Navy 2004 Logistics Conference Logistics Transformation at DoD Mr. Brad Berkson Acting Deputy Under Secretary of Defense (L&MR) May 18, 2004 DoD would be like Wal-Mart . . . . . . if Wal-Mart's 3000+ stores moved . . . if a Wal-Mart stockout meant that everyone inside the store could die. . associates had to random event kind 5 vest . .... if if Christmas was awear a differentevery ofyears 8/11/2011 1:04 PM 2 2001 QDR Direction • Project and sustain the force with minimal footprint • Implement performance-based logistics to improve readiness for major weapon systems and availability of commodities • Reduce cycle times to industry standards 8/11/2011 1:04 PM 3 04pm12-3 Opening Observations • We have many supply chains to manage – Commercial Commodities (food, fuel, pharma, clothing) – Weapon Systems – Deployed Land Forces • Each has different characteristics and requirements . . . • Need to be tailored to optimize performance . . . • Consist of multiple chains where the actual tailoring has to take place • DoD’s scale, complexity, and coordination needed, provide challenges to fundamental improvements 8/11/2011 1:04 PM 4 Joint Logistics Board Priorities • Support current operations Deployed Forces • Ensure success of the DPO • Streamline material flows Commercial • Explore and implement Customer Pay commodity flows opportunities • Accelerate Performance-Based Weapons Logistics (PBL) Systems • Develop a way ahead for achieving maintenance excellence (e.g., Lean) • Implement a balanced scorecard and Infrastructure performance metrics • Ensure Logistics Enterprise Integration efforts are coordinated and interoperable Memo to Acting Under Secretary of Defense (AT&L) February 10, 2004 8/11/2011 1:04 PM 5 Comparison Matrix Commercial Chain Equivalent Inventory Key Data Flow Commercial • Sears • $12 B • Shelf demand • High commodities • Wal-Mart • Fast moving • ITV • Continuous • True-Value • Lower value • One way Major System • GE turbine • $66 B • Shelf demand • Lower • End items • Caterpillar dealer • Slower moving • ITV • System • Repairables • IBM mainframe • Higher value • UID dependent • Readiness • Bi-directional critical Deployed Forces • NO direct • $??? • Sequence • Enormous • Process • DoD • ITV • Intermittent industry • Real-time • Multi- indirectly system status Directional 8/11/2011 1:04 PM 6 “Major Land Force Deployment” Deployed Ground Unit • Use to close and sustain major Service ICP AOR AOR ground forces into AOR CONUS Intercon Organic Organic Organic Organic Port Move Port Move • Metric: Time to close forces Garrison Deployed Ground Unit • Transformation example: RFID ITV* Ground Unit PMO CONUS Intercon AOR AOR • Leverage point: Improve trust in Commercial Commercial Commercial Commercial flow capability to allow smaller Port Move Port Move Deployed footprint in theater Ground Unit Vendor * RFID tags being seized and reprogrammed by in country forces – need more! 8/11/2011 1:04 PM 7 Deployment/Distribution Operations Center-Forward (DDOC-FWD) Pilot DDOC - FWD DPO National TACON TO COCOM Partners - Air (CJ4) - Land - Sea - Sustainment Service Reps DDOC-FWD Mission Statement: • executes CENTCOM deployment and distribution priorities • validates/directs mode selection of intra-theater with CFLCC, CFACC & CFMCC • adjudicates identified CENTCOM distribution and intra-theater shortfalls • coordinates for additional USTRANSCOM support • provides TAV and ITV for inter and intra-theater forces and materiel • synchronizes effective theater retrograde The missing Theater link until now… 8/11/2011 1:04 PM 8 DDOC–FWD Pilot Immediate Impact – 1st Month • Synchronized strategic air/sea & intra-theater lift: Increased throughput • Improved readiness by diverting theater assets (track & DLRs) • Improved customer confidence – collaborative theater environment • Improved quality and availability of enterprise information • Reduced operational costs with improved ITV & TAV (19 containers of track located & re-directed; over one hundred Class IX containers diverted) • Accelerated 101st AA div redeployment by weeks • Accelerated retrograde of DLRs by 900% • Improved strategic delivery of critical materiel directly to forward units (pure pallets to forward warehouses) 8/11/2011 1:04 PM 9 Why RFID now? • Improve business processes now • Drive the direction and cost of technology development • Drive the standards to work for us • Facilitate the implementation of Unique Identification (UID) Set the foundation for future supply chain improvements…TODAY! 8/11/2011 1:04 PM 10 Passive RFID Requirements • Tagged cases and pallets shipped to DoD receiving points beginning Jan 2005 • Tagged packaging for items that require a Unique Identification (UID) shipped to DoD receiving points beginning Jan 2005 • Pilots will help determine pace of expansion • Tags will be EPC-compliant – Initial Implementations: currently available Class 0 and Class 1, V1 EPC tags – When available: Class 1, Generation 2 EPC tags 8/11/2011 1:04 PM 11 “Commercial Commodity” • Use to flow “consumer goods” (e.g., food, fuel, clothing) to ground Army forces in garrison, sea and air Navy forces, and depots • Metrics: Availability, customer wait time, inventory turns, log cost % sales • Transformation example: Prime Air Force Vendor contracts for fuel, pharma, vendor and bin stock at Depots • Leverage point: Consolidate inventory upstream, vendor direct Marines delivery of goods to shelf Current State: Background • Thousands of DoD CONUS locations initiate freight movements using commercial freight carriers with thousands of destinations. • Dozens of DoD receiving, storage, and shipment activities across the United States consume personnel, funding, inventory and time. • Multiple systems are employed to execute and manage shipment activity and operations – there is no centralized planning or control – systems require stronger linkage and significant resources to operate • Over the last fifteen years, organizations and processes have been aggregated and consolidated without the benefit of a holistic analysis which leverages today’s IT processes, commercial capabilities, and proven best practices. 8/11/2011 1:04 PM 13 Defense Transportation Coordination Initiative (DTCI) Consolidation Break Bulk Points Points National coordinator manages DOD transportation, including dedicated truck Regional service to leverage “best practices” Regional Shipping Receiving Cluster Cluster 8/11/2011 1:04 PM 14 Regional Inventory & Material Management Project A pilot program designed to optimize Pilot Location: San Diego inventory, reduce material handling and • Identify opportunities to reduce customer wait time through minimize touches streamlining delivery of parts to end users. • Identify opportunities to streamline processes The pilot will ultimately seek to deliver • Optimize inventory by relying the same or better mission capability at on rapid wholesale response lower cost. (vice multiple layers of inventory) Improved repair cycle time on DLRs can potentially reduce spare • Identify alternative requirements, resulting in inventory organizational structures optimization and cost savings. (organic and/or contracted) to execute the streamlined process 8/11/2011 1:04 PM 15 “Weapons System Service Provider” User • Use to provide weapons systems availability Local • Metric: Mission capability, operating $/hour • Transformation examples: Navy APU Cherry Point, JSTARs, C-17 • Leverage point: Have each PM design ICP system’s supply chain to optimize its flow given the significant inherent variations (e.g., submarine vs. radar) Vendor Depot 8/11/2011 1:04 PM 16 Weapon System Sustainment Roadmap Number of Partnerships PM accountable for life (1998 & 2002) cycle 45 JROC established 40 35 sustainment requirements 30 Number Enabling Depot 25 20 legislation 15 • Joint Strike Revised Maintenance 10 Fighter 5 Policy 0 • Future Combat Army Navy Air Force Marines Industry Supply Chains System Reengineered Training 1998 2002 • Advanced Amphibious Historic Assault Vehicle • Warfighter-driven • Suppressed Readiness readiness • Marginal reliability • Ultra-reliability • Fractionated Accountability • Clear PM • $67B/year accountability • Huge footprint • Minimal PBL Implementations Footprint 100 90 Financial Reform (PR05) Cumulative PBL Programs 80 85 92 Single-line Accounting 70 60 71 Life Cycle Cost 50 57 Management 40 30 • Operational requirements 20 synchronized with PBBS 10 0 2002 2003* 2004* 2005* 2000 * Projected PBLs Based on Approved Service Plans 2005 2015 17 8/11/2011 1:04 PM DoD Vision for Item Marking: UID To implement a policy establishing a strategic imperative for uniquely identifying tangible items relying to the maximum extent practical on international standards and commercial item markings and while not imposing unique government data requirements. Uniquely identified (UID) tangible items will facilitate item tracking in DoD business systems and provide reliable and accurate data for management, financial, accountability and asset management purposes. 8/11/2011 1:04 PM 18 Performance-Based Logistics Oversight via Oversight via DAB/DAES R-TOC Forum New program 30 Pilot implementation Programs Quadrennial Defense Review • Performance-Based Logistics Reengineer Lessons • Legacy Systems Product Support Operational Learned • FY03 DPG • Service Implementation Schedules Demonstrations Adjustments • CY02/03 PEO/SYSCOM • PM Roundtables A joint, disciplined program to • • AIA Product Support Industry/Government successfully implement PBL! Tiger Team 19 8/11/2011 1:04 PM PBL Programs & Partnerships in Support of GWOT PBL Performance JSTARS B-2 100 F/A-18 E/F 90 Mission Capable Rates 80 C-17 F-117 70 60 50 AWACS 40 Common Ground Station 30 20 10 Deliverin 0 g F-117 FA-18E/F AV-8B F-14D F-15C/E F-16C Capabilit PBL Traditional Support y NOW! Figure 1 – PBL programs achieved readiness during OIF 8/11/2011 1:04 PM 20 Why does the warfighter like PBL programs? F/A-18 SMS - Availability Was 65% ... Now 98% Tires - Availability Was 81% ... Now 98% ARC-210 Radio - Availability Was 70% ... Now 85% APU - Availability Was 65% ... Now 90% F-14 LANTIRN - Availability Was 73% ... Now 90% H-60 Avionics - Availability Was 71% ... Now 85% F/A-18 C/D - 67% Availability ... F/A-18 E/F FIRST - 85% Improves Readiness PBL Lowers Total WORKS! Ownership Costs 8/11/2011 1:04 PM 21 PBL Vs. Organic Repair PBL Organic Repair Parts Cost: $300,000 Used Parts: $120,000 Labor & Admin Costs: Labor & Admin Costs: $34,000 $34,000 Total Cost: $334,000 Total Cost: $154,000 Average Life: 2,000 hours Average Life: 375 hours Cost per hour: $167 Cost per hour: $411 8/11/2011 1:04 PM 22 Future System Sustainment Real-Time System Status (CBM+) Industry/Government Performance- Based Logistics Weapon System Manager Force Provider Partnerships Ensure system is Provide continuous, sustained at optimum reliable, affordable level support Acquisition Sustainment Disposal Visibility into cost/risk decisions across life cycle 8/11/2011 1:04 PM 23 Providing operational availability; not parts. Enterprise Integration Logistics Balanced Scorecard Synchronized to DoD BSC Warfighting Perspective Warfighting Perspective Provide optimum responsive logistics support to the joint warfighter to ensure: • An immediately employable force option • A rapidly deployable capability • A sustainable total force Innovation & Learning Perspective Innovation & Learning Perspective Logistics Process Perspective Logistics Process Perspective Ensure a capable workforce responsible Provide effective logistics chain for meeting the warfighter logistics Vision performance and capacity while reducing and support requirements to include: Strategy the logistics footprint to include: • Introduction of leading edge advanced concepts • R&M, Leveraging Global Industry, IT • Organization adaptability Improvements, and Commercial • Workforce shaping Advances Resource Planning Perspective Ensure affordable logistics support through resources and choices that enable effective joint warfighter capability to include: • Accurately forecast and identify logistics requirements • Identify and understand the risks associated with logistics resource allocation Enterprise Architecture Portfolio Management DUSD(L&MR) Memo DUSD (L&MR) Guidance & Oversight/Integration • Achieve FLE • Streamlined Systems • Efficient Systems • Integrated Knowledge Base July 2002 Component • Interoperable July 2002 Execution Plans Execution Systems • Milestones And FLE • Schedules/Brown Out Modernization • Critical System/ Database Information Component (IT meta data) • Evaluate Logistics AISs Strategies and Databases January 2003 January 2003 • Management Approach • Identify Systems to be: • CIO Interface • Evaluation Criteria Eliminated • Process Methodology Sustained • Metrics Integrated • POM Considerations August 2002 8/11/2011 DoD PM Leading 1:04 Enterprise Integration 24 Streamlined Portfolio Management Enterprise Integrated Data Environment (EIDE) Provide an enhanced environment that enables the DoD Logistics Enterprise to execute practices, processes, applications and decision support tools to achieve logistics interoperability and allow for information exchange within and between internal and external DoD business partners. - Non-system dependent transactions - Consolidation and reuse of Interfaces - Data integration/sharing - Leverage Modernization Efforts - Data Standards not Standard Data 8/11/2011 1:04 PM 25 DoD Logistics Strategic Objectives Warfighter Perspective* Provide optimum responsive logistics support to the joint warfighter to ensure: • Immediately employable force options • A rapidly deployable capability • A sustainable total force Workforce Logistics Process Perspective Ensure a skilled capable workforce Provide effective logistics chain responsible for meeting the warfighter performance and capacity while reducing Vision logistics support requirements to and the logistics footprint to include: include: Strategy • Introduction of leading edge advanced • Reducing cycle time, improving concepts effectiveness, improve product quality, • Organization adaptability leveraging IT improvements and • Workforce shaping Commercial Advances Resource Planning Perspective Ensure affordable logistics support through resources and choices that enable effective joint warfighter capability to include: • Accurately forecast and identify logistics requirements • Identify and understand the risks associated with logistics resource allocation • Improved cost predictability and constrained JLB Approved Aug 03 cost growth. 8/11/2011 1:04 PM 26 Logistics Transformation Mass-Based Just-in-Time Sense and Respond More is better Precision is better Mountains of stuff measured Agile is better in days of supply Reduce Inventory to a Dynamically positioned minimum and keep moving Uses massive inventory to Inventory throughout hedge against uncertainty in Use precise demand Use transportation demand and supply prediction and optimization flexibility and robust IT to to reduce uncertainty Mass begets mass and slows handle uncertainty everything down Works great, except when it Supports adaptive doesn’t operations Prime Metric: Days of supply Prime Metric: Flow Time Prime Metric: Effects Migrating to the Force-centric Logistics Enterprise 8/11/2011 1:04 PM 27 The End Game Ubiquitous, cost-effective capability 8/11/2011 1:04 PM to project and sustain power. 28 04pm12-28 Backup/unused slides 8/11/2011 1:04 PM 29 Single Point of Entry (SPOE) • A common way to exchange information with the Logistics Domain from modern weapons platforms and it’s suppliers via an Integrated Data Environment (IDE) at the process level not the system interface. ALIS - OEM 8/11/2011 1:04 PM 30 Where NAVICP Is Today NAVAL SUPPLY SYSTEMS COMMAND 42K Items, 12% of total obs Covered $M NAVICP PBL Obligations $700 200 $600 $578 Awarded PBLs $486 $525 180 $500 156 160 # of Contracts Awarded $400 $331 138 140 $300 $245 120 120 $200 104 $85 100 $100 $35 72 80 $0 FY98 FY99 FY00 FY01 FY02 FY03 FY04 60 est. 40 40 7 17 20 1 1 2 3 1 0 FY87 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 est. A Reengineering Tool to Improve Readiness/Sustainment 8/11/2011 1:04 PM 31 6 F/A-18 E/F USN/Industry Partnership • Configuration • Material Management • Program Control Management – E/F Unique Reparables • System Safety • Systems – All E/F Consumables • Organizational and Engineering – Transportation Intermediate • Information Systems – Retail and NADEP Support Maintenance • Fleet Support • Reliability Improvement (Ashore/Afloat) • Configuration Management • Life Cycle Management • Component Repair • GFE and E/F, C/D • Obsolescence Management Common Spares • Support Planning • Design Engineering • • GFE Support Equipment Teaming • Tech Data • Component Repair • Deployed 6 months early to meet OEF/OIF • Industry/Gov’t requirements distribution • 99% Range and Depth of • Seamless support Spares Deployed to OIF to warfighter • 70%-89% of demands met • Web-based asset in 48 hours visibility • 97.1% successful launch Leverage commercial and DoD rate best practices 32 8/11/2011 1:04 PM
"Sears Logistics Management Practices"