Defense Logistics Agency Update

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DEFENSE LOGISTICS AGENCY
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Defense Logistics Support Command

• Over 1400 Weapon Systems
• Supported
• 11.6B Inventory
• 12B Annual Sales
• 25M Annual Reutilizations/
• Disposals
• 27M Receipts and Issues
• annually
• All DoD Wholesale Inventories

• Activities
• Defense Supply Centers
• Defense Reutilization
• Marketing Service
• Defense Distribution
• Center
• Defense National Stockpile
• Center
• Defense Logistics
• Information Service
• DLA Europe
• DLA Pacific

• Functions
• Supply Management
• Procurement
• Distribution
• Logistics Information
• Management Support
• Reutilization Marketing
• Stockpile Management
• Energy Support
• Management

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Defense Contract Management Command
LEADER IN ACQUISITION REFORM
CONTRACT MANAGEMENT FOR MOST DOD PROCUREMENTS
Defense Contract Management District
International
Defense Contract Management District East
970B ACTIVE CONTRACTS 490 M DAILY IN CONTRACT
PAYMENTS
374K PRIME CONTRACTS 25K CONTRACTORS
ON SITE REPRESENTATIVE FOR BUYER AND PROGRAM
MANAGER
109 PILOTS FOR AIRCRAFT ACCEPTANCE
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DLA MANDATE

• Provide Value Added Service to Our Customers
• Ensure Defense Readiness

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A Glimpse of the Future Joint Vision 2010

• Changing World
• More Joint / Multinational Operations
• Information Technological Advances Will
  Revolutionize Warfare
• No Near Term Potential Adversaries
  State-To-State Relations are Norm
• Operational Environment Will Range From
  Peacekeeping Disaster
• Relief to Major Regional Contingencies
  
• Changing Nature of War A Revolution in Military
  Affairs
• Asymmetrical Force on Non-Linear Battlefield
  Fought in Multiple
• Locations Positional Advantage
• Decisive Speed Tempo All Weather Day Night
• Information Superiority Near Real-Time
• Dominant Maneuver Across the Range of Military
  Operations
• Mobility Agility
• Precision Engagement Responsive Accurate
  From Extended Ranges
• Changing Nature of Logistics A Revolution in
  Military Logistics
• Focused Logistics Precise Application of
  Logistics
• Rapid Integrated Response Distribution
• Total Asset Intransit Visibility Information
  Fusion

FUTURE WARFARE
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Transforming DoD Logistics
JV2010 Full Spectrum Dominance
Modern Warfighting Capability
Revolution in Military Affairs
Precision Engagement
Full Dimensional Protection
Focused Logistics
Dominant Maneuver
Modernization
Funding
Technology
Industry
Infrastructure Reductions
Research Development
Acquisition Reform
Revolution in Business Affairs
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Environment
1
Downsizing in DoD and industry Changing global
markets Fewer resources more competition Governm
ent Re-Invention Acquisition Reform New technology
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4
5
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Reengineering
TO DO BUSINESS IN OUR INDUSTRIES IN THE WAY
THEY DO BUSINESS
Dont pave over cowpaths, but tear up the road
and start over. Michael Hammer, Reengineering
the Corporation
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Objectives
Enhance Military Readiness While Reducing
Peacetime Investment

• Buy Commercial Products
• Adopt Proven Best Commercial
• Business Practices
• Applying Emerging Technologies

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DLA Business Approach
ENABLES CUSTOMERS AND LOGISTICS MANAGERS
TO CONDUCT BUSINESS IN THE ELECTRONIC MARKETSPACE
ENVIRONMENT

• Integrates all our new, successful Business
  Processes in a
• closed loop EC / EDI system
• Addresses peace and war readiness
• Adds value lower prices, faster LRT, choice
  and product info

Underpinnings Taps into worldwide
inventories Leverages prices through long term
flexible business arrangements Provides delivery
with various levels of service Creates Interfaces
with the user via Internet
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Reengineering Industry Relationships
New Business Relationships -- Long Term
Partnerships -- Dual Use Technology -- Shared
Production
Market-Oriented Supply Risk Management Pro-Active
Approach
FROM
TO
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Reengineering Automation

• Understanding the Changing Business
• Relationships, Strategies, Systems
• Fully Integrate Business Applications
• Take FULL Advantage of Evolving Technologies

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Adopting Commercial Best Practices
Re-engineered Practices

• Commercial Off the Shelf
• Performance Specs
• Supply Chain Management
• Business Alliances
• Credit Cards / Debit Cards
• Electronically Enabled Business Processes
• Automated Info Technology
• Internet technology
• Client Server architecture
• Electronic Funds Transfer

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Business Strategy ...Tools We Are Using
Business Strategy

• Shift to Commercial Practices
• Prime Vendor
• Virtual Prime Vendor
• Supply Chain Management
• Direct Vendor Delivery
• Electronic Mall
• Re-engineering
• Inventory Control Points
• Distribution Depots
• Disposal
• Best Value Sourcing
• A-76 Competition
• Depots
• DRMOs

Benchmarking
Leveraging Private Sector Capabilities
Reengineering
Best-value Sourcing
Competition
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Definition

• An integrated Supply Chain is a connected series
  of organizations, resources and activities
  involved in the creation and delivery of value,
  in the form of both finished products and
  services to end customers.

• Maximize value added for each link (activity or
  organization)
• Maximize value of aggregate performance
• Every supply chain will have a unique solution
  for maximum overall value

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Electronic Commerce Prime Vendor
Bank
Commercial Products and Distribution
DPSC
Prime Vendor
Prime vendor is commercial distributor of
commercial Brand Name products using EDI. It
uses long term price, product and distribution
contracts or agreements with suppliers of a
variety of goods for regionally grouped
customers. EDI links all trading partners with
the customer.
Customer
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Prime Vendor
Now Showing
Coming Attractions
Industrial Wood Products Metals HAZMAT

• Subsistence
• Medical
• Pharmaceutical
• Maintenance Repair Operations

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Shift to Commercial Business Practices
CHANGE IN
CHANGE IN
CHANGE IN
PRICE
LRT
INVENTORY
Subsistence
-10
-93
-76
98 Prices vs Market Basket
(delivered)
(30 - 2 days)
(175 M)
C T
-22
-50
-18
(contract)
(28 - 14 days)
(300 M)
MILSPEC - Commercial 15 Bag Items
Medical
-20
-97
-62
(contract)
(30 - 1 days)
(204 M)
Top 40 PV Drugs Proprietary to Competitive
Spares (Class IX) are a different commercial
challenge
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Maintenance Repair Operation Prime Vendor
Where we have been - BRAC Item transfers to DISC
- Lumber, plumbing, HVAC - USMC requested prime
vendor for facilities maintenance supplies -
Market research revealed emerging integrated
supplier segment
Where we are going - Worldwide roll-out by
geographic region - Roll-out to additional sites
w/i region - Strong Support from OSD - Mgmt
Reform Memo 12 dtd 6/17/97
Market Research/ Benchmarking - Home Depot -
Lowes - General Motors - Xerox - Saturn -
Disney Results - high probability of dramatic
improvement in customer satisfaction. - Cost
savings unknown - Emerging nature of integrated
supplier segment increases program risk
Statistics - Est 75 buy-around (current local
purchase) - 1 billion potential sales
nationwide Schedule - Southeast award 12/97 -
Hawaii - 1/98 - So CA Northeast - 7/98 -
Remaining CONUS-7/98 - OCONUS by 12/98
DISC / DSCP
Sites - Initial pilot in Southeast U.S.. starting
with Parris Island, Beaufort MCAS, Beaufort Naval
Hospital, Camp Lejeune, Ft. Jackson - Roll-out
to other geographical regions
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Shift to Commercial Practices ( of Sales to
Private Sector)
Bulk Lumber
Metals PV
Equipment
Avionics PV
Bell CC
Batteries
MILSPEC Items
Hardware
MRO PV
C-130 VPV
Industrial PV
Boeing CC
1993
Recruit Ctrs DVD
SE Demo DVD
Military Medals
1995-8
CT
Other Regional DVDs
Tentage
First QR
2001
ASCOT
Future
Subsistence
Rations
Subsistence PV CONUS
Fleet OCONUS
Dental PV
Medical-Surgical PV
Mail Order Rx
Pharmaceutical PV
Exotic Vaccines
Medical
0
20
40
60
80
100
of Sales
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Industrial Prime Vendor
Where we have been - Fasteners - large volume,
low value, wide range of customer needs
requires new approach - Partner with major
fastener customers, starting with ALCs - Bench
stock operations identified as most promising
area archaic system, multiple stock levels, no
item accountability - Tap into Supply Chain
Management sector providing supplies to
commercial airlines
Where we are going - Selected Depot Maintenance
Sites for Aircraft, marine and land
vehicle systems. - Operational bases
Point of Use Sale
Statistics OC-ALC - Estimated Annual demands
-106,000 - Number of NSNs -15,200 - Annual value
22 million
Market Research/ Benchmarking - Aviall - Bell -
Delta Airlines - Mac Air - Boeing Result - Good
match between customer needs commercial
capability. High expectation of improved support
and cost reduction.
Schedule - Revised BAA issued 8/97 - Target
award dates NADEP - NI Jul 98 ALCs DEC
98
DISC
Sites - Initial test sites Oklahoma City-ALC,
Warner Robbins ALC, Ogden ALC, NADEP North
Island, NADEP Cherry Point
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Weapon Systems Support
Now Showing
Coming Attractions
NOW SHOWING
C-130 Hub and Blade Virtual Prime Vendor C-5
Progressive Depot Maintenance C-17 Flexible
Sustainment
Apache Prime Vendor Support DSCR - NAVICP
Partnership Fleet Automotive Support MTVR DD21 FCS
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Virtual Prime Vendor
Where we are - Issued Broad Agency Announcement /
Apr 96 - Award of C-130 Hub and Blade VPV
contract 10 Oct 96 to Hamilton Standard
(partnership with Derco) -- Implementation Jan
97 -- Year one of Long Term Contract -
22 million - Other BAA proposals under
evaluation
Where we are going - VPV expansion to other Air
Force Maintenance Shops - VPV expansion to other
MIL Service systems and maintenance facilities
C-130 Hubs and Blades - 1600 plus NSNs - VPV
world wide distribution - VPV forecasting,
warehousing, distribution, expedited
delivery, materiel and inventory
management Contract Features - !00
availability - stocked items - Incentives for
supply performance price reductions in out
years
Program Manager DSC - Richmond
Coming Attractions - Aircraft PDM at WR-ALC -
Aircraft Depot Maintenance at NADEP JAX (selected
lines) - Intelligent partnership arrangements
for consumable parts support under MILSVC
privatization efforts for C-17, MTVR, Apache
Helicopter
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C-17 Flexible Sustainment Supply Support

• MTA provides total IM and MOB support for C-17
  unique NSNs throughout production phase--2005
• MTA forms intelligent partnerships with
• Organic repair facilities for repair of
  reparables
• DLA for consumables
• DLA will continue to manage/supply common
  consumable NSNs
• DLA/C-17 SPO/Boeing MTA drafted Best Value plan
  for determining who should manage/supply C-17
  unique consumable NSNs
• MTA responsible for total logistics support
• Performance objectives at weapons system level,
  e.g., cost per flying hour, power by hour, NMCS
  rate, PMCS rate

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Supply Chain Integration In Practice
Vertical Support All Commodities for Specific
Customers
Integrated Support Prime Vendor Access to DLA
and Service Supply Sources and Other Prime
Vendor Contracts
REQUIREMENTS
Evolving Commodity PVs
DoD Corporate Contracts
Horizontal Support Specified Commodities for
Many Customers
Service Depot Stocks
DLA Depot Stocks
Affordability through Common Support
ICP Support
CUSTOMERS
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WHAT HOLDS IT TOGETHER?

• Commodity Expertise
• - National leveraged buying power
• - Evolving Commercial Practices
• DoD Best Value Partnerships
• - Acquisition Planning
• - Logistics Planning
• - Contracts
• - Consensus Metrics
• Emerging Technology
• Knowledge and Process Sharing

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Achieving Integration for Total Life Cycle
Management
DVD Corporate Contracts Prime Vendor
Virtual Prime Vendor Third Party Logistics
Full Integration of Acquisition Logistics
DoD Costs and Infrastructure
Plateau
Plateau
Evolving Innovation
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Business Transformation Through Emerging
Technology
Virtual
Marketspace
Virtual Shopping
Virtual Inventory
Virtual Product
Internet Shopping
Electronic Catalogs
Customer Value Contracts
Corporate Contracts
Prime Vendor
Quick Response
Electronic Commerce
EDI Purchasing
Direct Vendor Delivery
Long Term Contracts
Best Value Buying
Sealed Bidding
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Technology Opportunities
Virtual
Marketspace
Satellite Networks
Fiber Optic Technology
Information Agents
Context Mediators
Artificial Intelligence
Internet
Distributed Processing
Data Warehouse
VANs
Client Server Applications
Relational Databases
EDI
Personal Computers
Mini-Computers
Mainframe Computing
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Electronic Commerce Mall
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Use Of Emerging Technologies
Buying Things One At A Time
POE
Payments 30-60 Days
Cycle Time 5 To 15 Days
Buying National Leveraged Business Constructs
POE
WORLD WIDE WEB
WORLD WIDE WEB
Base Level Purchasing
KTOR OF CHOICE
Cycle Time 3 To 5 Days
Closed Loop EDI Tracking Credit Card Payment 1 Day
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DLA EMALL Precursors

• Rapid movement to Electronic Commerce
• Internet explosion
• Low cost
• Flexibility
• Development of DLA Material Management Homepage
  (www.emall.dla.mil)
• Catalog development inside and outside DLA

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DLA EMALL Pay / Order Methods
Depending on the store, one or both of these
methods of payment are available. Soon, most
stores will offer both.

• MILSTRIP- Familiar to customers- P/N or NSN-
  Through local system- Normal funding

• Purchase Card- DoD emphasis - Smart
  Cards will help collect demand data in future.
  .

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The DLA EMALL

• Internet based stock market approach
• Recover lost markets and generate new
• National leveraged buying power
• Provide choice on price, delivery, etc.
• Wide range of competitive items
• Government stores (value added)
• Government customers

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Customer Choice Drives Reform
DoD Logistics System 100 Synthetic One Size
Fits All Dry Clean Only
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Our Strategic Goals
1. Consistently provide responsive, best value
supplies and services to our customers.
2. Serve as a catalyst for the Revolution in
Business Affairs and Acquisition Reform.
3. Ensure our workforce is enabled to deliver
and sustain world class performance.
4. Rapidly exploit technology to provide
agile,responsive,interoperable solutions.
5. Aggressively pursue partnerships with
industry and our suppliers.
We must have a logistics system which tailors
what we provide to what our customers require -
not what is convenient for us - and does so in
dramatically reduced time frames, reliably and
consistently.