Defense Supply Center Richmond

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Defense Supply Center Richmond

• WORLDWIDE ENERGY CONFERENCE
• BRAC PRIVATIZATION
• EFFORT
• 20 APRIL 2006

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Agenda

• Overview
• Traditional Support
• BRAC Privatization Efforts
• Chemical Management Services

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Defense Logistics Agency
CORPORATE STAFF
DIRECTOR VICE DIRECTOR
Organizational Structure
CSM
DES ENTERPRISE SUPPORT
J-1 HUMAN RESOURCES
J-3 LOGISTICS OPS
J-4 CUSTOMER OPS
J-6 INFORMATION OPS
J-8 FINANCIAL OPS
J-9 RESERVE FORCES
SPECIAL STAFF
BUSINESS UNITS
DEFENSE SUPPLY CENTER COLUMBUS
DEFENSE SUPPLY CENTER RICHMOND
DEFENSE SUPPLY CENTER PHILADELPHIA
DEFENSE ENERGY SUPPLY CENTER
DEFENSE DISTRIBUTION CENTER
DEFENSE RE-UTILIZATION MARKETING
SERVICE ACTI V ITIES
DOCUMENT AUTOMATION PRODUCTION SERVICE
DEF LOG INFO SERVICES
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Defense Supply Center RichmondDLAs Aviation
Supply Chain

• Engine Components
• Air Frames
• Landing Gear
• Flight Safety Equipment
• Propeller Systems
• Fasteners
• Electrical Components
• Other Commodities

RDML M.F. Heinrich, SC, USN Commander
Richard J. Bailey Deputy Commander
DSCC and DSCP Detachments
Aviation Expertise Unique Skill Set
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Other Commodities
Environmental Products
Products
Maps
Industrial Plant Equipment

• Topographic, hydrographic, aeronautical
  maps/charts, in both hard copy and digital
  format, for all DoD Activities

• Re-refined Oil
• Battery Consignment Program
• Ozone Depleting Substance Reserve

• Lathes
• Milling Machines
• Boring Machines
• Grinding Machines

• Packaged POL
• Chemicals
• Electrical Hardware
• Batteries
• Bearings
• Instruments /Gages

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Traditional Support
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CY 05 Customer ProfileChemical supportDSCR View
By Sales
By Requisitions
Marines (5.3) 6.9M
Navy (16.4) 21.4M
Army (45.9) 89,164
Marines (2.5) 4,914
Other (9) 12.0M
Other (8.9) 17,336
Army (44.3) 57.8M
Air Force (23.7) 45,949
Navy (19.0) 36,795
Air Force (27.8) 36.3M
Total Sales 134.4M Total Requisitions
194,158
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Top 9 Chemical Customers CY 2005

• Bagram Air Base---------------------
• Anniston Army Depot--------------
• Tinker AFB ----------------------------
• Balad AB-------------------------------
• USMC MDC East--------------------
• Elmendorf AFB ---------------------
• USAF COS CELL ------------------
• ARCENT KANDAHAR -----------
• Hill AFB--------------------------------

• 3.9 M
• 2.9 M
• 2.5 M
• 1.9 M
• 1.6 M
• 1.6 M
• 1.5 M
• 1.5 M
• 1.5 M

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Traditional Support

• Customer Direct Delivery Requirements

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Traditional Support

• Performance Characteristics

• Supply Availability
• Order to Ship Time 62.6

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Traditional Support

• Firm Fixed Price with Economic Price Adjustment
  clause
• - EPA Clause re-write
• Approved 4/4/06
• Changes the way pricing adjustments are
• processed
• Accommodates use of Platts Oilgram or
• Icis-Lor market bench
  prices

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Privatization

• Mandated by BRAC recommendation 175, November
  9, 2005.
• Relocate tire supply contracting function from
  Detroit Arsenal and Hill AFB to DSC Columbus ICP.
  Relocate supply contracting function for
  packaged POL from NSA Mechanicsburg to DSC
  Richmond ICP. Disestablish all other supply
  functions and all storage and distribution
  functions for tires, packaged POL and compressed
  gases.

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Base Realignment and Closure (BRAC)Recommendation
175

• Background
• Privatize functions of supply, storage, and
  distribution
• Retain only the supply contracting function for
  overall support of the commodities
• Intent is to leverage the commercial industry
• Goal is to improve lead-times, reduce costs, and
  increase customer satisfaction

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Base Realignment and Closure (BRAC)Recommendation
175

• Benefits
• Achieves economies of scale and efficiencies
• Enhances effectiveness of logistics support
• More responsive supply support
• Centralizes management
• Enables latest technologies, expertise, and
  business practices

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Federal Supply Classes

• 6830 Compressed Gases
• 8120 Cylinders
• 9150 Packaged Petroleum, Oils, and Lubricants
• 6810 Packaged Reagent Technical Grade
  Chemicals
• 6820 Dyes
• 6840 Pesticides, Disinfectants, Repellents
• Deodorants
• 6850 Miscellaneous / Compounded Chemicals

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Future Supply Chain
DLA - Scope of Services

• Provide historical data
• Collaborate with customer
• Send order to Vendor
• Oversee / Administer Contracts
• Input MSDSs into HMIRs

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Future Supply Chain
Contractor - Anticipated Scope of Services

• Demand Planning (Forecasting)
• Collaboration with customer
• Procurement/Purchasing
• Inventory Management/Storage/Warehousing
• Distribution
• Transportation
• Environmental, Safety, and Occupational Health
  (ESOH) services (to include disposal)
• Customer Direct Delivery
• Customer Returns
• Data Management
• DLA Systems interface (BSM)
• Chemical Management Services option

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Procurement Cycle
Requiring Activity
DFAS
Receiving Report
Requisition
Invoice
DLA
Goods/ Services
D.O.
Contractor
EFT
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Privatization Timeline

• IndustryDay 14 Dec 05
• RFI Feedback 30 Jan-3 Feb 06
• Small Business Industry Day 1 Mar 06
• Draft Business Case Analysis 24 Mar 06
• Synopsize 28 Apr 06
• Issue RFP 2 Jun 06
• Pre-Proposal Conference 15 Jun 06
• RFP closes 2 Aug 06
• Oral Presentations 31 Aug 06
• Tech/Price Evaluation 18 Sep 06

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Privatization Concept

• 3rd Party Logistic Providers
• Umbrella Initiative with Phased Approach
• Inventory Attrition
• DDRV August 2007
• Other CONUS DDCs December 2007
• Remaining Inventory must be depleted by December
  2008

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Privatization Concept

• DRMS disposal contracts
• PQDRs / SDRs
• Customer returns handled directly between
  customer and contractor

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Privatization Initiative

• 3 Tiered Approach

Year 1-2
Years 2-5
Attrit, transfer, dispose of inventory
Years 2-10
Add more items as appropriate
Implement chemical management service programs
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Privatization Initiative

• Challenges
• OCONUS Contract Support
• Pricing Volatility
• Provision for Govt owned Cylinders
• Socializing Interdependencies
• Long Range IT Solutions

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BRAC Summary

• Savings Must Be Achieved
• Joint Collaborations Required
• Opportunity to Further Align by Supply Chain
• Profound Effect on DoD Transformation

Creating Win/Win Solutions for all Stakeholders
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Chemical Management Services Option

• DLA tasked to provide a chemical supply chain
  management solution for use by DoD customers
• Leverage the solution throughout DoD
• Scope of Services/Products procurement,
  inspection, forecasting, inventory management,
  delivery, use, collection/disposal, reporting
• Projected Benefits reduce costs, improve
  compliance, improve readiness, and return
  customer to core competencies

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Chemical Management Services (CMS) - What is CMS?

• Strategic, long-term relationship where a CMS
  provider supplies and manages a customers
  chemicals and related services. Cradle to grave
  includes
• - chemical purchasing
• - inspection
• - forecasting
• - inventory management and
  tracking
• - delivery to site and
  distribution to point of use
• - preparation for disposal and
  disposal
• CMS providers compensation tied to quantity and
  quality of services and not chemical volume
• CMS optimizes processes and continuously reduces
  chemical lifecycle costs, risk and environmental
  impact

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CMSmanaging the entire chemical lifecycle
The Chemical Lifecycle
upstream
downstream

Chemical management can cost up to 3 for every
1 of chemical purchased.
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CMS Baseline

• Objectives
• Understand current chemical operations
• Identify scope and areas of opportunity
• Understand material and management costs
• Understand IT systems
• Compare current operation to CMS model and
• determine feasibility
• Present business case to decision makers

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CMS CONOPS
Concept of Operations
Direct Delivery, Locker Management, Pick-up
Service Managed Items
CMS Vendor
DLA
GSA
Direct or Local Purchase
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Benefits of CMS on Mission Readiness and
Material Availability

• CMS will allow personnel to return to higher
  priority activities such as repairing aircraft
• The CMS Provider is one face to the customer
  which greatly reduces time spent managing
  chemicals and increases time spent on core
  responsibilities
• Industry benchmarking with CMS providers reveals
  material availability at approximately 96-98
• - Industry just-in-time delivery methods from
  CMS providers greatly increases material
  availability and accuracy to point of use
• CMS is a Lean effort and will align with current
  Lean Transformation activities
• CMS Provider provides business, operational and
  regulatory data which allows for more informed
  operational decision-making

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DSCR Website

• Website
• http//www.dscr.dla.mil/UserWeb/FAGA/index.html
• Under Specialized Support, Click on
  Privatization Efforts