DLA Logistics Transformation

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DLA Logistics Transformation

  1. 1. Senior Executive Partnership Round Table November 10, 2004 Right Item, Right Time, Right Place, Right Price, Every Time... Best Value Solutions For America's Warfighter
  2. 2. Agenda <ul><li>DoD Transformation </li></ul><ul><li>DLA </li></ul><ul><ul><li>The Enterprise Today </li></ul></ul><ul><ul><li>Transformation </li></ul></ul><ul><li>Supply Chain Integration </li></ul><ul><li>What This Means to Suppliers </li></ul><ul><li>Summary </li></ul>
  3. 3. DoD Transformation <ul><li>Defense Transformational Goals: </li></ul><ul><li>Protect the US Homeland and Critical Bases of Operation </li></ul><ul><li>Deny Enemies Sanctuary </li></ul><ul><li>Protect and Sustain Power in Access-denied Areas </li></ul><ul><li>Leverage Information technology to connect troops and their operations </li></ul><ul><li>Improve and protect information networks from attack </li></ul><ul><li>Enhance space operations </li></ul>
  4. 4. What is DOD Transformation? <ul><li>Transforming how we fight </li></ul><ul><li>Transforming how we do business </li></ul><ul><li>Transforming how we work with others </li></ul>DoD Transformation
  5. 5. Joint Logistics Priorities <ul><li>DoD Logistics Balanced Scorecard </li></ul><ul><li>Enterprise Integration </li></ul><ul><li>Performance Based Logistics </li></ul><ul><li>Logistics Transformation Roadmap </li></ul><ul><li>Maintenance Excellence </li></ul><ul><li>Streamline Material Flows </li></ul><ul><li>Distribution Process Owner (DPO) </li></ul>Logistics Transformation DoD Transformation
  6. 6. <ul><li>Raise the Bar on Performance </li></ul><ul><li>Make DLA a World Class Organization </li></ul><ul><li>Execute Transformation </li></ul><ul><li>Supply Chain Integration/Business Development </li></ul>DLA’s FY05 Goals: Focus The Vision Logistics Transformation DoD Transformation DLA Transformation
  7. 7. Why Transformation? <ul><li>For DLA to remain valuable to the warfighters, it must better organize its workforce, develop and implement new business strategies and relationships that deliver end-to-end supply chain solution sets to the COCOMs and Military Services…otherwise, we become irrelevant. </li></ul>
  8. 8. Agenda <ul><li>DoD Transformation </li></ul><ul><li>DLA </li></ul><ul><ul><li>The Enterprise Today </li></ul></ul><ul><ul><li>Transformation </li></ul></ul><ul><li>Supply Chain Integration </li></ul><ul><li>What This Means to Suppliers </li></ul><ul><li>Summary </li></ul>
  9. 9. Scope of Business <ul><li>45,000 Requisitions/Day </li></ul><ul><li>8,200 Contracts/Day </li></ul><ul><li>#56 Fortune 500 - Above Prudential Financial </li></ul><ul><li>#2 in Top 50 Distribution Warehouses </li></ul><ul><li>25 Distribution Depots </li></ul><ul><li>5.2 Million Items </li></ul><ul><li>24.7M Annual Receipts & Issues </li></ul><ul><li>1411 Weapon Systems Supported </li></ul><ul><li>144M Net Barrels Fuel Sold (FY04) </li></ul><ul><li>$14.6B Annual Reutilizations/Disposals </li></ul>People <ul><li>21,490 Civilians </li></ul><ul><li>524 Active Duty Military </li></ul><ul><li>637 Reserve Military </li></ul><ul><li>Located in 48 States/28 Countries </li></ul>Foreign Military Sales <ul><li>Sales: $719M </li></ul><ul><li>Shipments: 580K </li></ul><ul><li>Supporting: 124 Nations </li></ul>FY 02 Sales/Services: $21.5B FY 03 Sales/Services: $25B FY 04 Projection: $28.0B <ul><li>Land/Maritime/Missiles: $2.8B </li></ul><ul><li>Aviation: $3.1B </li></ul><ul><li>Troop Support: $12.4B </li></ul><ul><li>Energy: $5.9B </li></ul><ul><li>Distribution: $2.5B </li></ul><ul><li>Other: $1.3B </li></ul>The DLA Enterprise…Today
  10. 10. DLA Transition… …Leaner…More Productive Civilian & Military Personnel (# In Thousands) Billions of Dollars Of Sales/Services … while personnel levels fell to their lowest since 1963 …12% below DPG From ‘01-’04, Sales and Services grew by 70%...
  11. 11. Percent Savings Returned to Warfighter (FY 06-11 based on PBR 2006 Proposal) FY 05 … 15% Lowest Cost Recovery Rate in DLA History ( Operating Costs as a Percentage of Total Sales ) CRR % Cost Recovery Rates Over Time DoD Policy Decisions
  12. 12. Backorders Hardware Thousands Lowest In DLA History Operation Iraqi Freedom
  13. 13. Supply Availability Hardware Total Percent Net Demands (M) DOD Supply Availability Goal: 85% Operation Iraqi Freedom
  14. 14. Readiness Review Sample Charts A Military Service’s Level A Systems Aviation Weapon System Performance Metrics DLA Per forma nce DLA Performance in Support of a WS DLA Support to a Maintenance Depot G R R G WS 4 G R G G WS 3 G R G G WS 2 G G G G WS 1 WSSM Assessment Readiness BO SA Airframe System
  15. 15. Agenda <ul><li>DoD Transformation </li></ul><ul><li>DLA </li></ul><ul><ul><li>The Enterprise Today </li></ul></ul><ul><ul><li>Transformation </li></ul></ul><ul><li>Supply Chain Integration </li></ul><ul><li>What This Means to Suppliers </li></ul><ul><li>Summary </li></ul>
  16. 16. Supplier Relationship Management Systems Architecture (SAP/Manugistics) Customer Relationship Management <ul><li>Customer Insight </li></ul><ul><li>Customer Service </li></ul><ul><li>Emergent Problem Resolution </li></ul><ul><li>Returns Management </li></ul><ul><li>Order Fulfillment </li></ul><ul><li>Planning </li></ul><ul><li>Financial Management </li></ul><ul><li>Procurement </li></ul><ul><li>Tech & Quality </li></ul>Business Systems Modernization Distribution Planning Management System Load Planning Network Warehouse Management IT Systems Integrated w/Partners Manage Vendor & Carrier Performance I N D U S T R Y S E R V I C E S Data Architecture (Integrated Data Environment)) Technical Architecture (Common Protocols and Standards) Technical Infrastructure (Enterprise Telecommunications and Network Data Center) How DLA Pursues Transformation 9 <ul><li>Strategic Materiel Sourcing </li></ul><ul><li>Strategic Supplier Alliances </li></ul><ul><li>Supply Chain Integration </li></ul>
  17. 17. BSM Business Volume Users BDUs Concept Demo Subsistence Release 2 FOC FY02 FY03 FY04 FY05 FY06 Items Thousands Concept Demo BDUs Subsistence Release 2 FOC FY02 FY03 FY04 FY05 FY06 Revenue $ Millions Concept Demo BDUs Subsistence Release 2 FOC FY02 FY03 FY04 FY05 FY06
  18. 18. BSM Rollout Through Dec 05 Jan05 Feb05 Mar05 Apr05 May05 Jun05 Jul05 Aug05 Sep05 Oct05 Nov05 Dec05 DSCP DSCR Maritime Non Pow Valves NSN-75K $79M Maritime Detachmt NSN-171K $129M Maritime Detachmt NSN-190K $46M Aviation Comm/ NSN-228K $145M Inactive Aviation NSN-157K Land Detachmt NSN-164K $78M Airframes & Engines NSN-140K $417M R 2.1.1 R 2.1.2 R 2.1.3 Maritime NSN-191K $172M Aviation/ SSA ISTs NSN-236K $239M Land NSN-141K $152M C&T Flag/Insig NSN 3K $20M C&T Accssrs NSN 2K $156M C&T Tents NSN-1K $110M Aviation Detachmt NSN-189K $124K DSCC Maritime (Elctrncs) NSN-281K $99M C&T Chem Sts NSN-1K $ 240M
  19. 19. BSM Rollout From Jan 06 – Sep 06 DSCC DSCP DSCR Aviation OEM NSN-142K $788M C&E NSN-93K $228M Release 2.2 STABILIZATION C&T Drs Cloth NSN-6 K $225M Subs PV FSE NSN-19K $56M Def WS Detachmt NSN-68K $200M Maritme (Elctrncs) NSN-204K $79M Deferred NSN163K $1,092M Maritime (Elctrncs) NSN-306K $174M Deferred Detachmt NSN-81K $446M Med 2 Trad/Asbl NSN-67K $815M Medical 3 Pharm Itms -29K $2,000M Medical 4 Med/Surg Itms-235K $150M Medical 1 ECAT Itms 1.8M $70M DSCP Operational Acctg HQ – Operational Acctg. DSCR Operational Acctg DSCC Operational Acctg – Pilot & Rollout C&T Footwear NSN-5.6K $260M C&T OCIE NSN- 6K $775 C&E NSN133K $221M C&E NSN-77K $250M C&E NSN-67K $170M Aviation Deferred NSN-55K $671M Jan06 Feb06 Mar06 Apr06 May06 Jun06 Jul06 Aug06 Sep06 Oct06
  20. 20. Agenda <ul><li>DoD Transformation </li></ul><ul><li>DLA </li></ul><ul><ul><li>The Enterprise Today </li></ul></ul><ul><ul><li>Transformation </li></ul></ul><ul><li>Supply Chain Integration </li></ul><ul><li>What This Means to Suppliers </li></ul><ul><li>Summary </li></ul>
  21. 21. More Organic More Commercial Traditional Organic Support Environment Contractor Responsible For Majority of Support CONTRACTOR ORGANIC MIX Organic Support Contractor Support Public/Private Partnering Opportunities DoD Supply Chain & Contract Logistics Support One Size Does Not Fit All
  22. 22. Case for Change Current Environment <ul><li>Comprehensive logistics solutions being demanded </li></ul><ul><ul><li>Performance Based Logistics </li></ul></ul><ul><ul><li>Contractor Logistics Support/3PLs </li></ul></ul><ul><ul><li>Joint Logistic Solutions </li></ul></ul><ul><ul><li>Executive Agent </li></ul></ul><ul><ul><li>End-to-End Initiatives </li></ul></ul><ul><li>OIF/OEF places increased pressure on agile logistics to support operations - Joint solutions preferred </li></ul><ul><li>Today’s technologies facilitate horizontal integration across traditional vertical “ownership” </li></ul>Defense Transportation Coordination Initiative (DTCI) Repairable Partnering with TACOM DLA must evolve its logistics solutions to meet changing demands being placed on its supply chains
  23. 23. DLA’s Business Strategy Within Supply Chains End to End Supply Chain Integration Moving From Physical Site to Supply Chain Management Planning DLA Disposal/ Reutilization Distribution Order Fulfillment Procurement DSCR Aviation DSCC Land DSCC Maritime DSCP Construction DSCP C&T DSCP Medical DSCP Subsistence DESC Energy Tech/QA Finance
  24. 24. Managing Across the Supply Chain “ Supply Chain” = Customer Operations + Supplier Operations with Distribution functions across the chain Customer Operations Supplier Operations CRM Cells/Support Teams Item Planning Teams Integrated Supply Teams Strategic Material Sourcing Group Customer Support Supplier Support Item Planning Teams Integrated Supply Teams In most cases, single face to the customer (OF, customer DP) regardless of what the customer is buying Item-level planning for the items managed by the Supply Chain Shared services (e.g., Finance) for Customer Operations units Supply planning, procurement, and tech/quality for items managed by the Supply Chain Strategic sourcing for items managed by the Supply Chain Shared services (e.g., Finance, T/Q for Supplier Operations units Direction of IPTs planning this Supply Chain’s items at other locations Direction of ISTs managing this Supply Chain’s items at other locations Detachments Keep focus on accountability for obtaining customers’ requirements Keep focus on accountability for planning customers’ requirements
  25. 25. Supplier Relationship Management
  26. 26. Agenda <ul><li>DoD Transformation </li></ul><ul><li>DLA </li></ul><ul><ul><li>The Enterprise Today </li></ul></ul><ul><ul><li>Transformation </li></ul></ul><ul><li>Supply Chain Integration </li></ul><ul><li>What This Means to Suppliers </li></ul><ul><li>Summary </li></ul>
  27. 27. Supplier Relationship Management <ul><li>SRM is a strategy to build and optimize relationships with selected suppliers while: </li></ul><ul><ul><ul><li>Evaluating and capitalizing on supplier capability </li></ul></ul></ul><ul><ul><ul><li>Monitoring supplier performance </li></ul></ul></ul><ul><ul><ul><li>Jointly solving problems </li></ul></ul></ul><ul><ul><ul><li>Teaming to provide best value and end to end Logistics Solutions in Performance Based Logistics arrangements </li></ul></ul></ul><ul><ul><ul><li>Supplier Relationship Manager acts as DLA’s primary POC to the supplier </li></ul></ul></ul>SRM is one of DLA’s eleven transformational initiatives
  28. 28. Supplier Relationship Management <ul><li>Goals </li></ul><ul><ul><li>Build partnerships with industry and suppliers </li></ul></ul><ul><ul><ul><li>Streamline business processes for DLA and supplier </li></ul></ul></ul><ul><ul><ul><li>Improve supply visibility </li></ul></ul></ul><ul><ul><ul><li>Form solid basis for PBL support </li></ul></ul></ul><ul><ul><li>Improve supply chain performance </li></ul></ul><ul><ul><li>Delivering results to end users </li></ul></ul><ul><ul><li>Manage inventories, resources and assets more effectively by leveraging joint capabilities </li></ul></ul><ul><ul><li>Create competitive advantage by bringing new, better and more customer centric solutions to market </li></ul></ul>
  29. 29. Supplier Relationship Management <ul><li>SRM provides for DLA: </li></ul><ul><ul><li>Strengthened customer confidence that mission requirements will be met </li></ul></ul><ul><ul><li>Improved management of relationships with key suppliers </li></ul></ul><ul><ul><li>Partnering opportunities with counterparts in supplier organizations for issue resolution </li></ul></ul><ul><ul><li>Integration of suppliers into business processes for improved execution </li></ul></ul><ul><li>SRM provides for Suppliers: </li></ul><ul><ul><li>Reduction in costs </li></ul></ul><ul><ul><li>Better communication leading to better supply management and fewer out of stock and overstocked items </li></ul></ul><ul><ul><li>Relationship driven, qualitative and quantitative feedback on actual performance </li></ul></ul><ul><ul><li>Improved operational execution through increased communication between DLA’s left and right sides via the Supplier Relationship Manager </li></ul></ul>
  30. 30. Strategic Materiel Sourcing Reliance On Industry Outcome Oriented Managing Supplier Relationships Long-Term Arrangements Integrating Supply Chains From To A Value Added Supply Chain Integrator SMS targeting 430K items of 3.6M hardware total Reliance on Inventories Transaction Based Managing Supplies Instant Buys Managing Separate Processes
  31. 31. BSM Release 2.1.2 Supplier Collaboration <ul><li>DLA has developed a new method for suppliers to manually review and comment on DLA supply plans. </li></ul><ul><li>The new Collaborate process will be managed through the use of Manugistics Networks Collaborate v7.1 Web-based tool. </li></ul><ul><li>The system will be tested with a small number of launch vendors (6-12) beginning in Feb 2005. </li></ul><ul><ul><li>Vendors had to be sole source suppliers or have current long-term contracts for a substantial number of items already in BSM. </li></ul></ul><ul><li>Beyond the launch vendors ≈ 480 additional Sole-Source & Long-term Contract vendors will be given view-only access to the collaboration tool </li></ul>
  32. 32. Supplier Awareness Benefits of Collaboration <ul><li>More accurate forecasting </li></ul><ul><li>Better, timelier customer support </li></ul><ul><li>Reduce safety stock levels and warehousing costs </li></ul><ul><li>Reduce administrative churn </li></ul><ul><li>Improve production planning within and across the supply chain </li></ul><ul><li>Reduce Raw Materials and inventory </li></ul><ul><li>Better visibility of DLA requirements </li></ul><ul><li>Enhance supply chain end-to-end performance </li></ul>Supplier Perspective: DLA’s Perspective:
  33. 33. How It Works Release 2.1.2 Supplier Collaboration Step-By-Step <ul><li>Total requirements at the item level sent to collaboration tool in monthly buckets (TPIP). </li></ul><ul><ul><li>Supply Plan for 24 months will be shown </li></ul></ul><ul><ul><li>Vendor will see only the items on his/her contract </li></ul></ul><ul><li>Initial process only applicable to forecastable sole-source and long-term contracts for items managed by BSM. </li></ul><ul><li>Vendor updates will be compared to DLA’s supply plan and exceptions will be highlighted for supply planners. Collaboration only permitted for requirements not yet committed to a contract. </li></ul><ul><li>Suppliers & DLA POCs will collaborate on exceptions and develop final supply plan. </li></ul>We Need Your Feedback and Active Participation
  34. 34. Summary <ul><li>DLA’s Transformation is underway – </li></ul><ul><ul><ul><li>streamlining supply chains </li></ul></ul></ul><ul><ul><ul><li>driving down costs </li></ul></ul></ul><ul><ul><ul><li>becoming more efficient </li></ul></ul></ul><ul><li>We want you to be part of the team…… </li></ul><ul><li>collaborating together to provide Best Value Logistics Support in traditional and non traditional (PBL) arrangements </li></ul>
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