategic Material Sourcing)―Get these key items on Long Term Contracts to increase the speed of ordering―Include performance requirements in these contracts to improve support to you―Work Issues in collaboration with Suppliers and You through Strategic Alliances

How is DLA Getting the Right Parts in Your Hands When You Need Them:

21

Parts Parts SustainmentSustainment

�Industrial Prime Vendor―GEN II Coming to a Depot Near You―Vendor manages bins, provides thousands of consumables directly to depots―Increased Service Levels with less Inventory and Inventory handling

�Performance Based Logistics―Value Added, end to end integrated Supply Chain Management and Logistics Solutions:

�Provisioning, Cataloging, Warehousing, Supply Support, Distribution

How is DLA Getting the Right Parts in Your Hands When You Need Them:




Mr. Kenneth Urtel Industrial Capabilities

Program Manager, Advanced Microcircuit Emulation Program

DLA HQ

October 26, 200422

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Industrial CapabilitiesIndustrial Capabilities

� Industrial Base Programs:� Warstopper� Rapid Manufacturing� Diminishing Manufacturing & Material

Shortages (DMSMS)

24


� R&D programs focused mainly on improving DLA business processes:� Supply Chain Management� Electronic Commerce� Aging Weapons Systems

� R&D programs focused mainly on troop support:� Medical R&D� Combat Rations Network: �CORANET�� Apparel Research Network: �ARN�

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� R&D Programs focused mainly on difficult to procure items:� Metal Casting: �PRO-ACT� � Metal Forging: �PRO-FAST�� Electronics Availability: �GEM and AME�

� Industrial Base Programs focused mainly on difficult to procure items:� Diminishing Manufacturing Sources & Material

Shortages �DMSMS�� Rapid Manufacturing Initiative �RMI�

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Procurement Readiness Optimization Procurement Readiness Optimization ––Advanced Casting Technologies (PROAdvanced Casting Technologies (PRO--

ACT).ACT).

� Program Objective: Improvements in readiness for spares made from castings.� Disproportionate share of backorders

� Program Scope: � Cast-It: solving individual part problems as case studies,

developing tools and processes to apply across the board.� Business Enterprise Integration: developing and deploying

best practices.� Technology Development: for casting design and

manufacturing.� Contract:

� Advance Technology Institute (ATI) is prime, June 2000 � June 2005, $10M government, + $2.5M industry.

� American Metalcasting Consortium (AMC); links with foundry technical societies, covers over 85% of non captive foundries inNorth America.

27

Procurement Readiness Optimization Procurement Readiness Optimization ––Forging Advanced Systems Technology Forging Advanced Systems Technology

(PRO(PRO--ACT)ACT)

� Program Objective: Improvements in readiness for spares made from forgings.� Disproportionate share of backorders

� Program Scope: � Forge-It: solving individual part problems as case studies,

developing tools and processes to apply across the board.� Business Enterprise Integration: developing and deploying

best practices.� Technology Development: forging manufacturing processes

and tooling.� Contract:

� Advance Technology Institute (ATI) is prime, Feb. 2001 �Feb. 2007, $12M government, + $3M industry.

� Forging Defense Manufacturing Consortium (FDMC); links with forging technical societies, and member organizations.

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Electronics AvailabilityElectronics Availability

� Program Objective: Develop a source for otherwise non-procurable digital microcircuits.

� Program Scope:� Two parts: Generalized Emulation Of Microcircuits (GEM)

for production (cataloged) items. Advanced Microcircuit Emulation (AME) for development of new capability -including special needs of customers.

� Utilizes a proven generic fabrication process to provide a wide range of digital microcircuits in low volumes on demand.

� Provides Form, Fit, Functional replacements, meeting all required specifications. Interchangeable with original devices.

� Not dependent on die, packaged parts, photo masks, or proprietary data from original manufacturer.

� Contract:

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DMSMSDMSMS

� Program Objective: Serve as a focal point for common DMSMS solutions

� Program Scope: Provide DMSMS solution sets in the Center of Excellence, making it a �one-stop solution resource� for obsolete part problems� Point users toward existing data bases and a means of

access� Provide one stop DMSMS training and information support � Include all common materials and components going

obsolete� Simplified DMSMS Information Services everyone can use� Eliminate redundancy of research on common problems� Provide free unlimited access to DOD programs large or

small

� Contract: � Karta Technologies Inc., San Antonio, TX (program

management)

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Rapid Manufacturing InitiativeRapid Manufacturing Initiative

� Program Objective: Production lead time reductions on hard to procure (primarily weapons system) spare parts, using groupings of low & high demand items to attract sources for longterm contracts.

� Program Scope:� 1st Demonstration phase: solicited nearly 1000 parts in 24

groups, awarded (2) 11-yr long term contracts for 69 parts to (2) sources.

� 2nd Demonstration phase: applied lessons learned from 1st

demo phase to solicit more than 500 more parts in 28 groups, awarded (3) 11-yr long term contracts for 217 parts to (3) sources

� Tool employment phase: assist DLA�s field activities with Strategic Material Sourcing long term contracting efforts by enhancing parts groups so as to maximize resources

� Tools developed assist in rating parts groups, visualizing parts attributes & modeling savings benefits for DLA based

� Contract:

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DLA Contacts

� To assist you, below is a listing of the DLA breakout panel with their contact information

� Ms Christine Gallo, Executive Director, Business Modernization and Integration (703)767-4300, [email protected]

� Mr Doug French, Planning Process Owner, (703)767-1633, [email protected]

� Captain John Qua, Chief, Acquisition Division, (703767-1470, [email protected]

� Mr Ken Urtel, DLA J-339 Industrial Capabilities Division, (703)767-1509, [email protected]

Putting Parts in the Hands of the Maintainer...147.7M Barrels Fuel Sold (FY 03) $12.5B Annual...

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