DLA Supply Chain Update

DSCR • Aviation Lead Center • DSCR • Aviation Lead Center • DSCR • Aviation Lead Center • DSCR • Aviation Lead Center

Senior Executive Partnership Round Table

Defense Supply Center Richmond

• Supplier Relationships – Year In Review

• Transformation And Expansion

• Supplier Relationships – Focus For FY05

• Takeaways

Agenda

Year In ReviewSupplier Team Scorecard

Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 Apr 04 May 04 Jun 04 Jul 04 Aug 04 Sep 04

Sep 03

Total ALT PRs>180 Replen PRs > ALT Hi Freq LTC % Hi Freq SA B/O > 180 Del Rate PLT

Sep 04

Total ALT PRs>180 Replen PRs > ALT Hi Freq LTC % Hi Freq SA B/O > 180 Del Rate PLT

• Supplier Teams Have Positively Impacted DLA Performance

• Partnering With Suppliers Is Key To Improvement

DSCR Data Only

Overall Supplier ScoreGreen

2Blue

1

(Sep 03 Data)

Green6

Blue5

(Sep 04 Data)

Year In ReviewStrategic Supplier Alliances

Strategic Supplier Alliances

• SSAs Are Maturing And Evolving

• For Mature Relationship – Focus On Process Improvements

Tactical Improvements

SSA Contract Metric

# Of DLA Suppliers (Sep)

Green Yellow Red

NSN Growth 19 2 1

ALT Reduction 23 0 0

PLT Reductions 10 8 5

Quality (PQDRs) 22 0 1

Backorder Reductions 19 3 1

Price Control 20 1 2

On Time Delivery 9 4 10

ADV On Contract 18 0 5

Strategic Improvements

• Process Improvements• Forecasting Accuracy• Pricing• Exchanging Critical Logistics Information• Lead Time Reductions

• Lean Events

• PBL Partnering

• Other Strategic Opportunities

5810PLT Reductions

1049On Time Delivery

0

50

100

150

200

FY03 FY04 FY05

DLA SMS On LTC

FY04 Adds 34,181 NSNs

FY05 Goal 23,010 NSNs(Tracked By Supply Chain)

Aviation 11,548Maritime 6,473Land 3,107C&E 1,882

Year In ReviewStrategic Material Sourcing

# NSNs (K)

FY04 SMS Not On LTC

ALT 73.4 Days

PLT 124.9 Days

SMS On LTC

3.0 Days

26.5 Days

• Continued Focus On SMS NSNs

• Supplier Relationships – Year In Review

• Transformation And Expansion

• Supplier Relationships – Focus For FY05

• Takeaways

Agenda

Transformation And ExpansionBusiness Systems Modernization

The Vision

Enhance DLA and Supplier interaction based on the specific needs of a relationship in order to allocate time and resource more efficiently to best support the warfighter.

Cu

stom

er R

elat

ion

ship

M

anag

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•Customer Insight• Customer Service• Emergent Problem Resolution• Returns Management

Business Systems

Modernization

Su

pp

lier

Rel

atio

nsh

ip

Man

agem

ent • Strategic

Materiel Sourcing • Strategic Supplier Alliances• Supplier Partnering

Transformation And ExpansionBusiness Systems Modernization

BSM Core Processes:• Order Fulfillment• Planning• Financial Management• Procurement• Tech Quality

Su

pp

lier

Rel

atio

nsh

ip

Man

agem

ent • Strategic

Materiel Sourcing • Strategic Supplier Alliances• Supplier Partnering

Benefits To Suppliers

• Reduce Costs• Improve Forecasting• Reduce Inventories• Improve Utilization Of Supplier Capacities

• Reduce Waste From Supply Chain

• Greater Visibility Of Needs• Data-Driven, Objective Feedback On Actual Performance

InactiveAviationNSN-175K

Jan05 Feb05 Mar05 Apr05 May05 Jun05 Jul05 Aug05 Sep05 Oct05 Nov05 Dec05

DSCP

DSCR

MaritimeNon Pow ValvesNSN-75K

MaritimeDetachmtNSN-171K

MaritimeDetachmtNSN-240K

AviationComm/NSN-228K

Land DetachmtNSN-14K

Airframes& EnginesNSN-140K

MaritimeNSN-196K

Aviation/SSA ISTsNSN-240K

LandNSN-145K

C&TFlag/InsigNSN 3K

C&T AccssrsNSN 2K

C&TTentsNSN-1K

AviationDetachmtNSN-190K

DSCC

Maritime(Elctrncs)NSN-287K

C&TChem StsNSN-1K

Rollout through December 2005

Transformation And ExpansionBSM Impact On SSA Suppliers

MaritimeNSN-196K

Aviation/SSA ISTsNSN-240K

LandNSN-145K

MaritimeDetachmtNSN-240K

AviationDetachmtNSN-190K

Land DetachmtNSN-14K

MaritimeDetachmtNSN-171K

AviationComm/NSN-228K

= Rollout Increment Impacting SSA Suppliers

Medical 3PharmItms -29K

Jan06 Feb06 Mar06 Apr06 May06 Jun06 Jul06 Aug06 Sep06 Oct06

Aviation OEMNSN-142K

C&ENSN-93K

C&TDrs ClothNSN-6 K

Subs PV FSENSN-19K

Def WSDetachmtNSN-68K

Maritme(Elctrncs)NSN-204K

DeferredNSN-163K

Maritme(Elctrncs)NSN-306K

DeferredDetachmtNSN-81K

Med 2Trad/AsblNSN-67K

Medical 4Med/SurgItms-235K

Medical 1ECATItms 1.8M

C&TFootwearNSN-5.6K

C&TOCIENSN- 6K

C&E NSN133K

C&E NSN-77K

C&E NSN-67K

AviationDeferred NSN-55K

Rollout from January 2006 – September 2006

Transformation And ExpansionBSM Impact On SSA Suppliers

DSCP

DSCR

DSCC

= Rollout Increment Impacting SSA Suppliers

Aviation OEMNSN-142K

DeferredNSN-163K

• Supplier Relationships – Year In Review

• Transformation And Expansion

• Supplier Relationships – Focus For FY05

• Takeaways

Agenda

Aviation Supply Chain

Focus For FY05Supply Chain Metrics

DSCC DSCR DSCP

Aviation Supply Chain Scorecard

• DLA Enterprise View By Supply Chain

• Replaces DSCR Supplier Team Scorecard

• Some Metrics Will Change

• Scores May Be Impacted Initially

• Goals To Be Established

Target For Supply Chain Scorecard Implementation:

2nd Qtr 05

Aviation Supply Chain

DSCC DSCR DSCP

Aviation Supply Chain Scorecard

Metrics – Looking Forward

SSA Scorecard

DLA Enterprise Supply Chain Scorecard

Joint Supplier Scorecard

• Building Metrics For Broader View

• Comprehensive Look At DoD Support

Army NavyAir Force

Focus For FY05Air Force Aviation

Common Operating Picture

Supply AvailabilityFY04

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

FY

03

OC

T

NO

V

DE

C

JA

N

FE

B

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R

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R

MA

Y

JU

N

JU

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AU

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DMD LINES DLA SA SA GOAL TOTAL BO

Demand And Backorder Lines (K)Projected FY05

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

0

50

100

150

200

250

300

• Expect FY05 Demand Level Slightly Lower• Some Potential For Consumable Funding Reductions• FY05 Goal To Recover The SA & BO Improvements by 2Q FY05

$132M In FY04 EOY Funds

Focus For FY05Army Aviation

Common Operating Picture

Supply AvailabilityFY04

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

FY

03

OC

T

NO

V

DE

C

JA

N

FE

B

MA

R

AP

R

MA

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N

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AU

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DMD LINES DLA SA SA GOAL TOTAL BO

Demand And Backorder Lines (K)Projected FY05

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

0

50

100

150

200

250

300

• Army Reset Due To Mission Effects of OIF/OEF• FY 05 Projection - Accelerated Reset Inductions With Demand At 3rd Qtr FY 04 Levels• Bottom Line – Continue Reset BO Reduction Glide Slope And Prep For OIF 2 Reset Support

OIF Reset 1 OIF Reset 2

DLA OIF 2 Orders

142,669 Reset

Surge*

*Impact To DLA And Suppliers In Increased Demands August – September

Focus For FY05Navy Aviation

Common Operating Picture

Supply AvailabilityFY04

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

FY

03

OC

T

NO

V

DE

C

JA

N

FE

B

MA

R

AP

R

MA

Y

JU

N

JU

L

AU

G

SE

P

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50

100

150

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250

300

DMD LINES DLA SA SA GOAL TOTAL BO

Demand And Backorder Lines (K)Projected FY05

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

0

50

100

150

200

250

300

• Naval Aviation Demand Back To FY02 Levels• Cost-Wise Readiness Is Focus• Marine Corps Aviation Reset Starts 3rd Qtr FY05• Bottom Line: Business Trends Will Continue Into FY05

Supply Availability Increasing

Demand Levels To –5%

Total Backorders Declining

300,000350,000400,000450,000500,000550,000600,000

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

FY03 FY04 Act FY05 ProjAssumptions: Peak rotation Nov thru Jan Demands decrease during transition period Demands pickup following Transfer of Authority (TOA) between units Mar-Apr units commence ASL ramp-up FORSCOM G-4 states same demand pattern for FY05

Supplier impact Continued high demand through FY05 Anticipating/watching industrial base issues Increasing collaboration

PEAK ROTATION

DSCC Warfighters Requirements Analysis Process (WRAP)

The Whole Army Is In Motion Gen Kern (AMC CG)

Maritime

88

90

92

94

Oct-03

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep-04

SA

%

0

50

100

150

200

250

300

Th

ou

san

ds

Demand STCK BO Actual SA

Land

80

82

84

86

88

90

Oct-03

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep-04

SA

%

0

50

100

150

200

250

Th

ou

san

ds

Demand STCK BO Actual SA

• Land BOs up by 13,068 lines or 17.5% from Sep 03

• HMMWV is the driving force

• Overall BOs increased due to heavy AF demands

• Maritime BOs are up 5,085 lines or 6.3% from Sep 03

• Sep 04 demands decreased by 12% from Aug 04

• FSG 53 (Hardware and Abrasives) drove increase 

DSCC Hardware Supply ChainsSupply Avail, Demand, & BOs

• DSCR Has Developed A PBL Engagement Strategy

• Identifying All Potential Opportunities For Growth

Business Development Office• Seeks Business With Military Service or Vendor• Establishes Interface• Negotiates and Coordinates PBA• Follows Up On PBA Performance Evaluation

Customer Operations

HQ DLASupply Centers

FinanceLegal

IT/Systems

Supplier Operations

Director

CAPT Walt Melton

Focus For FY05Business Development

• Supplier Relationships – Year In Review

• Transformation And Expansion

• Supplier Relationships – Focus For FY05

• Takeaways

Agenda

Takeaways

• Strong Year For DLA/Industry Partner Teaming/Performance

• SSA Focus Areas…PLT, Delivery

• DLA Transformation Moving To Full Speed

• Transition To Supply Chains

• OEM Business Begins Moving On To BSM - February 2005

• DLA Enterprise Supply Chain Scorecards - May 2005

• Common Set Of Metrics

• Need Close Collaboration On Service Business/Ops Trends

• DLA Business Development Function Fully Operational