Defense Logistics Agency RFID-enabled Distribution Supports U.S. Military Efforts

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2 Defense Logistics Agency RFID-enabled Distribution Supports U.S. Military Efforts Mark Lieberman Program Manager Automatic Identification Technology (AIT) Defense Logistics Agency

3 Defense Logistics Agency The DLA Enterprise A $42 Billion global enterprise 5 Million line items Eight supply chains Primary DoD receipt, stow and issue warehouser Reverse logistics processor reutilization and disposal Foreign Military Sales (FMS) and Humanitarian Aid A Day In The Life of DLA 10,000 procurement actions 60,000 receipts and issues 13M gallons of fuel issued 3

4 DLA AIT Project Management Office Business Process & Systems Integration Focus Mission: Leverage AIT in logistics operations to reduce cost and improve service Provide budgeting, planning, strategy, focus and business systems integration for AIT-enabled process improvement and logistics technology initiatives Focus: Effectiveness, efficiency, and resource utilization Proponent for AIT in Support of DoD Enterprise Business Transformation 4

5 AIT Enables Better Business Practices Improvement in Logistics Cost and Efficiency Improved Sourcing (e.g. Strategic Sourcing) Improved Sustainment (e.g. PBL, Depot Partnering) Improved Delivery (e.g. Network Optimization) Improved Planning and Decision Making (e.g. Forecasting and Demand Management, Collaborative Planning, Inventory Planning / EBS) Improved IT Systems (e.g. ERP / EBS / Legacy) Asset Visibility (AIT) Reinforcing Policy and Incentives 5

6 DLA AIT Programs Overview Expansion Stage Passive RFID Enabled Receiving Operations (PRR) Rollout complete 17 CONUS DDCs Begin rollout to OCONUS sites in 2012 Clothing & Textiles Item Level Initiative Extending training uniform apparel items tracking initiative across RTCs Initial Implementation Positive Materiel Transfer Implementation at USAF ALC Tinker AFB Investigation Stage Inventory condition monitoring prfid visibility to materiel in warehouse, putaways Visibility to business process, warehouse operations Enhance business intelligence 6

7 DLA AIT-Enabled Supply Management Material Transfer, Forward & Reverse Logistics Goal: Utilize advanced AIT solutions at co-located depots to reduce costs and improve efficiencies DLA Center of Excellence (CoE) methodology at Tinker AFB to improve visibility and accountability of material transfer Leverage proven AIT solutions to minimize initial investment Initiate enterprise implementation Substantial potential cost avoidance via increased efficiency and visibility 7

8 Positive Material Transfer Streamline Receiving, Local Delivery & Velocity 8

9 AIT-Enabled Positive Materiel Transfer AIT Provides Accurate, Timely Management Data Productivity Challenges Labor intensive search time for materiel Service Levels Limited visibility to requisition status and materiel transfer between DDOO, DLA Aviation, and AF Depot Maintenance Untracked actual response times for requisitions or supply delivery Optimizing Inventory Re-ordering based on materiel lost / invisible in the supply network AIT Solution Automated data collection eliminates error prone, timeconsuming manual processes Manual data entry errors reduced Create additional visibility to materiel status and location Improved accuracy of materiel movement data Results & Benefits Productivity Reduced searching, improved labor utilization Service Levels Improved visibility based on reliable, timely data updates of materiel location Lower Transportation Cost: Reduced expedited shipments Optimizing Inventory Lower Inventory: Improved fulfillment information 9

10 Phased Approach Mitigates Risk PHASE 1: ASSESSMENT AND VALIDATION Enable prfid for the B-52 Supply Chain PHASE 2: IMPLEMENTATION ACROSS TINKER AFB Enable positive materiel transfer across OKC PHASE 3: IMPLEMENTATION ACROSS ALL ALCS Enable processes at all ALCs with prfid Key Criteria Improve Data Accuracy Improved Process Inventory Impact Business Impact Reduced Manual Errors Reduced Searching Faster Processing Decision Support Shortened Lead Time Increased Inventory Turns Less Inventory at Customer Less Inventory at Wholesale Reduced Orders to Suppliers Phase 4: Apply to Enterprise Co-Located Operations Based on data from Aug 2011 Visit **Plus annual maintenance fee 10

11 prfid Enabled Receiving Operations (PRR) Automated receiving reduces manual errors, expedites materiel velocity, and improves utilization of labor resources 11

12 PRR: Leverage of Proven Solution Improves Asset Visibility & Productivity, Lowers Cost DLA PRR COE program prfid enabled receiving implemented at 17 DDCs Faster and more accurate receipt processing through automatic population of key data elements, 20% reduction inbound processing time Reduced receipts with manual error corrections by 62%. Labor to post PRR receipts reduced by 25% Problems Addressed Manual data entry warehouse activities time-consuming and error prone Cycle counting timeconsuming, infrequent, and error prone Misplaced items in warehouses = delays in packing and shipping "Open lines" on outbound shipments PRR at 17 sites Streamline and automate data entry, all warehouse processes Conduct frequent cycle counting with minimal effort Track location of cartons within warehouse Track items as loaded onto vehicles Under evaluation to quantify additional savings: Reduced cycle inventory, reduced duplicate orders, improved materiel routing 12

13 DLA AIT Programs: 2012 & Beyond Achieve best-in-class supply chain processes leveraging AIT to enable Asset Tracking & In-Transit Visibility and related improvements in DoD logistics operations ROI focused, business case based initiatives Measure, track & report quantitative and qualitative results Leverage lessons learned and existing solutions Support DoD drive toward integrated, synchronized, end-to-end logistics operations to meet warfighter requirements for information and materiel 13

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