Title (Arial

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SCOR as a Performance Based Enabler SCOR Users
Seminar 9/27/06 Bob Nelson Raytheon Technical
Services
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Agenda

• Performance Based Logistics scope
• PBL implementation methodology
• Base lining the system and capability model
• SCOR Methodology approach to PBL outcomes
• SCOR best practices and the Business Case
  Analysis
• PBL contract implications

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PBL Definition
Performance-Based Logistics (PBL) is the
acquisition of support as an integrated,
affordable, performance package designed to
optimize system readiness and meet performance
goals for a weapon system through long-term
support arrangements with clear lines of
authority and responsibility.
Performance-based strategies focus on
achievement of performance outcomes, not the
transactional products or services that enable
those outcomes.
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OSD PBL Scope
Platform
Stage 4
Mission Performance
Mission Assured Support
Stage 3
Weapon System Performance
System / Platform Lifecycle Focus
Contract Scope
Weapons Systems Scope
Stage 2
Logistics Performance
Parts Availability Focus
Stage 1
Delivery Agreement
Distribution Performance
Component
Preferred Metrics
Mission Reliability
Operational Availability
Availability
Delivery Speed

• Planning
• Logistics
• Value Engineering
• Config. Mgmt.
• Maintenance
• Operations

• Planning
• Logistics
• Value Engineering
• Config. Mgmt.
• Maintenance

• Planning
• Logistics
• Value Engineering

• Planning
• Logistics

Functional Scope (responsibility of the provider)

• Platforms

• Parts
• Components

• Systems
• Platforms

• Components
• Assemblies

Typical Weapon System Scope
AAQ-26 USMC SecReps Standard Missile-1
AIM-9X MK-57 NSSMS
Raytheon Examples
Sentinel ITAS AAS-44 APG-63V1 UK RaPID
AAQ-16,27,29
FBX-T (In work)
AEGIS Phalanx ALR-67V3 AMRAAM US/UK Javelin
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Span of Control ofthe Mission PBL Provider

• Program Management
• Facilities
• Own spares
• Manage repairs
• Depot Operations
• Operate equipment
• Perform maintenance
• Condition Based
• Preventative
• Training
• Packaging, Handling, Storage and Transportation
• Documentation
• Reliability, Availability, Maintainability (RAM)
  Engineering

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Notional Performance Agreement
Negotiated Fixed Price is adjusted based on key
performance indicators. The performance
threshold increases over time.
Performance indicators are weighted to arrive at
the overall performance adjustment
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SCOR Focus
Phased Approach
1. Foundation
2. Planning
3. Execution
4. Control
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Capability Model
If you do nothing to change your support
structure, you will operate somewhere on the
capability curve.
Baseline
Baseline Model
Ao
Ao
Modeled Capability
Current Capability
Current Capability
0
0
Cost
Cost
OR
If you do what you always did, youll get what
you always got Yogi Berra
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BaselineEnabling Technologies
Spares Optimization System Dynamic Modeling

• How many spares should we buy?
• Where should we put them?
• What is it worth to reduce shipping times?
• What is it worth to reduce repair times?
• Impact of moving a hub or adding a repair depot?

• Provides holistic dynamic depiction of the
  living system
• Accommodates complexities in players,
  interactions,
• and changing dynamics
• Ease of performing trades and sensitivity
  analysis
• Integrates existing engineering cost analysis
  methods and data
• Employs dynamic modeling simulation

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SCOR - Processes
The SCOR model will be developed to suit the CLS
structure
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SCOR Process Reference Model
Best Practices Analysis
Process Reference Model
Business Process Reengineering
Benchmarking
Quantify the operational performance of
similar companies and establish internal targets
based on best-in-class results
Characterize the management practices and
software solutions that result in best-in-class
performance

Capture the as-is state of a process and
derive the desired to-be future state
Capture the as-is state of a process and derive
the desired to-be future state
Quantify the operational performance of similar
companies and establish internal targets based on
best-in-class results
Characterize the management practices and
software solutions that result in best-in-class
performance
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Linking Supply Chain Performance Attributes and
Level 1 Metrics
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Supply Chain Scorecard Gap Analysis
Begin analyzing the metrics where substantial
improvement can be obtained.
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Impact on Performance
Some of the improvements in the TO BE state will
have a direct impact on performance outcomes.
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SCOR To Be Initiatives

• The model will HELP you identify opportunities in
  the current process.
• The impact on performance outcomes and investment
  cost must be determined
• Calculate the cost per unit of performance
  outcome achieved.

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Best Practice Analysis
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Business Case AnalysisDoD vs. Commercial
Perspective

• DoD (PBL) BCAs
• Primarily Analysis Tools
• Not always go/no-go decision tools no options
  to NOT develop a support strategy
• Many criteria bound and constrain the process
• Statute, Policy, Financial rules
• Reduced DoD support infrastructure
• Best value use of Public/Private capabilities
• Alternatives not clear early they evolve as
  filters and criteria are addressed
• Commercial BCAs
• Purely business proposition tools
• i.e. Launch a new product? Open a new market
  territory? Merge with another company?
• Basically go/no-go decision tools Does it make
  financial (business) sense (ROI, etc.)?
• Alternatives are clear and defined early
• Most factors are either known or obtained in
  advance via market research, surveys

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The Business Case
Customer Objective
Contractor Response
Cost Structure
Business Improvement

Ao
Legacy Profit
Legacy Price
New Capability
Customer Objective
Legacy Cost
Current Capability
PBL Price
0
Cost
Yrs.
Contract Duration

• The customers objective is to get a higher level
  of service at a lower cost.
• The contractor must shift the cost utility curve
  by
• Redesigning the product to be more reliable
• Changing the logistics support structure

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The Impact on theBaseline

• Stack rank the initiatives based on the cost/
  benefit ratio.
• Calculate Cumulative Benefit and Cumulative Cost.

Input to the contract negotiation process
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The Basis for Contract Negotiation
Performance Agreement
Dont forget to include a factor for risk.
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PBL TransitionCash Flow Impact
Consider the time value of money

Legacy Profit
Legacy Inflow
Customer Objective
Legacy Outflow
Contractor Cumulative Cash flow
PBL Profit
PBL Inflow
PBL Outflow
Contract Duration
Yrs.
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Summary

• All PBL applications are different no universal
  solution
• You need to know you capabilities and your
  opportunities
• SCOR improvements will provide operational
  improvements, but also PBL incentive award.
• Treat the Business Case Analysis with the same
  level of effort as you would treat a Business
  Plan.
• Make sure you understand and manage the risks
• Cost
• Technical
• Schedule/ Programmatic
• SCOR is a tool, not a recipe.