NAVICP Top 2 Aviation Supply Chain Concerns

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NAVICP Top 2Aviation Supply Chain Concerns

• Presented to the Senior Executive Partnership
• Round Table 10
• 2 May 2007

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Naval Aviation Supply
NAVICP Concerns

• Meet Warfighter Material Availability
  Expectations
• Decrease Customer Direct Turn Over (DTO)
  Backorders
• Reduce Organic Depot Awaiting Parts (AWP) Levels
• Support CNO Cost-Wise Readiness Objectives
• Implement Ready For Tasking (RFT) Focus
• Expand Utilization of Performance Based Logistics
  (PBLs)

The War On Terror And The Battle Against Cost
... We Must Win Both
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Decrease Customer DTO Backorders
Backorder Breakdown (NAVICP Managed Items)

• Observations
• DTO slice of the pie is too big
• We must do a better job of filling outfittng /
  stock rqmts to prevent DTOs
• To succeed, we must reinforce our day to day
  efforts on basic business

F M S
Outfitting
DTO
Stock
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Decrease Customer DTO Backorders
The Way Ahead

• Reinforce sound supply chain management practices
  
• as part of day to day business operations
• Continually improve requirements forecasting
• Execute timely placement of procurements
• Ensure on-time delivery of all due-in material
• Pursue aggressive expediting, where required
• Utilize intense customer collaboration to
  prioritize efforts

Focus on the Basics
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Reduce Organic Depot AWP
Fleet Readiness Center AWP Scorecard
FRC
Bottomline Need To Reduce The Negative Trends
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Reduce Organic Depot AWP
What We're Doing

• Continue aggressive interface with FRC-Ds / DLA
• Validate requirements, target expediting, and
  discuss select inhibitors
• Focus on AWP with BBs, overaged AWP, and AWP with
  single downers
• Review growth in local purchase/local manufacture
  requirements
• Reinforce process discipline and reconcile data
  bases
• Conduct DLA site visits ICP AWP Summit Business
  meetings
• Assemble and disseminate AWP report card
• Develop AWP Entitlement metric
• NAVICP developing with DSCR, FRC-D
  supply/production reps, NAVAIR
• Entitlements set by site, based on historical
  induction rates, budgeted delay time

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Implement Ready for Tasking (RFT) Focus
RFT Overview

• RFT Defined The right readiness, at the right
  time, at the right cost
• Amount of required readiness for any given
  aircraft is determined by mission
• RFT replaces traditional Full Mission Capable
  (FMC) standard... Aircraft and all mission
  systems ready at any given time
• RFT creates some Initial Support Challenges
• RFT is dynamic...must be defined for each T/M/S
  and each mission...effort is in its infancy
• Virtually all current metrics are based on FMC
  standard...RFT will demand revised metrics to
  properly focus support efforts

Paradigm Shift From Readiness At All Costs To
Cost-wise Readiness
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Implement Ready for Tasking (RFT) Focus
Current Effort

• The Naval Aviation Enterprise (NAE) is working
  three FY07 goals to support RFT attainment
• Achieve necessary RFT gap closure
• Identify and prioritize systems degrading RFT
• Improve reliability of RFT degraders

Right readiness, right time
RFT Availability (E-2C)
RFT Entitlement
RFT Gap
Degraded RFT
Actual RFT
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Implement Ready for Tasking (RFT) Focus
E-2C Example
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Expand Utilization of PBLs
The Essence of PBLs

• What we buy
• Comprehensive performance package... not
  individual parts
• Value Proposition
• Substantially improved performance at less than
  or equal to cost
• Why they work
• Government sets performance, establishes
  long-term fixed price relationship ... Fixed
  price "pay for performance" contract motivates
  vendor to reduce failures / consumption
• Long term commitment enables vendor to balance
  risk vs. investment

Vendor asked to provide superior performance
at no additional cost
A Reengineering Tool To Improve Readiness Through
Improved Reliability And Better Availability
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Expand Utilization of PBLs
PBL Program Performance
Availability
Reliability
Inventory Reduction
H-60 FLIR ... 40 increase ALR-67 (v)3
Radar Warning Receiver- 53 increase
Aviation Tires ... - Wholesale
Inventory reduced by 90 - Plane-side
inventories reduced by 66
F/A-18 SMS - availability was 65 ... now 98
ARC - 210 Radio availability was 70 ...
now 85 APU - availability was 70 ... now
95 F404 engine availability was 43 ... now
99
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Expand Utilization of PBLs
Current Enterprise Objectives

• PBL Cost Reduction
• - Reduce the cost of PBLcontracts renegotiated
  inFY07 by an average of 2
• Reduce AVDLR costs for items supported by PBLs
  renegotiated in FY07
• Support NAE cost-wise readiness goals and
  objectives

PBL Demand Coverage Goal
- Increase aviation demand covered
by PBL contract to 28 by
the end of FY07 Benefits -
Enhance supply support at equal or lower
cost - Achieve select reliability
improvements - Support NAE RFT and
ACWT goals and objectives
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Summary

• NAVICP Top Priority is Meeting Enterprise
  Performance Expectations

as defined by
CNO Guidance and Our Customers
while
Improving the Supply Chain and Reducing Life
Cycle Costs