Defense Logistics Agency Update

1
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
2
Prime Vendor
Now Showing
Coming Attractions
Industrial Wood Products Metals HAZMAT

• Subsistence
• Medical
• Pharmaceutical
• Maintenance Repair Operations

3
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
6
4
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
5
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
6
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
7
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
8
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
9
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

23
10
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
11
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