Land Supply Chain Strategic Material Sourcing Capability Summit November 14, 2007.
-
Upload
lillian-pierce -
Category
Documents
-
view
221 -
download
0
Transcript of Land Supply Chain Strategic Material Sourcing Capability Summit November 14, 2007.
Land Supply ChainStrategic Material Sourcing
Capability Summit
November 14, 2007
Perform
ance Transformation
Culture
Introduction: Chief, Tailored Support TeamTopics Covered
•Business Overview•KID campaign recap•Long Term Contracts and Warfighter Support•SMS Programs•Small Business Impact/Issues•TINA Implications for Industry•Value Engineering/Testing•SMS Web Site Demo
Break-Out Sessions
Capability Assessment
Land Supply ChainSMS Capability Summit
Perform
ance Transformation
Culture
Director, Land Supplier Operations
Business Overview
Land Supply Chain
Wheeled Vehicles
Tracked Vehicles
Batteries
Nuts & Washers
Converters
Tires
Small Arms
Non-NSN
Perform
ance Transformation
Culture
– 385K NSNs, 3 sites, $1.6B in sales
– Army/Marines …85% of demand- 4,100 + suppliers- 320K contract
actions- 24 integrated
supplier teams
Land Supply Chain FSCs(Preponderance of FSCs assigned to Land SC)
Perform
ance Transformation
Culture
COLS FSCs
1005 2540
1010 2541
1015 2590
1020 2610
1025 2630
1030 2640
1035 2805
1040 2815
1045 2825
1055 2910
1075 2920
1080 2930
1090 2940
1095 2990
2510 3030
2520 4910
2530
PHIL FSCs
5340
5341
5360
RICH FSCs
5110
5120
5180
6117
6135
6140
Perform
ance Transformation
Culture
The Nine IndicatorsImpacting Your Business
Order Fulfillment (Delivery)• Stock availability• Order quantity fill rate• Logistic response time• Time definite delivery
Planning• Attainment to plan
Financial• Aged accounts payable
These KPIs measure how we do business with you
Tech Quality (PQDRs)• Order quality
Procurement• Administrative lead time• Production lead time•Key Item Drivers (KID)•BO Reduction•Contract Delinquencies
Perform
ance Transformation
Culture FY08 SMSG Strategy
Objective:•Key business drivers on long-term contract •Prioritized approach to project selection
Target population: •FSC 5340 – hardware•FSC 1005 – small arms•FSC 3030 - belts•Weapon systems•Tires (ancillary support)
Building strategies that are directly linked to customer requirements
Focus on KID 1-4
Perform
ance Transformation
Culture
M2 .50 cal Machine GunSourcing NSN’s
5930-00-614-7461 SWITCH,EXTRACTOR5310-00-501-3623 NUT,PLAIN,HEXAGON5315-00-501-3524 PIN,SHOULDER,HEADLE5315-00-600-8919 PIN,ECCENTRIC1005-00-625-7592 BAR, TRIGGER1005-00-600-8934 SIGHT, FRONT5365-00-600-8920 BUSHING,MACHINE THR1005-00-657-3953 SLIDE ASSY, RETR5360-00-726-6134 SPRING,FLAT5315-00-600-8784 PIN,SPRING1005-00-550-4082 EXTENSION ASSEMBLY,1005-00-716-1302 LOCK,BREECH,MACHINE
Perform
ance Transformation
CultureBusiness Drivers on LTC
LTC Obligations for 1st Quarter FY08: $104,482,859.58
Coverage FY04 FY05 FY06 FY07
NIINs 47% 57% 70% 75%
Annual Demand Value 67% 71% 76% 80%
Annual Demand Frequency 62% 69% 72% 75%
GOAL FOR FY08- 1,549
90% OF FY08 FOCUS WILL BE ON KID 1-4 NSNs10% OF FY08 FOCUS WILL BE ON LOW DENSITY SYSTEMS
Perform
ance Transformation
Culture
Focusing efforts on small group of Key Item Drivers (KID)
Small population of items have a large impact on our business
Broadcast fax sent out to industry in September
Campaign Goals: •PR Production (Manual Awards): 4,000 / Mo•20% Reduction in KID 1-4 Open PRs•PRs > ALT•Open PR Workload•Awarded ALT
KID Campaign Recap
Perform
ance Transformation
Culture
KID Matrix
ANNUAL DEMANDFREQUENCIES
ARE
ANNUAL DEMAND VALUE =
$6,000 AND GREATER
ANNUAL DEMANDVALUE =
LESS THAN $6,000
150 AND GREATERALL ITEMS
1 2
20 - 149ALL ITEMS
3 4
4 - 19WSICs F,G,H,J,K,L,T
5 6
4-19WSICS
M,P,R,S, W, X, Y, Z , N
7 8
0 - 3ALL ITEMS
9 0
Perform
ance Transformation
Culture
KID Statistics
All NSNs
All Others = 95%(358,000)
KID 1-4 = 5%(17,000)
Total PRs on Hand
All Others = 79%
KID 1-4 = 21%
Total Backorders
KID 1-4 = 75%
All Others = 25%
Total Requisitions
All Others = 20%
KID 1-4 = 80%
4th Quarter FY07 Obligations for KID 1-4 NSNs: $265,719,805
Perform
ance Transformation
Culture
SMS targeting KID 1-4 items for FY08 projects
Ensures support for multiple years
Streamline ordering process
Reduce manual PRs on-hand
KID and SMS
Perform
ance Transformation
Culture
• Customer Operations Mission
• DLA Support to the Warfighter
• Benefits of LTC's
• Vendor Support to the Warfighter
War Fighter Support
Perform
ance Transformation
Culture
Strategic Material Sourcing (SMS)
Presented by Director, Procurement Process Support Directorate
Program Overview
14 November 2007
Perform
ance Transformation
Culture
Focus of the SMS Program
DLA directed by OSD to develop Enterprise strategy to reduce inventory by $340 M by end of FY 2011
The Strategic Material Sourcing (SMS) program is DLA’s umbrella initiative designed to facilitate the Agency’s efforts to meet this directive by:
Placing items of strategic importance on Long Term Contracts (LTCs) Developing initiatives to reduce depot inventory levels Reducing Administrative and Production Lead Times on these items Adopting best commercial practices wherever possible to Include developing strategic Alliances with Key Suppliers, such as, Strategic Supplier Alliances with our Sole Source Suppliers
Perform
ance Transformation
CultureGoal of SMS
1. Increase Number of NSNs covered by Long Term Contracts
2. Increase Percent of Long Term Contract Obligations
3. Lower Inventory Levels/Cost
4. Lower Administrative and Production Lead Times .
Perform
ance Transformation
Culture
How Are SMS NSNs Determined?
Sales Drivers – Sales Drivers – Pareto (80/20 percent rule) based on last 2 years of sales dataPareto (80/20 percent rule) based on last 2 years of sales data
Demand DriversDemand Drivers - - Pareto (80/20 percent rule) based on last 2 years of demand dataPareto (80/20 percent rule) based on last 2 years of demand data NMCS NMCS – NSNs which have historically impacted readiness – NSNs which have historically impacted readiness
Warstoppers – Warstoppers – Needed by the Services in case of wars or other contingenciesNeeded by the Services in case of wars or other contingencies Readiness ItemsReadiness Items – EC 1 WSIC items with PLT>179 and at least 1 Back Order in past 3 – EC 1 WSIC items with PLT>179 and at least 1 Back Order in past 3 yearsyears
Critical Items - Critical Items - Critical item code ‘Y’ with PLT>179 and at least 1 Back Order Demand in Critical item code ‘Y’ with PLT>179 and at least 1 Back Order Demand in past 3 yearspast 3 years
High Frequency Items - 100 or more annual requisitions in the past 12 months
Supply Chain Focus Items - Items important to initiatives and directives the Supply Chains are responsible for managing.
Total DLA Hardware NSN Population: 3.9 million
Total DLA Hardware NSN Population: 3.9 million
Focus on SMS: 335,715
Focus on SMS: 335,715
Perform
ance Transformation
CultureFY08 SMS Population
FY08 SMS Drivers By Category By Supply Chain
GROUP NSNs % Aviation C&E Land Maritime
Sales 44,824 13.4% 26,426 1,655 3,096 13,647
Demand 88,678 26.4% 51,114 3,863 6,901 26,800
NMCS 8,671 2.6% 3,275 2,514 1,053 1,829
Warstopper 36,702 10.9% 11,476 3,070 8,644 13,512
Readiness 22,798 6.8% 14,682 1,561 1,885 4,670
Critical 4,353 1.3% 3,187 324 252 590
JRIMM 930 0.3% 158 103 144 525
Addbacks 83,846 25.0% 49,195 4,678 10,482 19,491
SC Focus 44,913 13.4% 5,927 1,312 10,870 26,804
TOTALS 335,715 100.0% 165,440 19,080 43,327 107,868
Perform
ance Transformation
Culture
Strategic Materiel SourcingExecution Plan
Total NSNs On LTC
0
50000
100000
150000
200000
FY03 Q
1
FY03 Q
3
FY04 Q
1
FY04 Q
3
FY05 Q
1
FY05 Q
3
FY06 Q
1
FY06 Q
3
FY07 Q
1
FY07 Q
3
FY07 Q
4
On LTC
131,444
Perform
ance Transformation
Culture
0%
25%
50%
75%
Fiscal Year Quarters
Perc
ent
ADV
ADF
ADV Goal
ADF GoalADV 53.5% 57.7% 55.0% 54.5% 53.6%
ADF 57.5% 55.4% 54.9% 59.1% 60.9%
ADV Goal 69.5% 63.0% 63.0% 63.0% 63.0%
ADF Goal 68.0% 63.0% 63.0% 63.0% 63.0%
FY06 FY07 Q1 FY07 Q2 FY07 Q3 FY07 Q4
SMS Annual Demand Value (ADV) & SMS Annual Demand Frequency (ADF)
•
ADV/ADF illustrates that the most strategic items are being placed on LTCADV/ADF illustrates that the most strategic items are being placed on LTC
Perform
ance Transformation
Culture
Total DLA Obligation Rate
50.0%
55.0%
60.0%
65.0%
70.0%
% o
f Tot
al O
blig
atio
ns
Actual LTC% 54.1% 57.5% 0.0% 0.0% 0.0% 0.0%
Goal 54.0% 56.0% 63.6% 63.6% 63.6% 63.6%
FY06 FY07 FY08Q1 FY08Q2 FY08Q3 FY08Q4
Placing items on LTC leads to improved support to the Warfighter… at lower administrative cost
Placing items on LTC leads to improved support to the Warfighter… at lower administrative cost
Total Long Term Contract Obligation Rate
Perform
ance Transformation
Culture
SMS Gross Inventory Savings
-$75-$50
-$25$0
$25$50
$75$100
$125
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
Fiscal Years
An
nu
al S
avin
gs
(Mill
ion
s)
-$50
$0
$50
$100
$150
$200
$250
$300
Cu
mu
lati
ve
(Mill
ion
s)
Annual Savings Target Cumulative Savings
SMS Gross Inventory SavingsQ3 Revised Numbers*
Total Program Savings As Of June 2007 = $219 Mil
Perform
ance Transformation
Culture
SMS DLA Average Administrative Lead Time (ALT)
Average ALT
0
50
100
150
Day
s
ALT SMS Only 21 15.2 13 12.6 14.5 12.8 13.7 15.1 14.6
ALT non-SMS 65.6 49.2 49.3 59 61.2 62.5 65.4 62.1 57
ALT SMS not on LTC 79.5 64.9 71.1 84.3 70.7 71 64.8 61.6 54.3
ALT SMS on LTC 3.1 3 3 3.1 3.6 3.2 2.7 2.8 1.9
2002 2003 2004 2005 2006 07Q1 07Q2 07Q3 07Q4
FY07
Perform
ance Transformation
Culture
Average PLT
0
50
100
150
200
Day
s
PLT SMS Only 47.1 41.6 43.2 45.6 38.6 43.4 39.2 38.7 36.5
PLT non-SMS 62 53.8 55.1 64.5 65.5 67.8 63.3 61.2 57.1
PLT SMS not on LTC 108.1 102.2 120.3 129.2 113.8 115.7 111.5 94.8 75.4
PLT SMS on LTC 21.9 21.9 25.5 30.9 27.7 31.6 28.3 29 29.1
2002 2003 2004 2005 2006 07 Q1 07 Q2 07 Q3 07 Q4
SMS DLA Average Production Lead Time (PLT)
FY07
Perform
ance Transformation
Culture
The Road Ahead
FY08 Goals
Supply Chain Net Award Goal Renewal Goal
LTC Obligation Percent
Aviation 1,697 650 64.4%
C&E 365 621 78.3%
Land 1,549 2,875 67.7%
Maritime 1,094 1,707 46.8%
Enterprise 4,705 5,853
Perform
ance Transformation
Culture
Director, Office of Small Business Programs(800) 262-3272
Small Business Perspective
Perform
ance Transformation
Culture
Office of SmallBusiness Programs
Our Function: • Represent the interests of the small business community as new initiatives are developed• Look for opportunities for small business, HUBZone, 8(a) and Service Disabled set-asides• If the role of Prime Contractor is not indicated, support and develop contractual language to assure best possible representation as subcontractors• Do all of this while remembering that Customer Support is paramount
Perform
ance Transformation
Culture
The Role of Long Term Contracts (LTCs)
• Long term contracts provide many DSCC benefits:• Significantly reduces administrative lead times• Reduces manpower requirements• Offers stronger relationships between the contractor and DSCC• Frequently provides enhanced customer support
• LTCs can be more risky for the contractor:• Escalating material or other costs may not be adequately covered in the out years
• LTCs can reduce the number of competitors over time
Perform
ance Transformation
Culture
• Historical experience – how many small businesses are able to provide the parts and related services (Rule of Two)• Methods of determining interest/capability
• Industry Day• Market Survey – Very Important!!!!• Direct feedback to:
• Contracting Officer• Office of Small Business Programs
• Possible visits to potential contractors
How Set-aside Determinations are Made
Perform
ance Transformation
Culture
How to Compete?
• Small Businesses interested in acting as Prime Contractors on larger initiatives should:
• Gain a full understanding of the requirement• Assure they have the “right stuff”
• Impeccable past performance• Adequate financing • Strong support staff including Customer Service• Comparable experience – even if on a smaller scale• Robust IT infrastructure for parts acquisition, forecasting, item management, etc• Realistic pricing• Warehousing and distribution capabilities• Partners, if needed
Perform
ance Transformation
Culture
Things to Consider
• Mentor – Protégé Programs • Both the DoD or DLA Programs offer many benefits for the mentor and the protégé
• Start out on smaller initiatives and developing a track record of exceptional performance and customer support• Developing strong, positive relationships with key contracting personnel• Become the “go to guy” when support is critically needed
Perform
ance Transformation
Culture
Little Things are Important
• When submitting a proposal be sure to:• Read and understand the requirements• Adequately address each part of the solicitation• Remember neatness and accuracy count – this is your chance to show the evaluation team that your are fully capable• Be timely• Read and re-read your proposal – make sure that what you say in one part is not contradicted in another
Perform
ance Transformation
Culture
Final Thoughts
• Ask for clarification if you are not sure • Make good use of the time with the contracting team:
• Have a strong “pitch” • Emphasize what you can do for the Customer• Offer to host a site visit• Be a problem solver
• Never underestimate the importance of a strong Market Research response!• Utilize the Office of Small Business Programs
• The better we understand what you can do, the more likely we can successfully set-aside future acquisitions
DSCC SMALL BUSINESS TEAM1-800-262-3272 OR
COMMERCIAL 614-692-3541
PROGRAM PHONE614-692-XXXX
Director, DSCC Small Business Office - 3735
Small Disadvantaged Business and 8(a) Programs - 1288
Outreach and Woman OwnedSDB/8(a) Program Support - 4864
HUBZone - 3510
Javits/Wagner/O’Day Workshops(Blind & Severely Handicapped) - 1494
Service Disabled Veteran Owned - 7935
Opportunity Specialist - 7624
Perform
ance Transformation
Culture
Perform
ance Transformation
Culture
TINA
Requirements Under the Truth in Negotiations Act (TINA) in DoD
Presented by Director, Procurement Process Support Directorate
November 14, 2007
Perform
ance Transformation
Culture
Agenda
•TINA Background
•TINA Requirements for DoD
•DLA Policy Changes
Perform
ance Transformation
Culture
Truth in Negotiation Act (TINA) Background
•Truth in Negotiations Act (TINA) – Passed in 1962
–Requires cost or pricing data for use in negotiating contracts and modifications.
–Certify in writing that, the cost or pricing data submitted are accurate, complete, and current.
Perform
ance Transformation
Culture
What has Occurred?
•2001, Contracting Officer Determinations of Price Reasonableness When Cost or Pricing Data Were Not Obtained (DOD-IG Report):
–CO’s lacked valid exceptions and failed to require data in 32% of contracting actions reviewed.
–Inadequate documentation to support price reasonableness in 86% of actions reviewed.
–CO’s did not challenge items categorized as commercial and accepted catalog prices/price lists without analysis.
•2002, DOD Needs Better Guidance on Granting Waivers for Certified Cost or Pricing Data (GAO Report):
–Regarding type of data and analyses and outside assistance.
–Whether waivers should be granted in first place.
Perform
ance Transformation
Culture
Recent TINA Changes for DoD
• Section 817 of Public Law 107-314 (FY 2003 NDAA) established stricter TINA requirements for DoD--- Waivers now limited to the most exceptional cases:
– DoD can no longer waive the requirement for cost or pricing data solely because the price can be determined fair and reasonable without the data (therefore FAR 15.403-1(c)(4) does not apply to DoD).
– CO’s must request the cost data and the Certificate of Certified Cost and Pricing Data.
– If the company cannot comply, a Waiver may be granted but all of following must be met:
1. Property or service cannot reasonably be obtained without granting the waiver;
2. Price(s) can be determined fair and reasonable without the submission of cost or pricing data; and
3. There are demonstrated benefits to granting the waiver.
– Required Congressional reporting requirements for actions over $15 million.
Perform
ance Transformation
Culture
2007 Actions Affecting DLA
•February 20, 2007 – Senate Armed Services Committee letter to the USD(AT&L reiterating the statutory requirements from the FY 2003 NDAA).•March 23, 2007 – Director, Defense Procurement and Acquisition Policy (DPAP), memorandum to Departmental Deputy Assistant Secretaries and the Directors of Defense Agencies emphasizing that the standard to be met for granting a TINA waiver is extremely high•.July 19, 2007 – DLA’s PROCLTR 07-10 specified actions to be taken when an offeror or contractor refuses to provide cost or pricing data. Implemented IAW DFARS PGI 215.403-1(c)(4)(A)(1).•October 2007 - DLA’s new PROCLTR provided detailed guidance to incorporate PROCLTR 07-10 and other TINA-related procedures into DLAD.
Perform
ance Transformation
Culture
What PROCLTR 07-10 Covered
•Implemented DFARS guidance for FY 03 NDAA:–The three findings required for an HCA to grant an exceptional circumstances exception (waiver),
–DPAP guidance that a waiver should no longer be granted to a contractor business segment that normally performs Government contracts subject to, and in compliance with, TINA, and
–That pending and actual waivers granted should be reported to our DLA J-73 focal point at the earliest possible date, to enable timely reporting of these waivers to OSD immediately following the end of each fiscal quarterly period.
Perform
ance Transformation
CultureSummary
• DLA must comply with statutory and policy guidance
• Fair and Reasonable Pricing is a critical component for success
• High Visibility item for Congress and OSD
• We need your cooperation!
Perform
ance Transformation
Culture
Value Engineering/Source Development
http://www.dscc.dla.mil/programs/sdi/
Value Engineering
Perform
ance Transformation
CultureSmall Arms Challenges
Diminishing manufacturing base Develop priority list for sourcing efforts
First article and production lot failures Increased use of pre-award surveys Qualified source list Increased surveillance visits by DCMA
Perform
ance Transformation
Culture
M2 .50 cal Machine GunSource Development NSNs
1005-00-550-4060 LATCH,BOLT
1005-00-550-4081 COVER,SUB ASSEMBLY
1005-00-550-4082 EXTENSION ASSEMBLY,
1005-00-550-4094 SLEEVE,BUFFER TUBE
1005-00-600-8782 GUIDE,BUFFER SPRING
1005-00-600-8934 LOCK,BREECH,MACHINE
1005-00-600-8936 TUBE,HANDLE GRIP
1005-00-614-7583 PLATE,BACK
1005-00-625-7592 LOCK,BACK PLATE LAT
1005-00-626-1110 NUT,PLAIN,HEXAGON
1005-00-657-3953 PIN,SHOULDER,HEADLE
1005-00-716-1302 PIN,SPRING
1005-00-918-2617 PIN,ECCENTRIC
Solution:
Established website that provides a list of NSNs where DSCC would like
to develop additional sources.
1005-00-918-2618 KNOB
1005-00-927-7273 SPRING,HELICAL,COMP
5310-00-501-3623 SPRING,FLAT
5315-00-501-3524 BUSHING,MACHINE THR
5315-00-600-8784 SWITCH,EXTRACTOR
5315-00-600-8919 SIGHT, FRONT
5355-00-550-4062 FRAME HANDLE, LOWER
5360-00-200-5800 CAM, BREECHLOCK, MACH
5360-00-726-6134 BAR, TRIGGER
5365-00-515-2834 SLIDE ASSY, BELT
5365-00-600-8920 SLIDE ASSY, RETR
5930-00-614-7461 PLUG, MACHINE THREAD
Perform
ance Transformation
Culture
http://www.dscc.dla.mil/programs/sccs/index.html
SMS Web Site Demo