DEFENSE LOGISTICS AGENCY AMERICA S COMBAT LOGISTICS SUPPORT AGENCY

Transcription

1 DEFENSE LOGISTICS AGENCY AMERICA S COMBAT LOGISTICS SUPPORT AGENCY WARFIGHTER FOCUSED, GLOBALLY RESPONSIVE SUPPLY CHAIN LEADERSHIP Defense Supply Center Columbus Inventory Management Excellence and Acquisition Agility 2012 Land & Maritime Supply Chain Business Conference Mr. Milton Lewis Acquisition Executive June 11-13, 2012 WARFIGHTER SUPPORT STEWARDSHIP EXCELLENCE WORKFORCE DEVELOPMENT 1

2 Guiding Principles Enhance Warfighter Readiness Ensure Availability and Responsiveness Protect the Supply Chain Deliver Conforming Material Guiding Principles Efficient Use of Taxpayer Dollars Drive Down Material Costs Maximize Small Business Participation 2

3 Land and Maritime Total Spend Total Spend: $3.19B $594M 19% $2.6B 81% Consumables DLRs Challenge: How do we reduce material costs by $1.05B? 3

4 Spend by Federal Supply Class (FSC) 80% 34 FSCs hold 80% of the Spend ADV and 80% of the actual Obligations Group 1: 1005, 2540, 2510, 6140, 4820 Guns, Vehicle Parts, Batteries, Valves Group 2: 5985, 4730, 2530, 3040, 5930 Antennas, Fittings, Vehicle Parts, Switches Group 3: 2590, 4720, 2541, 2610, 5935 Transmission and Vehicle Parts, Hoses, Tires, Connectors Group 4: 4810, 4320, 6135, 2620, 5965 Pumps, Valves, Batteries, Connectors, Tires, Headsets Group 5: 4710, 2520, 5945, 6110, 2910 Filters, Pipes and Tubes, Engine Components, Relays Group 6: 6130, 2815, 5998, 4330, 6145 Convertors, Filters, Engine Components, Electrical Boards, Wire and Cable Group 7: 2930, 6105, 6625, 1095 Electronic Motors, Engine Components, Testing Equip, Weapons 4

5 Strategies to Achieve Material Savings Leverage Commercial Capabilities Leverage Economies of Scale Sole Source Cost Control Enhance Competition Use Commercial Price Lists Customer Direct LTCs for Commercial- Off-The Shelf (COTS) items Cost effective methodology of supporting Non-NSN items Long Term Contracting (LTC) First Destination Transportation & Packaging (FDT&PI) Quantity Price Breaks Strategic Supplier relationships Overhead Cost Analysis Forward Price Rate Agreements/ Recommendations Reverse Auctions Reverse Engineering Source Approval Request (SAR) processing Automation 5

6 Long Term Contracts 3-5 years Increase coverage by approximately $1 Billion (Annual Demand Value) no later than FY15 Commodity Group Projects Millions $60 $50 $40 $30 $20 $10 $0 Projected FY14-18 Material Cost Savings $15M $30M $45M $60M $50M FY14 FY15 FY16 ` FY17 FY18 LTCs improve efficiencies and reduce material costs 6

7 Leveraging Commercial Capabilities Identify existing commercial supply chains Establish Customer Direct LTCs for Commercial Catalogs Utilize EMALL more efficiently for Non- NSN items Millions $7 $6 $5 $4 $3 $2 $1 $0 Projected FY14-18 Material Cost Savings $7 $3 $2 $2 $2 FY14 FY15 FY16 ` FY17 FY18 Avoid duplication of commercial supply chains 7

8 Sole Source Supplier Cost Control Regularly monitor (Bi-Monthly) - What is company's ability to manage their costs? What is happening in their commercial and military business environments? Growth? Decline? Regularly monitor (Semi- Annually) - Where is company going in terms of indirect rates and control on those rates considering base & pool costs? Cumulative Price Trend Tracking by Sole source CAGE and NIINs (Semi- Annually) Millions $5 Projected FY14-18 Material Cost Savings $5 $5 $5 $5 $5 $4 $3 $2 $1 $0 FY14 FY15 FY16 ` FY17 FY18 Cannot afford higher prices with dwindling budget 8

9 First Destination Transportation and Packaging Apply DLA s Economies of Scale to the Inbound Supply Chain Transportation Convert inbound new procurement freight to FOB Origin Consolidate shipments Optimize inbound network Packaging Expand use of Commercial Pack in supply chain Simplify packaging requirements Reduce packaging waste Millions $20 $15 $10 $5 $0 Projected FY14-18 Material Cost Savings $12 $14 $19 $12 $11 FY14 FY15 FY16 ` FY17 FY18 Implement Proven Commercial Best Practices to Drive Supply Chain Efficiencies 9

10 Reverse Auctions Online Pricing Tool Increases Price competition Drives down material costs Millions $15 $12 $9 $6 $3 Projected FY14-18 Material Cost Savings $11M $13M $13M $14M $14M $0 FY14 FY15 FY16 ` FY17 FY18 Proven Best Practice in Private and Public Industries 10

11 Automation Minimize NSN exclusions to maximize use of automation Tighten pricing logic Millions $16 $12 $8 $4 Projected FY14-18 Material Cost Savings $16M $14M $14M $14M $12M $0 FY14 FY15 FY16 ` FY17 FY18 Land and Maritime s strategy is to fully leverage automated capabilities 11

12 Reverse Engineering Sole Source Break Out Effort Improve Source Approval Request (SAR) Process Sustaining Engineering Millions $72 $70 $68 $66 $64 $62 $60 $58 Projected FY14-18 Material Cost Savings $62M $64M $67M $67M $70M FY14 FY15 FY16 ` FY17 FY18 Land and Maritime is focused on enhancing competition 12

13 Other Initiatives Performance Based Logistics (PBLs) Purchasing Raw/Semi-Finished Goods Shelf Life Management Remanufacturing Industry/Commodity Market Analysis 13

14 Summary Land & Maritime is committed to achieving material cost savings to support our Warfighters We can never be any better than the suppliers who support us. Thank you for all you do! 14

15 WARFIGHTER-FOCUSED, GLOBALLY RESPONSIVE, FISCALLY RESPONSIBLE SUPPLY CHAIN LEADERSHIP DEFENSE LOGISTICS AGENCY AMERICA S COMBAT LOGISTICS SUPPORT AGENCY WARFIGHTER SUPPORT STEWARDSHIP EXCELLENCE WORKFORCE DEVELOPMENT 15