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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
6
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
8
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
11
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
Defense Logistics AgencyDefense Logistics Agency
delivering 21delivering 21stst century logisticscentury logistics
Mr. Douglas FrenchForecasting
Planning Process OwnerDLA HQ
Putting Parts in the Hands of the Putting Parts in the Hands of the Maintainer Maintainer
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
15
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
Defense Logistics AgencyDefense Logistics Agency
delivering 21delivering 21stst century logisticscentury logistics
Captain John Qua, SC, USNParts Sustainment
Chief, Acquisition DivisionDLA HQ
Putting Parts in the Hands of the Putting Parts in the Hands of the Maintainer Maintainer
October 26, 200419
20
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:
Defense Logistics AgencyDefense Logistics Agency
delivering 21delivering 21stst century logisticscentury logistics
Putting Parts in the Hands of the Putting Parts in the Hands of the Maintainer Maintainer
Mr. Kenneth Urtel Industrial Capabilities
Program Manager, Advanced Microcircuit Emulation Program
DLA HQ
October 26, 200422
23
Industrial CapabilitiesIndustrial Capabilities
� Industrial Base Programs:� Warstopper� Rapid Manufacturing� Diminishing Manufacturing & Material
Shortages (DMSMS)
24
Industrial CapabilitiesIndustrial Capabilities
� 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�
25
Industrial CapabilitiesIndustrial Capabilities
� 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�
26
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.
28
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:
29
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)
30
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:
31
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]