0202 DLA Vice Director Update to Army Materiel Command

1
Reengineering To Better Meet Your Expectations
RADM Raymond A. Archer III, SC, USNVice
Director, Defense Logistics Agency
2
Introduction

• MG Hawthorne Proctor Director Logistics
  Operations
• Ms. Christine Gallo Chief Reengineer
• Mr. Larry Glasco Customer Support
  Operations Officer
• LTC (P) Hugh Robinson Army National
  Account Manager
• Don Neri Logistics Operations
• Dan DeVincentis Logistics Operations

3
Why We Are Here

• Customer Perception
• No Agreed-to Expectations
• Reactive v. Proactive
• Unstructured Customer Touch
• Inflexible Business Delivery
• No Clear Direction

4
What Is Our Plan?

• Establish Structured Customer Relationship
• Strategic Operational
• Craft Mutual Expectations
• Build by re-orienting (zero sum)
• Adopt Best Practices Through BSM
• To Support Expectations
• Significant Change to DLA Capabilities and
  PracticesWe Are Reengineering

5
To Be Honest

• We think we have the right plan
• We dont have all the answers, but want to use
  concept demo to get them
• We cannot be successful in isolation
• We need your help
• Establish POC to set overall strategic agreement
• Begin the process to form the new relationship

6
ReengineeringRedefining Success

• Focus
• Customer vice Function
• Key Driver
• Expectation Management
• Outcome
• Time Phased vice Availability based
• Based on Expectation

7
Product/Function FocusBefore Reengineering
Item Segment
C U S T O M E R S
S U P P L I E R S
Group Class GI
Item Manager Forecast (Sales)
Contracting
Item Manager Forecast (Sales)
Group Class Aviation
Contracting
Item Manager Forecast (Sales)
Group Class Ground
Contracting
Item Manager Forecast (Sales)
Group Class Sea
Contracting
Built on two premisesitem segments and
forecasts (item focus), little collaboration and
planning
8
Customer Focus
Customer Segment Collaboration (Expectation)
Collaboration
(Supply Plan)
S U P P L I E R S
C U S T O M E R S
(Demand Plan)
MA N U G I S T I C S
Aviation
Maritime
Land
Troop Support
Built on two premisescustomer segment and
planning via collaboration
9
Process Improvements
Today BSM

• Premium Services (Transportation, Expedited
  Processing) and Discounts (Volume Purchase)
• Plan by Customer, Item, and Location
• Every Customer Has a Support Plan
• Extensive Collaboration with Customer
• Pay on Receipt (ERS)

• All Operations Costs Included in Cost Recovery
  Rate
• Plan by Item
• Limited Customer Input
• Invoice Required for Payment

10
Strategic CRM Organization
DIRECTOR DLA CSM
EXECUTIVE DIRECTOR (DE)
VICE DIRECTOR (DV)
Logistics Operations MG Proctor Mr. Lotts
Human Resources (J-1)
Financial Operations (J-8)
Information Operations (J-6)
J-32
J-33
J-34 Mr. Glasco
J-38
Ground Sea Sys (DSCC)
Aviation Sys (DSCR)
Contingency Plans Operations
Readiness Weapons Sys Analysis
Customer Operations
FMS
CIP
Troop General (DSCP)
Energy (DESC)
ARMY NAM LTC (P) Robinson
AF NAM Col Migaleddi
NAVY NAM CAPT Wright
MC NAM Col Burton
CRM Project Team
Distribution (DDC)
Reutil Mkting (DRMS)
Stockpile (DNSC)
DLA EUR/PAC
Commodity CAMs
Program Support
11
Changing to Face the Customer
Army G-4 CDR AMC
NAM
By Military Service Four Major Customer
Accounts National Account Manager (NAM)
Service Level Agreement
AMCOM FORSCOM TRADOC ACES Etc.
CAM
By Major Claimant Or Command Customer Account
Manager (CAM)
STRATEGIC
OPERATIONAL
Corpus Christi
Collaborative Demand Planning
CSR/ ICT
Ft. Riley
Ft.Jackson
Customer Support Representatives (CSR) Integrated
Customer Teams (ICT)
Etc.
12
Customer Relationship Management (CRM)
Military Service
By Military Service National Account Manager
(NAM)
NAM

• Strategic Level Engagement
• Set expectation levels
• levels of service
• Set common collaborative
• business practices

Service Level Agreement
Major Claimant or Command
By Major Claimant or Command Customer Account
Manager (CAM)
CAM
STRATEGIC
OPERATIONAL
Customer A
Collaboration
Customer B
CSR
Customer C
Customer Support Representatives (CSR)
13
Customer Relationship Management (CRM)
Military Service
By Military Service National Account Manager
(NAM)
NAM
Service Level Agreement
Major Claimant or Command
By Major Claimant or Command Customer Account
Manager (CAM)
CAM
STRATEGIC
OPERATIONAL

• Operational Level Engagement
• Determine how tos
• Execute Service Level Agreements
• Input/feedback to strategic
• level

Customer A
Collaboration
Customer B
CSR
Customer C
Customer Support Representatives (CSR)
14
What Comes Out ofService Level Agreements

• Set Mutual Expectations
• How Does DLA Contribute to Your Success?
• Detail Performance Objectives Measure
  Effectiveness
• Invest To Outcome Vice Levels
• Proactive Planning Versus Reactive Response
• Work Within Each Others Planning Cycles
• Strategic level agreements to Drive Operational
  Behavior
• How far down supply chain (support CSCM-A)
• What services should DLA provide?

15
What We Need From You To Make It Happen

• Agreement To Proceed
• Provide Colonel POC To Work With NAM
• To Begin Establishing Strategic Agreement/MOU
• That Sets Armys Expectations
• Champion Army Participation In Concept
• Demo
• Support Efforts To Negotiate Service Level
• Agreements For Class I BDUs With TRADOC
• Help Us Test New Organization Processes At
  Strategic Operational Levels
• Stay The Course Its A Journey Worth Taking

Desired Major Outcome Of Initial SLAs Will Be
Relationship Building
16
BSM Project Plan
Full OperatingCapability
2005
Initial OperatingCapability
2002
Concept Demonstration
We are here
2001-02
Milestone I/II Approval
Summer 2000
SI Proposals
Spring 2000
Milestone 0 Approval
December 1999
17
BSM Concept DemoExpectations

• We Are Going Live July 02
• Scaled to mitigate risk to our customers
• Demo is Our Time of Discovery
• New Organization Structure
• New Business Practices
• New Systems
• Learn our capacity for change

Were beginning a long process of learning
improving were anxious to get started
18
BSM Timeline Rollout Strategy
Testing Training Approach Customers Suppliers
We are here
July 2002 Troop Support (est. 140M)
Release 1 prove concepts with 5-10 of the
business
4th quarter FY 2003
Release 2 Target 100 functionality with 35-50
of the business
4th quarter FY 2004
Release 3 100 functionality with target 100
of business
Release 4 Technology Upgrades and the toughest
challenges
FY 2005
19
BSM Concept DemoRelease 1 Population

• Battle Dress Uniforms
• Garrison Feeding (PV Southeast Region)
• Helicopter Systems (UH-1, H-3, H-46, and H-53)
• Terminal Lugs And Insulation Sleeving
• Maritime Carrier And Sub Surface Teams--LM-2500
• Medical/Surgical Fleet Prime Vendor

• All Services
• All Products
• All Processes
• All Centers

150,000 Items 17,000 Customers 400 Users 500M
Sales Annually
Army Is Major Troop Support Customer In First
Release
20
TRADOC Is Major Army Customer In Concept Demo

• Army BDU Customer In Concept Demo Is Fort Jackson
  Recruitment Training Center
• Army Subsistence Customers In Concept Demo Are
  All Army Dining Halls In Southeast Region Of
  CONUS
• Expect Major Collaboration To be With Army Center
  of Excellence for Subsistence (ACES) With
  Designated TRADOC Component For BDUs
• Will Have Dedicated Integrated Customer Teams
  Facing ACES Designated TRADOC Component In
  Concept Demo

21
Recommended Structure For Continued Engagement

• Report Progress Discuss Strategy Every Six
  Months At Three Star Level
• Progress Of MOU/SLA Negotiations
• Lessons Learned
• Future BSM Releases
• NAM/Army Counterpart Provide Quarterly Progress
  Reports To Appropriate Levels
• Continued Cooperation Between BSM WLMP

22
Backups
23
BSM Process Reengineering Demand Planning
Today BSM

• Plan by Item
• Limited Customer Input
• No User Interaction with Models
• Single/Static Forecast
• Quarterly Forecast
• Decentralized Systems

• Plan by Customer, Item, and Location
• Extensive Collaboration with Customer
• User Interaction with Models
• Variable/Time Phased Demand Plan
• Monthly Planning Horizon
• Single Demand Planning System

24
BSM Process ReengineeringOrder Fulfillment
Today BSM

• Orders Processed First In
  First Out
• Single Line Orders
• Order Status Transactions
• All Operations Costs Included in Cost Recovery
  Rate

• Orders Processed by
  Required Delivery Date
• Multi-line Orders
• On-line Account and Visibility.
• Premium Services (Transportation, Expedited
  Processing) and Discounts (Volume Purchase)

25
BSM Process ReengineeringFinance
Today BSM

• Eight (8) Ledgers to Consolidate
• Inventory Valued at LAC Not GAAP Compliant
• Invoice Required for Payment

• Single General Ledger Using USSGL Chart of
  Accounts
• Inventory Valued at Moving Average Cost GAAP/
  CFO Compliant
• Pay on Receipt (ERS)

26
Concept Demo ICTs

• Lead Center for Maritime
• Maritime Maint Branch
• Maritime Maintenance (Other)
• Naval Shipyard, Norfolk
• NADEP North Island
• SIMA Norfolk
• Trident/PACNORWEST
• Maritime Operations Branch
• Maritime Operational
• Maritime FISC Branch
• Maritime FISCs
• Puget Sound
• Norfolk
• San Diego
• Maritime Other Br (includes Army)
• Maritime Other

• Lead Center for Aviation
• Customer Facing DIV 1
• NADEP Cherry Point
• NADEP North Island
• Ogden ALC
• Customer Facing Division 2
• Navy Aviation Maintenance (Other)
• Army Aviation Maintenance
• Air Force Aviation Maintenance
• (Other)
• Aviation Other (includes Army)
• FISC San Diego

• Lead Center for Troop and General Support
• Troop General Support Div
• TRADOC
• Ft. Jackson
• FORSCOM
• Ft. Bragg
• Army TG Support Other
• Navy TG Support
• Air Force TG Support (Other)
• Lackland AFB
• MC TG Support (Other)
• Parris Island
• TG Support Other
• DECA

• BOLD ICTs for concept demo
• Indented DODAAC groupings
• for collecting data

27
Major Components Of CRM Strategic Segments
OTHER POTENTIAL STRATEGIC SEGMENTS INCLUDE FMS
DOJ EXCHANGES STATE DEPT COMMISSARIES
ALL OTHER
V-2